Scaling sustainably: Strategies to drive growth in manufacturing

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Australia’s manufacturing landscape has vast acknowledged potential. Unlocking it requires more companies making the jump from small-sized enterprise to medium (or beyond.)

An issue identified in Industry Innovation and Science Australia’s Barriers to Commercialisation report was an industrial structure “heavily skewed towards micro businesses” (one to four people) and a “missing middle”, limiting an overall ability to “invest in adopting and scaling innovation”.

Midsized companies have an arguably important position in an economy: resourced enough to invest in meaningful, industry-changing innovations, but not so large that they’ve become overly bureaucratic or lost their closeness to their customers. 

They sometimes get lumped in with smaller businesses under the SME catchall or eclipsed by large corporates, but they have a “really special role… very much one of a connector,” believes Bruce Minty, Senior Product Marketing Manager at MYOB.

“The way to think about it is that midsized businesses are the influencers of our economy, as it were, because of their role as a connector within many supply chains. 

“They’re linking businesses to businesses across their industry networks. And because they push smaller businesses and larger enterprises to adopt new technologies as well. So to that end they’re critical in diffusing new technology right across the economy.”

A thriving midmarket lifts the entire manufacturing ecosystem’s resilience, agility and competitiveness, he adds.

Recent research published in MYOB’s The Bigger Picture Report highlights midsized companies’ importance. They beat small and larger businesses in productivity growth. Driving this was an investment in R&D that grew “around 200 [per cent] over the past 15 years” to represent 30 per cent of total private-sector R&D spend.

Within the manufacturing industry, the large number of small companies (about 90 per cent of Australian manufacturers employ under 20 people) limits things like productivity, innovation and export readiness, adds Minty.

Those wanting to do the important work of scaling up need to get a few things in order before trying.

“You need to assess whether or not your business is ready to scale. And you can start with a simple self-check to understand readiness,” says Minty.

He nominates a few questions, including access to real-time visibility for managers, missed deadlines, manual workarounds, and reliable data.  

“Manual processes and those rigid platforms from legacy systems often fail to keep pace with rising demand,” says Minty. 

“And with that comes operational complexity and evolved compliance requirements. Common red flags that we see include data errors, we have customers missing deadlines in deliveries, we’ve got a heavy reliance on spreadsheets and limited visibility of any key metric for that matter for decision-makers in businesses.”

Solutions like MYOB Acumatica are purpose-built to replace disconnected systems, streamline processes, and provide real-time visibility, helping businesses scale with confidence.

In this episode of @AuManufacturing Conversations, published in partnership with MYOB, Minty shares some reasons why midsized manufacturers matter, and how ambitious companies can navigate hurdles as they grow into the category.

Episode guide

0:44 – Minty’s background.

1:53 – How shifts in the industry impacted Minty’s family, which counted the last three car makers as its biggest customers.

2:48 – A shift from mass production to high-tech and customisation.

3:41 – Strengths and opportunities for Australian makers.

5:16 – Challenges to do with fragmentation and a lack of scale.

6:48 – What can improve productivity within manufacturing

7:31 – The benefits of modern ERP systems and their features. 

8:31 – How small improvements add up.

9:20 – The important role of midsized businesses in Australia (and why we need more of them.)

10:28 – Midsized businesses are only 3 per cent of companies, but deliver a vastly outsized performance in private sector GVA and employment.

11:28 – Why a thriving midmarket can enhance all of manufacturing.

12:30 – Why success begins at home for exporters.

14:20 – Growing pains and how to avoid them at scaleups.

15:18 – It’s essential to regularly review if systems and processes are fit-for-purpose.

16:10 – What getting it wrong while growing can look like. Plus a counter-example. 

18:38 – Some scaling sustainably self-assessment steps.

19:50 – Leadership should regularly pause and review if goals, people, processes and technology are aligned.

20:16 – A simple question that can uncover risks, plus how you can start small to prepare for growth.