Manufacturing


70 years of IDA Support – A Reflection on Ireland’s Global Trade Success

My mother, Mary Rushe, was born in 1927, the year in which the state-owned Electricity Supply Board (ESB) was established. A farmer’s daughter, she witnessed technical and economic upheaval such as rural electrification and the arrival of the motor car and farm mechanisation; bade farewell to many cousins who immigrated to the United States out of dire economic necessity; experienced rationing during the WWII years or ‘the emergency’; and left her post as a secondary school teacher, without question, when she married my father in 1955, because of the ban on married women in the civil service. The decade when the marriage ban was lifted (1973), and my mother returned to work 6 children later, the social profile and ethical belief system in Ireland had begun to change dramatically. At 92 years of age she has witnessed a level of change in all aspects of life, the scale of which generations before her could not have countenanced.

As we are an island nation on the western seaboard of Europe, it is only natural (if short sighted) that the economy, in the early years of the Irish Republic, was inward-looking, with high tariffs on imported goods, and limited export trade. Political leaders such as Sean Lemass (TD, Minister for Industry and Commerce and Taoiseach, in the years 1924 to 1969) and T K Whitaker (Secretary to the Department of Finance, Governor of the Central Bank and Senator, in the years 1956 to 1982), heralded a new era of forward-thinking economic strategy in the 1950’s, 60’s and 70’s.  Since its foundation by government in 1949, the mission of IDA Ireland has been constant, that is to promote the growth and development of industry in Ireland. It has not been all plain sailing, far from it, but what a glorious success story the IDA has been in our tiny open island economy.  IDA Ireland representatives have worked hard across the world, challenging the perception of Ireland as a backward rural country, and promoting its educated workforce and business-friendly tax incentives, with the added benefit of access to the common market when Ireland secured EEC (now EU) membership in 1973.

From the mid-1970s onwards IDA Ireland focused on attracting pharmaceutical and electronics manufacturers, two sectors pinpointed as having significant growth potential in global terms. The first wave was purely components manufacturing, but later R&D and higher value work followed. By 1982, some 130 of the world’s leading electronics companies had manufacturing facilities located in Ireland. This is the Ireland into which I was born, and my adult life story has been very much moulded by the success story that is foreign direct investment in Ireland. For over 30 years I have worked as an employee and consultant with over 40 companies who are operating successfully on this island. I am only one of the 229,000 people employed in jobs in foreign industry in Ireland.

The IDA now has a network of 30 offices globally (nine in Ireland) and a total staff of 340. Year-on-year it continues to promote investment in Ireland in the face of continuing challenges, threats and opportunities, from Brexit to global tax reform and beyond. However well it does its job, neither the IDA nor any development authority, can compensate for national fiscal recklessness. Ireland is lying in 24th place in the World Economic Forum global competitiveness index, and the level of debt per capita the highest in the Euro zone, so we have no room for complacency in the current wave of economic stability. We can only be grateful to IDA policy and practice that has ably supported Ireland in weathering the post Celtic Tiger economic crisis.

Last April, The American Chamber of Commerce in Ireland helped to celebrate the IDA’s 70 years in business by presenting the IDA with a Special Recognition Award. CEO Martin Shanahan received the award on behalf of the IDA. I am sure we all join with AmCham in recognising this incredible organisation for a major contribution made to transforming Ireland into an inclusive home of talent and innovation with global impact.

To view the current IDA policy and strategy, see “Winning: Foreign Direct Investment 2015-2019”

https://www.idaireland.com/about-ida/winning-fdi

 

 

Acknowledgement: The author is grateful to content authors of the following sites, on whom she drew for this blog.

https://www.idaireland.com/newsroom/blog/january-2019/marking-70-years-of-ida-ireland

https://www.idaireland.com/about-ida/winning-fdi

https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018


Is your organisation living Lean Values?

For many years now we have been supplied with a rich volume of literature, much of it originating in the United States, on lean practices and principles as exemplified by the Toyota organisation. From ‘Lean Thinking’ the seminal lean textbook published by Womack and Jones back in 1996, to ‘The Toyota Way’ published by Liker in 2004, there has been no shortage of literature to guide us along the lean path. The former gave us 5 lean values to live by, and the latter gave us 14 management principles to implement.

So far so good in terms of academic analysis, but what does the Toyota organisation itself espouse as guiding principles or values? A visit to their global website reveals Toyota’s current guiding principles. These form the foundation of the company’s vision and philosophy.

Principle 1: Dedicate our business to providing clean and safe products and to enhancing the quality of life everywhere through all of our activities. Generating value for the customer, society and the economy.

