Nick Shields: Business model approach can make excellence a Scottish characteristic

Driving organisational capability through improved management practice, staff engagement and continuous improvement was highlighted as key in the recent Mayfield report on increasing UK productivity.

Nick Shields, Director at Scottish Manufacturing Advisory Service and Board member of Quality Scotland.

In Scotland, we have been on the front foot of this agenda with our Inclusive Growth strategy and a commitment to fair working practices.

Once seen as a mechanism for delivering the same with less, productivity is now viewed as a key driver of stronger public services and improved opportunities for all. The Productivity Leadership Group of businesses and trade associations is headed by Sir Charles Mayfield, chairman of the John Lewis Partnership. Last year’s report, How Good is your Business Really? highlighted the contribution that productivity makes to economic growth. The key areas were Ambition, Measurement, Organisational Capability, Innovation, Digitisation and Governance and Finance.

The report stated that three-quarters of the gap between UK and US productivity could be explained by weaker management practices in British businesses. One of the best ways to address this is to adopt a structured approach to improving a business.

Scottish Enterprise’s Scottish Manufacturing Advisory Service (SMAS) has been delivering the Supply Chain 21 (SC21) model to firms in the aerospace, defence and marine (ADM) sector for the last 10 years. The approach is to understand and score businesses across critical areas such as adding value for customers, creating a sustainable future, developing organisational capability and harnessing creativity and innovation.

The model also focuses on staff engagement, viewed as a key for productivity. Businesses in the top quartile for staff engagement have 18 per cent higher productivity than those in the bottom quartile.

Manufacturing has long been used to measuring business processes such as production figures, quality, delivery and yield. Extending this to measuring organisational performance in an objective way is a natural extension of normal business activity. The model allows businesses to objectively measure performance against similar businesses in the ADM sector. The challenges in this sector are significant; it is globally competitive, quality and product performance are an absolute given, and the market grows at around 3 per cent per annum, attracting new participants and increased competition.

Using the SC21 model, the business is measured across key areas, which can then be benchmarked against the best. Based on the diagnostics, an improvement plan is agreed that moves the business forward.

There is also a structured award process that rates businesses as gold, silver and bronze depending on consistent performance in quality and delivery and scoring in the diagnostics. The National Plan for this approach is published and publicly available on the SC21 website and this open and transparent approach provides a great opportunity for businesses to showcase their capability and increase market visibility.

There are currently around 780 companies signed up to the programme. Of these, 130 have received awards – two gold, 45 silver and 83 bronze. Scotland has 52 participants, with two at silver and six at bronze levels.

SC21 is underpinned by the European Foundation for Quality Management model which is delivered here by Quality Scotland. Organisations can extend this process to gain full recognition with relative ease. Quality Scotland’s mission is “to make excellence a national characteristic of Scotland”. A prime example of EFQM in action was demonstrated to Quality Scotland at the Bosch facility in Bavaria.

The business unit designs and manufactures engine management control systems for the Tesla car in this factory and is their showcase facility for Industrie 4.0 (the next industrial revolution that harnesses the internet and digital technology) and EFQM. It demonstrated that a commitment to excellence and innovation can deliver world-class products and a workforce aligned to the vision of the business.

The experience of using the SC21 and EFQM models has helped businesses excel and demonstrates to customers how seriously they take this challenge. Closing the productivity gap through a structured and formal management approach will help to increase competitiveness and drive economic growth and wealth creation for the Scottish economy.

Nick Shields, director at Scottish Manufacturing Advisory Service and board member of Quality Scotland.