A new model for manufacturing

The key to New Zealand’s future wealth and economic well being is for businesses to learn how to create greater value, according to Dr Mike Pratt, Professor of Leadership and Sustainability at the University of Waikato.

Pratt is the editor of a new book that aims to help New Zealand manufacturers create greater value in their business, increase their profits and develop their export potential.

Creating Value in Your Business is based on research completed in 2006 for New Zealand Trade and Enterprise’s Manufacturing+ project.

The book pulls together the knowledge and experiences from the 50 companies and 500 people that took part in the original research project.

Additionally, Pratt’s book includes the 80 companies which have participated in the Manufacturing+ implementation workshops over the last three years.

Manufacturing in New Zealand is showing signs of breaking out of its recent doldrums - but is not yet out of the woods.

While total manufacturing activity fell 1.4 percent in the September 2009 quarter, Statistics New Zealand says when meat and dairy product manufacturing is excluded, volumes rose 1 percent - the first rise in seven quarters.

“The potential for New Zealand businesses is enormous”, Pratt says.

 “We have some truly world-leading companies doing brilliantly in their global niche. But even our best companies are achieving less than their full potential. If we could boost value creation, then we could increase overall economic performance dramatically.”

That’s what Pratt’s book aims to do, by conveying principles, concepts and stories that can benefit all businesses.

“It’s about how organisations can design their business to create the best possible perception of value in the mind of the customer and consumer.”

According to Pratt, value creation is about how to deliver profit and productivity.

“If a company doesn’t create value, no-one is going to pay for it.”

Creating Value in Your Business came up with four fundamental principles, which all businesses need to address to be successful:

• Be clear about your business purpose, and share that with customers and consumers
• Work closely with customers to really understand their needs and how to create value
• Be very clear about your channel to market, and the best way to reach your customers
• Develop lean thinking, and eliminate everything that does not create value for your customer from your processes, so you minimise costs and maximise your margins.