A major Kiwi agri-tech company is bucking the trend of outsourcing to China by keeping manufacturing at home and is keen to share its 'lean' philosophy with other local businesses.
Tru-Test, which makes electric fence systems, animal weighing and recording equipment and milk meters has taken a leading role in New Zealand by adopting lean manufacturing techniques.
While outsourcing production to countries like China or India might seem cheaper, in a "total cost plan" it can work out more expensive, said operations manager Jason Kiteley.
"People can certainly be dazzled by cheap prices but when you start taking into account lack of flexibility, freights costs, and quality issues from time to time, you can often find what might have looked like a good deal might not be at all."
At the core of Tru-test's lean philosophy is the idea of manufacturing as if customers were watching every step of the process and would not pay for anything they saw as inefficient or wasteful, Kiteley said.
"When we decided not to go down the China path we knew it meant competing on the international manufacturing stage.
"The only way to do this was with an absolute commitment to minimising waste, maximising efficiency and adopting new ideas."
Efficiency improvements have included reducing machine set-up times for electronics manufacture from 55 minutes to nine minutes, and for plastic molding from 45 minutes to two minutes.
"We have gone out and really set quite high goals that meant we had to rethink things," Kiteley said.
Achieving those goals meant pushing staff to upskill and contribute ideas to the efficiency process.
Tru-Test's entire manufacturing and stores staff recently achieved NZQA Level 2 certification for competitive manufacturing. Kiteley said the aim is for many of these employees to go on to Level 3, and then Diploma level.
Tru-Test has more than 300 staff at its plant in Mt Wellington, Auckland, including its research and development, and marketing teams.
Kiteley said the company's decision to manufacture in New Zealand reflected a number of competitive advantages locally.
It allowed for simpler distribution logistics given the company has multiple product lines which its exports to more than 80 destinations.
The group can now produce exact amounts of product required by the market at any time, cutting down instances of surplus of shortage.
Other benefits included better quality control and opportunities to use other Kiwi organisations for contract manufacturing.
Kiteley said although the change had been important financially, the biggest long-term benefit for Tru-Test was likely to be cultural.
"It's given our people immense personal growth, allowing them to define how they work and to challenge the status quo for constant improvement.
"The operators on the line are the subject matter experts - it's logical they should be at the heart of innovation.
"Historically, decisions about how systems would be designed and run had little input from those actually operating them day to day, which limited both the benefit of any improvements and the opportunity for further improvement."
Tru-Test had to pioneer 'lean' techniques in New Zealand, having to travel to the US and Canada to learn from organisations there.
It is now keen to share its experiences and has done so with around 20 Kiwi companies in the past year.
"We had to go offshore to discover those answers and we want to make that information more accessible to other companies here."
"There generally is a lot of interest out there - we're not having to educate other companies that going lean is the right things to do - but what we tend to find is a lot of them go 'Where the hell to we start and what does it look like?"
Industry collaboration is important to the company, Kiteley said.
"Even a large New Zealand company is small on an international level so without collaboration we're going to struggle."
Tru-Test is hosting a "Lean learning hub" at the end of June which a group of Kiwi companies, including Fletcher Building, will attend.
The hub is for companies interested in following Tru-Test's footsteps to hear about its journey, including the risks and benefits involved.
Phil Morton from industry training organisation Competenz said Tru-Test had set the bar for engaging and involving staff in constant improvement.
"We're introducing a number of companies to Tru-Test so they can see the level of performance they should be aspiring to," Morton said.
"Tru Test is world-class and has been very good at opening its doors to help others be likewise."By Ben Chapman-Smith Email Ben