Principle 2: Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide. In doing so base your management decisions on the long term, even at the expense of short-term financial goals.

Principle 3: Create continuous process flow to bring problems to the surface. Essentially you need to completely remove the amount of the time that any work project is sitting idle or waiting for someone to work on it.

Principle 4: Support individual creativity and value teamwork through harmony. Eliminate overburdening people in the production schedule. Work to level out the workload of all manufacturing and service processes.

Principle 5: Honor the language and spirit of the law of every country and region, and undertake open and fair business activities to be a strong corporate citizen of the world.

Principle 6: Contribute to economic and social development through corporate activities in your respective communities. Understand your place in history and bring value.

Principle 7: Eliminating waste is just one-third of the equation for making lean successful. Build a culture of stopping to fix problems. Again it’s about thinking long-term. Ensure your company culture aims to quickly solve problems and put in place countermeasures to enhance quality productivity in the long run.

Principle 8: Use technology to support people not to replace people. Remove or modify technologies that conflict with your culture or that might disrupt stability, reliability and predictability.

Principle 9: Grow leaders. Grow leaders from within your organisation. Leaders must be role models and teachers for the company’s philosophy.

Principle 10: Work with business partners in research and manufacturing to achieve stable, long-term growth and mutual benefits, while remaining open to new partnerships. Have respect for them and treat them as an extension of your business.

The above principles were established in 1992, and revised in 1997 (translated from the original Japanese).

Those of us looking for concrete guidelines and tools for lean implementation may be disappointed with the above list. However they provide more insight into Toyota’s living values, and the secrets of their success, than any workshop on leader standard work or value stream mapping.

How do they compare with the values in your organisation? Is there an opportunity for modification? Is the management team in your organisation leading by example and living its values? This blog has led me to cross-reference our own Mission and Values which you can download from our website here. There is always room for improvement and I hope this article has given you some insight into how respect for the individual and teamwork have contributed to Toyota’s success.


The role of the contract Lean Six Sigma Black Belt

Black Belt

The Certified Lean Six Sigma Black Belt (BB) is a professional who is well versed in the Lean Six Sigma methodology, who leads improvement projects, typically in a full-time role. A Lean Six Sigma Black Belt possesses a thorough understanding of all approaches and tools within the phases of lean six sigma project. They understand how to perform and interpret Six Sigma tools and how to use standard principles of Lean.

A BB is results driven, trained in advanced project management and statistical analysis tools. He/She is expected to contribute between €250K and €1M to the company’s operating profit each year by undertaking process improvement projects that lead to enhanced customer satisfaction, and lower cost to the company.

Why use contract Black Belt support?

Employing contract BBs has become popular for every employer type, ranging from multinationals to SMEs and even start-ups. One of the reasons why it’s beneficial for companies to employ a BB contractor to work on specific projects, is the specialised expertise that they can bring to that role. They can also adapt quickly to the organisation’s processes and culture, and deliver measured value on a quick return basis.

The contract black belt service compliments existing operational excellence department resources, or can act as a stand-alone professional support to the management team and project teams on site. The advantages to the organisation are many, and include:

  1. Senior project manager with cross-sector experience;
  2. Access to a wide and deep knowledge store of programme management approaches, and lean six sigma data analysis and problem-solving tools;
  3. The support of a professional who is senior enough to influence management thinking, without having the natural hesitation that might inhibit a more junior permanent employee;
  4. Use of support days in line with the organisation’s needs, and
  5. The freedom to wind-up the contract when it best suits the organisation.

Black belt duties

Duties of the black belt will vary from company to company, however will most likely include the following. In consultation with the management team and others:

  • Development and maintenance of the continuous improvement roadmap;
  • Project selection and team selection;
  • Project planning, team mentoring and individual team lead mentoring;
  • Process problem-solving with teams in manufacturing, laboratory, warehouse and office areas;
  • Data analysis and report writing, with recommendations and project plan

Support days & duration

The range of support days varies typically, from 3 days per month to full time 20 days per month.

Funding  

The organisation may be eligible for IDA or Enterprise Ireland lean funding, under the Lean Business Offer suite of programmes. Talk to us about it today.

 

 

 


Attracting (and keeping) the right customer – The software industry in Ireland

The major difference between a person with a lean mindset and one who has not, is that the lean head is always asking ‘Who is my customer?’, ‘What does my customer want?’ and ‘Do I know how well I am satisfying my customer?’ If we regard Ireland Inc. as a supplier of resources to potential overseas customers (i.e. the multinationals), there are many bodies corporate who ask those questions on our behalf, in order to attract and retain the right customer. The National Competitiveness Council, the IDA and our educational institutions, are just a few of the agencies who are active in ensuring that Ireland Inc. has the right mix of resources to attract the right customers.

