Q&A: Ishan Galapathy of Capability Unlimited on supercharging productivity and profitability

Ishan Galapathy has spent over two decades in the Manufacturing Excellence space, with 15 years working with multinational companies such as Kellogg’s and Campbell Arnotts. Now an Operational Excellence expert, speaker, and author, he helps businesses in the manufacturing and distributing industry to propel their businesses forward.

In this interview, we talked to Ishan about the state of manufacturing in Australia, his take on the connectivity and automation ‘hype’, his latest book, and how supply chain leaders can begin supercharging productivity, performance, and profitability.

In case you missed it: Ishan also shares how organisations can be a successful leader in the future of supply chain

SCC: Firstly, can you describe the current state of the Australian manufacturing sector?

Ishan: I keep saying that it’s a tale of two halves or it’s like a coin with the two sides. On one aspect that we see a lot of growth signs —there’s a recent publication, the PMI, which is the Performance of Manufacturing Index, that’s been measured and presented by the Australian Industry Group. One of their recent reports is that we’ve seen nine consecutive months of growth, where the sector is expanding. So that’s fabulous, right? And also, we know that the Australian Government has been putting a spotlight on manufacturing for the last so many years. We’ve tried to resuscitate this sector which seemed to have bottomed out at just only 5.6% of GDP at the moment —it used to be in the 30% in the 1960s. So it looks like there are signs of the sector expanding.

While that’s the good side, if you look at the flip side, the Australian Supply Chain Institute (ASCI) [in] their latest report, the State of Supply Chain report in 2020 (conducted by University of Technology Sydney), they state that the overall maturity of supply chains have gone backwards between 2018 and 2019. And this is the latest information we have. The next one is being done right now, so we’ll have another data point later this year, which would be interesting to see how that goes. But the overall maturity has gone backwards by six percentage points from 52 to 46, despite automation and technology being off the scale.

We have this situation where a lot of the government productivity strategies are focused towards driving automation and technology solutions. But what I’m finding, which is evident from the ASCI report as well, is that not all businesses are ready to leverage from technological interventions. They’re missing the basics and the fundamental ingredients that need to run a good supply chain business. Growth is good but we cannot grow the way we have grown in the last five years —it’s not a recipe that is working.

SCC: There are many stories of businesses in the manufacturing and supply chain sectors where they implement state-of-the-art tech into their operations, and experience this step as being such a game-changer for them. So you can see why other businesses would believe that this would also be the solution for them. But as you highlighted, this isn’t the whole picture.

Ishan: It’s not surprising that supply chain leaders are frustrated because there’s a lot of “hype” around technology and automation. I mean, after all, we are in this Industry 4.0 era, right? We are all making history together —you, me and your readers. It’s the fourth industrial revolution and the previous three started from the 1700s all the way through to the late 1980s. We’ve gone from leveraging different kinds of energy, from steam to electricity to robotics and computing, to being able to improve productivity and drive costs down.

So the 4th one, the hype is all around this connectivity and automation which is leveraged on the back of things like augmented reality, 3D printing and connectivity. We know that the availability of big data is growing. We know the power of computing is ever increasing, right? Anything that’s got an IP address can now connect from your home light bulb to a computer, and everything in between can be connected and controlled through this device in your hand.

Technology is required at a specific time but not necessarily as a piece-meal solution.

Every breakfast event you go to, there’s so much on technology, and business leaders feel that they need to do something to improve on the technological front. And I find that people implement technology as a solution, and then look for the problem that it has solved. And technology isn’t a solution looking for a problem.

The other thing is, people think this is the only way to reduce costs. It’s this point solution approach of “automate this, automate that” without thinking it through as an overall strategy. Technology is required at a specific time but not necessarily as a piece-meal solution.

SCC: What’s the biggest mistake that supply chains are currently making?

Ishan: One is that piece-meal approach. One of my clients…I was on the floor and the general manager would say “Hey Ishan, come with me and let me show you our greatest IoT project!” and they were showing me this case packer that they have. And yes it’s got a wonderful graphical interface, GUI screen. Yes, it’s able to deliver a lot of data from instantaneous productivity, instantaneous machine faults etc. It’s able to deliver all this. But the problem is that updating a machine is not an Industry 4.0 upgrade or an Industry 4.0 project or that doesn’t mean your business is now Industry 4.0 ready. I laugh, saying “Maybe we can call it an Industry 3.1 to make you feel good, Mr Manager.” (laughs)

People aren’t aware that being Industry 4.0 ready is not an out-of-the-box solution that you just buy and implement. So perhaps that’s one of the key issues and that’s further fueled by the fact that they hear so much around the technological hype which we spoke about.

