NZ Software Company Helps Manufacturers
MEDIA RELEASE FROM THE ESCALATOR SERVICE
11 December 2007
NZ Software Company Helps Manufacturers Boost Productivity
New Zealand software company esCollate is eyeing up international markets after successfully selling a novel manufacturing performance tool to Australian company, Metal Manufactures Ltd.
The company is seeking investors to help take the product to new markets and is using the Escalator Service to assist them with this search. Escalator is funded by New Zealand Trade and Enterprise (NZTE) and helps selected businesses access independent specialist advice to attempt to raise capital or complete a licensing, strategic partnership or joint venture.
The esCollate software was first developed 17 years ago and has been revamped this year to take advantage of new technologies and lean manufacturing techniques. The esCollate 2007 version provides operators with instant information about the direct impact of their work on productivity.
Sean Thomas of esCollate says this helps employees see that they are making a meaningful difference to the business.
“One of the key challenges in manufacturing is that few people on the floor have job satisfaction because they don’t see the connection between their hard work and actual results. As a result, employees tend to do just enough to meet the targets they have been set” he says.
“A business can be revolutionised if the employees become intrinsically motivated and feel positive about their work. Companies which have used esCollate commonly show a 30% increase in production - often much, much more. Morale on the floor is improved, management is able to make better decisions and the principles of lean manufacturing can be more easily implemented,” he says.
Escalator General Manager Mark Robotham says esCollate is one of 65 selected firms the service has taken through the full deal broking component of the programme in the last year. Since July 2007, 256 people have also attended workshops to gain an understanding on what is required to get firms investment ready for an early stage capital raising.
“Many will not have done this before, so there is a lot of coaching involved to shape an entrepreneur’s thinking around what to say and pitch so they can attract smart money from investors who have networks locally and offshore,” Mr Robotham says.
Escalator uses a consortium of leading private sector advisors to prepare companies for potential deals. Escalator broker Mark Edwards from I Grow New Zealand Ltd is providing advice on capital raising and licensing agreements for esCollate.
“There is strong international demand for products such as esCollate which will allow manufacturers to operate more efficiently to stay competitive with cheaper labour markets. The product is set up to be adaptable and easier to customise for each site. A key advantage of the new product is that has been developed to be distributed and supported through channels,” Mr Edwards says.
Mr Thomas adds that esCollate works because it connects technology with the human element of manufacturing.
“The real strength of esCollate is demonstrated by the loyalty people develop towards the system once it is in place. They love it,” Mr Thomas says.
Sean Thomas, esCollate, 021 543 130
Mark Robotham, General Manager of Escalator, 021 61 8850
Mark Edwards, I Grow NZ Ltd, 0274 833275
Making a difference in manufacturing - the esCollate story
Many modern manufacturing plants provide their operators with screens of numerical data about how an individual piece of equipment is working. The fundamental problem is that this data is often of little value to the operator and instead of inspiring and motivating employees, makes them feel measured and controlled. The esCollate software provides feedback that enhances employees’ sense of control and responsibility.
The esCollate system is different because it approaches age-old productivity problems from a completely new angle. Utilizing a mix of manufacturing experience and knowledge of human-social factors, esCollate Ltd have developed a software system which produces spectacular results. Production in facilities which have adopted esCollate commonly show at least a 30% increase and often much, much more.
“The problem with most manufacturing systems,” says Sean “is that it is hard to see if the production line is working properly. While operators are presented with plenty of information, it tends to be of little value and distracting. Worse, the operators can not see how their actions make a difference to the process as a whole. As a result, people understandably disengage because their performance does not seem to matter. Each day they come in and do the same things and, of course, get the same results. Many systems tend to create and lock in this behavior.”
“Although it is a software tool, esCollate is actually designed to focus on the social needs of the people working in manufacturing. Our system focuses on satisfying human-social needs – everyone’s desire for meaningful goals at a personal and team level and direct feedback on performance. The purpose is to let employees instantly see the contribution they are making and let their personal pride and natural competitive attitude lead to improvements,” says Sean.
“The key is information. People will only change their behavior when they receive new information. In a tailored, graphical format, esCollate 2007 presents operators only with the information which will influence how they feel or what they do. It lets them see the direct impact of their work down the line. They feel connected with the rest of the team. The purpose of the system is to help people become intrinsically motivated in their work. This means they are setting their own goals and making their own decisions. Otherwise, people naturally work just hard enough to meet externally set goals,” Sean says.