These resources, or wealth enablers, come in a variety of forms and include political systems, tax incentives, regulatory and legal systems, availability of talent and geographic and climatic factors, to name the some of the most influential. They are not wealth generating in themselves, however they create the right environment to attract the right customer, and associated wealth, into the country.

If we take a look at the software sector as an example of ‘the right customer’, many companies have been attracted to set up in Ireland. As of 2018, Amazon, Cisco, EA Games, eBay, Facebook, Google, Groupon, Mastercard, Microsoft, SAP, SmartBox, TripAdvisor, and Yahoo have all established centres here. Outside of the United States, IBM Ireland’s Software Lab is one of its largest research & development labs focusing on cloud, analytics, mobile, social, and security. Ericsson’s operation is Ireland’s largest agile enterprise software development site, creating their next generation Network Management Systems, whilst Intel’s Quark family of processors was developed in Ireland. Even Aon established their Global Innovation Centre in Ireland.

The fastest rise in recent years has been the implementation of cloud and digital services bringing a new wave of software development and analytics. Millions of euros and dollars have been invested and thousands of jobs have and still are being created. (Please don’t anyone mention the disaster that was Apple’s proposed data centre in Athenry, Co. Galway).

But why Ireland? What have been the specific resources we supply to attract such customers and their investment? Well quite simply, Ireland was ranked 1st in the world for attracting and retaining talent in the 2017 IMD World Competitiveness Yearbook. Of course, having the highest education participation rate in Europe and the youngest population also helps the country become the fastest-growing tech population in Europe.

We all know of Ireland’s corporate tax rate of 12.5%. What is less well known is that Ireland also has a 25% Research & Development Tax Credit and a 6.25% preferential tax rate on income arising from intellectual property. Not alone that but there are also foreign direct investment benefits for Multinationals when engaging with organisations like IDA Ireland.

Okay so we have the talent, an educated young workforce, attractive tax rates and incentives – but just as importantly is our ease of doing business. Last year (2017) Forbes ranked Ireland as the 4th best country in the world to do business. This is where good lean management and building a strong track record helps businesses excel in the global market. Even the Irish government are planning to increase the number of people working in tech to 3,000 per year through the Tech Life Initiative.

So, although Brexit is bringing a certain amount of uncertainty, it is still a time of positivity as a lot has been achieved since the arrival of IBM in 1956, and if we manage it properly we can expect a lot more growth and development over the coming years.

Not bad for a little country with such a short independent history. With every upside of course comes a downside. Our model is easily copied and competitiveness ebbs and flows. As long as the corporate bodies in whom we trust to manage our competitiveness keep asking ‘Who is my customer?’, ‘What does my customer want?’ and ‘Do I know how well I am satisfying my customer?’ we will continue to thrive.

 

See IDA infographic here


Supply Chain Risk Management – Fail to prepare, prepare to fail

At regular intervals, a local crisis occurs in some country around the world, and the ramifications on global trade are felt for months afterwards. We can all probably name political coups, ash clouds, earthquakes, and tsunamis that have had a devastating effect on many sectors for months after their occurrence. Here in Ireland the recent collapse of UK construction company, Carillion, has left subcontractors and regulatory bodies scrambling to recover the situation and keep the planned school building programme on track.

Benjamin Franklin famously said “Fail to prepare, prepare to fail”. This phrase couldn’t be more apt when it comes to dealing with anticipated and unanticipated risks in the supply chain. Supply chain risk can be defined as the probability of an event occurring that will influence (usually negatively) the ability of a business to serve its customers. Effective identification and management of risk will enable an organisation to guarantee continuous cash flow and profitability. In this blog I will concentrate on identifying and mitigating risk in the supply base.

There are all types of operational risks which need to be considered, ranging from suppliers who create goods and services used in a company’s own operations, to third party providers who distribute the company’s products or services to the customers. By using the following 5 techniques when planning and agreeing to third-party involvement in your business, you will reduce the risk of damaging situations and implement an effective risk management policy. The key factor is to do your research on the suppliers and carefully plan and prepare for all possible supply interruption situations.

 

  1. MAP THE HIGH-LEVEL SUPPLY STREAM

For each key product and service, identify and map nodes (the inventory holding points) and activities (the inventory movement between nodes). This visual map on paper is typically completed by the procurement/purchasing teams.