The other mistake is thinking that technology is a silver bullet. They don’t realise that they’ve got so much underutilised capacity that they can unleash. But I see that problem-solving capability in businesses is so poor —the managing director is solving the problem of the middle managers, [while] the middle managers are solving the problems that the frontline teams should be solving. And team leaders are so busy running around because they don’t know how to leverage their teams.

The whole business is running in this third gear without [being] able to improve productivity and performance year-on-year, so no wonder that leaders feel frustrated and feel that the only way must be through the tech focus. However, they haven’t looked into improving the problem-solving capability or tried to find other ways to unlock hidden opportunities that could advance the business. If they can’t solve problems effectively today, what’s the point of adding highly advanced equipment and solutions where you have even more data and information? You’d feel like “I don’t know what to do with this!” Businesses are getting into that stage of [being] so data-rich but insight-poor.

SCC: As a first step, how can businesses begin this process of uncovering hidden cost reduction opportunities?

Ishan: In one of my last corporate roles working as a manufacturing manager, I used to spend a lot of time on the shop floor. I remember on one occasion where I was talking to an operator on a day we were running a product that required cheese to be sprinkled on the product. I remember talking to him — and we were just having a chat — and the operator pointed out how much cheese is actually sprinkled, and the excess that was being wasted. He was pointing out not only the problem but he was also able to provide a solution. He stated that if we could move the sprinkler 5 metres down the line, there’s this spot where we could actually recover some of that excess cheese.

So I went back into my office and then I quickly calculated the numbers. We had to buy a new cheese sprinkler because it was in a tighter spot and the old sprinkler wouldn’t fit but that required something like $20,000. And then I calculated the savings we would generate based on some conservative numbers and it was estimated around $200,000 to $250,00. It’s pecorino cheese, which is an expensive ingredient. That was a no-brainer project.

On another instance, an operator shared with me how to find $300,000 in savings without any capital expense at all. Just needed to change some of the machine and line settings and do some trials, and then we were able to achieve that. All of this was on a line that was running quite efficiently when I took over [it]. So even on a line that was running fairly efficiently, I was able to unearth a lot of these opportunities simply by talking to the employees and finding out what’s frustrating to them, but also understanding the opportunities that they see.

What are the special X-ray glasses that you provide to your employees so that they can continue to identify the real opportunities?

It’s a little bit like —do you remember the movie The Sixth Sense with Bruce Willis? In that movie, the little boy can see dead people, and Bruce Willis in his role as the doctor, couldn’t. But something happens in that movie towards the end where Bruce Willis also understands and sees through the same lens as the little boy. And all of a sudden, he’s able to now understand what’s going on. It’s a little bit like that, particularly with SME businesses — not so much the multinationals — where the business leaders are frustrated that they are the only ones who can see these hidden opportunities on how to cut costs. And they don’t know how to leverage the next layer and the layer after that, in terms of identifying opportunities.

The two examples provided, they’re not isolated incidents. There are these hidden golden opportunities in every business but you need a system to continually identify such opportunities. What are the special X-ray glasses that you provide to your employees so that they can continue to identify the real opportunities, not just the lame ones, such as the machine is outdated and needs replacing or that the coffee is bad in the canteen.

Big companies like 3M and Atlassian are famous for having their quarterly employee days to identify improvement opportunities. It’s their play day to “Well, just have a play, have a think about options and opportunities.” And they do that day every three months. These are the golden opportunities if you can systemise, not just to give people a free day but to identify good opportunities. You’ll be amazed how many ideas will be generated.

SCC: Talking about X-ray glasses, you recently launched your second book ADVANCE. Can you discuss how it will help business owners adapt to the changes we’ve recently seen in the supply chain sector? And more importantly, help them drive profitability in spite of the decrease in supply chain maturity in the country?

Ishan: Over my last 20 years of being in manufacturing, I’ve been fortunate and privileged to see some of the best of the best world-class manufacturing businesses. What I’ve seen is that they have systems, structures, processes that continually shift performance year-on-year, continually engage people year-on-year. But they have such complicated programs to run those world class systems; that’s their competitive edge.

I wanted to simplify everything that I’ve seen and learnt over the last two decades with regards to running world-class businesses. And in my new book ADVANCE, I’ve created a simplified framework with twelve essential elements that a mid-tier business, in particular, could implement and continue to improve performance year-on-year, like a world-class business. ADVANCE book is a step-by-step guide, without the jargon, and without complexity.