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Manufacturing

Innovate or perish – a lesson for Manufacturing

A productive manufacturing sector is a critical component of a thriving economy, but Australian manufacturing has declined approximately 20% since its 1960s peak. The industry’s viability, future success, and the millions of jobs it supports, now rely on national productivity and competitiveness.

At Fortitude, we work with businesses in every sector of the Australian Manufacturing industry, bringing our wealth of knowledge and extensive experience to help you achieve the profitability, security and lifestyle you seek.

Case study: Failure to innovate destroys businesses and industries

Background

A food manufacturing and marketing business was on the brink of collapse, threatening the livelihoods of those who depended on it.

One central manufacturing and marketing business held industry power, but it had become complacent and failed to invest in the future. Failing to find new and more efficient ways of conducting business, it was in serious decline as costs continued to climb beyond the point of sustainability. Survival required a change in approach!

The business cut costs significantly to rescue itself. Its strategy was to maximise its sale value and saleability with the smallest investment possible. Unfortunately, it used its industry power to cut costs, unilaterally lowering payments to suppliers.

Rather than meaningful reform, the business simply transferred costs to its suppliers, forcing them to innovate or exit the industry. However, we helped many suppliers invest heavily in innovation and establish an industry-leading best practice, therefore, the food manufacturing and marketing business’ strategy didn’t work.

When challenged, it cited the usual excuses of being involved in a commodity market and competing against low-cost labour countries, instead of undertaking the more important job of creating value and generating revenue. It placed itself and everyone dependent on it at risk, and inflicted undue pain – because innovation seemed just too difficult.

How we helped

A new manufacturing and marketing business that embraced innovation worked to secure the industry. Taking a different mindset, we looked for ideas the industry hadn’t implemented in existing industry research.

Next, we partnered with industry experts to make significant efficiency gains and improve end product value. We:

  • Eliminated a large part of the production process, reducing product damage, improving efficiencies and increasing end-customer value
  • Developed a new way to transport, dehydrate and dry the product, further reducing damage and boosting production and value
  • Transferred knowledge from other industries and adopted automation to improve processing efficiency and cost savings
  • Improved end-product quality to create differentiation and secure premium pricing
  • Educated the market on our product’s points of difference, driving increased sales.

Outcome

By adopting basic innovation management practices, we achieved sufficient cost savings and revenue growth to turn the industry’s fortunes around. We added significant value for everyone from growers to consumers, alleviating the pain of further forced exits.

Competition and customer expectations never cease to increase. No matter how successful your past endeavours or your domination of present markets, survival means innovation – no excuses or exceptions!

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