“As an example, esCollate worked with a factory where the theoretical maximum production rate was 9,000 units every 30 minutes. However, despite an improvement effort spanning many years average performance had settled at around 2,300 units per 30 minutes. Many good reasons were given by employees on the line as to why performance could not be improved; they had learned to accept that level of performance. We were contracted to put esCollate in place and had a performance target of 2,700 jars every 30 minutes. The employees on the line were horrified at this because it was thought to be an impossible target and would put them under undue pressure. We installed the software and left them to play with.” Sean says.
“A fortnight later, I came back to the line and headed over to talk to one of the employees. When I tried to talk to him, he told me – not in such polite terms – to get lost! Eventually, he waved at me to come over and asked if I had heard the news. The news was that the night shift did 8,970 units in 30 minutes the previous night and he is worried that if they are first to 9,000 they will be completely unbearable,” laughs Sean.
“In two weeks they had completely forgotten that they couldn’t possibly do 2,700 units. They were now competing to reach 9,000. The final result was an average improvement of 70% in production and morale was through the roof. I could sense it as soon I stepped through the door. Employees were interested and engaged in their work, could see their results and were proud of the difference they could make. Working without seeing your impact you have is like playing golf without keeping score – it’s boring and pointless! esCollate lets people see they have a meaningful role and let’s them play the game,” he says.
“A business can be revolutionised if the employees there feel positive about their work. One of the key challenges in manufacturing is that few employees on the floor have job satisfaction because they don’t see the connection between their hard work and results. esCollate helps employees make that connection and supports managers to make sound decisions. It is also compatible with the popular Lean Manufacturing process. The real strength of esCollate is demonstrated by the loyalty people develop towards the system once it is in place. They love it,” Sean says.
Sean developed the first esCollate style product over 17 years ago and it had major success with a number of Australian companies. Over the last 12 months esCollate has been completely redeveloped to take advantage of newer technologies and to tightly integrate with lean manufacturing.
The first release of the product has been built and is already being used by a major Australian company. The next step is to raise investment money to take the product to market internationally. esCollate Ltd is a new company that will be headed by an international continuous improvement specialist.
The drive for investment is being facilitated through the NZ Trade & Enterprise Escalator Service which helps businesses raise capital or complete licensing, strategic partnerships and joint ventures. Via Escalator, Sean Thomas is working with investment broker Mark Edwards of I Grow New Zealand Ltd to become investment ready and seek the capital required for growth.
“In order for a company to be investment ready the broker’s role,” Mark explains “is to asses a company’s proposal through a robust needs assessment and advisory process and then find deals through investor networks. Work covers such items as market, management , technical (including IP), financial and competitive assessments, that then lead into advising on valuation, deal structuring, offer document preparation to then identifying and pitch to potential investors and strategic partners. The ultimate goal it to secure a deal that will assist firm growth.
“Above all though, the process is about people. We help business people understand what they need to do to connect with investors. Many will not have done this before, so there is a lot of coaching involved to shape an entrepreneurs thinking around what to say, pitch and what do they bring and what the gaps that are required to be filled by an investor, as it is not about dumb money, entrepreneurs whether they accept it or not they need smart money, some one who has networks locally but more importantly offshore networks to grow the business beyond the current stage. We also endeavour to manage expectations, as an investor’s timetable is usually time poor, so to raise the chance of an investment success is to present an easily understood but compelling proposition,” Mark says.
Many firms cannot afford the fees required to go through this process on a private basis which would normally include a retainer and a success fee. Escalator covers an initial budget; and the client pays the broker a success fee on completion of a successful transaction. Sean says he is “very happy with my broker. He understands the process, he knows the people. It has been a very organised and cost effective process. It was a real head start.”
When asked about why investors should be interest in esCollate, Mark quickly provides a compelling list of reasons. “Sean is experienced, battle hardened and coachable. The company has a vision and a burning desire to succeed. The product is set up to be adaptable and easier to customize for each site. A key advantage of the new product is that has been developed to be distributed and supported through channels. esCollate has built up a good team which understands the human and technology elements of manufacturing.”
“Above all, I’m confident there is demand for a product like esCollate. Manufacturing companies around the world are looking to improve efficiency on-shore as production from cheap labor countries bite into margins. This product will help them work better reducing down time reduce wastage and positively engage with there employees but above all save money. It is a perfect fit with the lean manufacturing process which is growing global demand. esCollate is poised to launch. It is just a question of who wants to be on board,” says Mark.