"The knowledge-based economy has impacted on PDL in a big way," says Steve Scott, manufacturing executive for the Christchurch-based electrical accessories manufacturer. "One area is development of new technology products, such as e.Boss, a smart building system and motor speed drive controls." PDL also benefits in other ways, says Scott, such as through international web-based equipment servicing for some products.
PDL owns the Mastertrade wholesaler and distributor chain with offices in New Zealand, Australia and Germany and has manufacturing offices in Christchurch and in Asia. It has employed new personnel, particularly in IT, and reorganised the IT environment under much stronger management. PDL is also continuing to research and develop e-commerce initiatives, mainly in the Mastertrade businesses.
"We are looking at what strategies to employ, what services to offer and how much information is to be supplied, says Scott. "We will then look at people to run the system, and this will require some higher-level skills than we currently have available. There are some instances where computers are replacing traditional methods, but that generally affects supervisor levels on up. Programs at lower levels are generally written in such a way that they only require pressing one or two buttons. On the supervisor level up, however, requirements are rising. A computer integrated manufacturing system requires a reasonable knowledge of computers. It is an issue. We need to do things a lot smarter to keep our edge."
PDL has had a large-scale restructuring programme in progress for 14 months. The company is moving from informal systems, where policies, processes and procedures were not in place. It is implementing an MRP2 system, which involves education and training, getting policies into place, and having a holistic, integrated system from senior executives to delivery people. There is less than a year to go in the process, which will be followed by ongoing education and continual improvement.
Benefits from reorganisation already include improved customer service and a reduction of inventory. Since the start, there has been an 18% to 20% improvement in customer service and a reduction of inventory of about 30%, the company says, which represents considerable savings. The company has a key performance indicator approach, and all indicators are trending toward the positive. Key performance indicator tracking is in itself computer-driven.
"We have had some difficulty in obtaining skills at a high level, especially at the senior executive level, and engineering is also requiring overseas imports," says Scott. "There are difficulties in employing people from overseas, particularly for urbanites, so that requires an extra factor in personnel selection. On the shop floor, there are issues of literacy, but it isn't so far a real problem at PDL." He says the MRP2 programme includes a large amount of training. "We also have a performance management review programme, which adds to training."
In high tech areas, such as e.Boss, there aren't a lot of other players, says Scott, so competition has not a been a real factor for PDL. There are other issues, however, such as sourcing of electronic components. Even though PDL is a reasonable sized local firm, it is small in terms of the global environment, so the large global firms tend to get preference. PDL is resolving this to some degree through e-business, using sites that cater to supplying smaller firms. Although there are risks in e-business, it is capable of providing significant advantages.
A much larger problem is in the economics of manufacturing here, says Scott. "With the current environment, as a manufacturing company on the global stage, we are considering where we should be making product." Raw material costs are soaring, he says, and the company is already moving commodity product manufacturing overseas. This has a variety of problems, including loss of local jobs. Specific local issues include the dissolution of the Employment Contracts Act, he says. "We have issues already with contracts. A lot of New Zealand manufacturers are considering an overseas move."
It is not all bad news, however. According to Scott, "the advantages of a knowledge-based economy are that it removes New Zealand isolation and opens all sorts of new markets. Issues of knowledge and communication are at everyone's fingertips, and electronic transfer and orders have huge advantages in creating efficiencies. To take advantage of this, all businesses need to get on board. There is some reluctance among smaller businesses, such as our small suppliers, but removing the paperwork and enabling electronic transfer have great advantages for all business."