 

  1. PERFORM A HIGH-LEVEL RISK LISTING ON THE SUPPLY STREAM

Brainstorm along the stream, all the worst-case scenarios from global issues, plant shutdown, loss of goods, restricted transport links, strikes, to internal breaches. Typical high-level categories are

  • Quality risk (the primary concern of most organisations)
  • Political (including government stability, legal and regulatory requirements, tariffs etc.);
  • Socio-Economic (including religious observance, holiday periods, counterfeiting, bribery);
  • Supplier organisation stability (ownership, management ethos, financial standing, safety & quality record, insurance)
  • Geographic (including distance, transportation mode, number of ports of call, time)
  • Climatic (including heat, cold, climatic turbulence, earthquakes);
  • Monopoly/supplier dominance (single source supplier, unique technology, patent restrictions, supplier very large by comparison with organisation), and
  • Pricing and future currency fluctuation (commodity price increase/decrease).

This step is similar to the first step in a traditional failure modes and effects analysis (FMEA) exercise.

 

  1. CROSS REFERENCE THE SUPPLIERS TO THE RISK LISTING

Using your vendor database, identify all approved and non-approved suppliers. Create a matrix that identifies which risks apply to which suppliers. Prioritise the list in the areas of greatest risk.

The above sample table uses a scale of 1 to 3, where 3 is the highest-level risk. The results of this exercise, typically performed by the procurement/purchasing team, are used to devise a proposed risk mitigation strategy for each supplier. For each of the risks identified, the mitigation plan must include a cost of implementation and quantification of the reduction in the risk. Aim for a 50% reduction, or greater in the risk. The proposals are then presented to the management team for amendment and approval.

 

  1. IMPLEMENT THE MITIGATION PLAN

In order to flesh out the mitigation plans, owners need to be found who will be responsible for taking action. This typically involves several months’ worth of work that needs to be planned, resourced and tracked through to completion. Here is where most risk mitigation plans fall down. Often senior management is prepared to live with the risk (‘It won’t happen to us!’) than invest in a mitigation plan.

Some useful risk mitigation strategies include:

  1. Vendor-owned consignment hubs close to your organisation (infinitely preferable to organisation-owned safety stock)
  2. Safety stock
  3. Second and third sourced vendors
  4. Alternative transport (e.g. air freight vs. sea freight)
  5. Alternative routes
  6. Late delivery penalties
  7. Contract cancellation option
  8. Sue the supplier for breach of contract.

The above options range from the collaborative (most desirable) to the punitive (least desirable).

  1. STANDARDISE THE PROCUREMENT APPROACH

The process of sourcing new suppliers involves asking where in the world should your organisation purchase raw materials, components, services? Once the supplier is identified, due diligence on intellectual property, capability, quality, pricing, flexibility and confidentiality etc. are all part of a standard contract negotiation process. Your organisation now has a template and guidelines to incorporate risk analysis and fail safes into future procurement processes e.g.

  1. Pre-plan the supplier identification and negotiation process, using the risk analysis template developed in 2 and 3 above.
  2. Standardise and simplify the contract template.
  3. Address the limitation of liability, indemnification, and supplier insurance that covers the potential risks identified. Ensure your organisation is covered in the event of being sued by the supplier or any 3rd party in the event of failure to supply products or services. Incorporate the requirement to keep certificates of insurance up to date.
  4. Include opt-out terms in the event on non-fulfilment of terms.
  5. Use credit rating agencies to assess the financial stability of the company. Regarding an Irish business, you can obtain financial reports from www.solocheck.ie.

Points c and d above are a different way of looking at the traditional catch-all force majeure contract clause. It’s can be a fine line. You don’t want to be overly-restrictive in the procurement of third-parties which ultimately leads to reducing your options of encouraging new suppliers and innovators to step-forward or tender. There will always be risks, but it’s about a willingness to take intelligent risks in order to generate profits for the bottom line.

In summary every organisation should strive to establish a collaborative relationship that will benefit both your organisation and the supplier. There is no zero-sum game (I win, you lose) in successful supplier-customer relationships. That being said, disasters can and will happen, out of the blue. I hope the above 5 step approach will help you to prevent or avoid them, or at the very least to significantly reduce their effects on your ability to supply your customers.

So, as you ponder what intelligent steps you need to take to mitigate risk, remember one more quote from Mr. Franklin “Never leave that till tomorrow which you can do today.

Bernie Rushe is a former lecturer on the undergraduate and post graduate programmes in Supply Chain Management at the University of Limerick.