What's Happening?
Argon & Co, a global management consultancy firm, has introduced a new work system called 'MODE' aimed at enhancing productivity in Australia's manufacturing sector. The initiative is expected to generate approximately $3 billion in productivity gains for the industry, which is currently valued at $47 billion. 'MODE' stands for 'Manufacturing Optimisation' and 'Daily Execution' and combines a structured performance roadmap with coaching and digital tools to improve manufacturing line execution. A pilot program demonstrated a 100% increase in line productivity, with expectations of achieving 2-5% EBIT improvements within two years. The launch of 'MODE' comes in response to challenges such as global supply chain uncertainties, rising labor costs, and weak capital investment affecting Australian manufacturing.
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Why It's Important?
The introduction of 'MODE' is significant as it addresses critical issues facing Australia's manufacturing industry, which has seen a decline in its GDP share from 8.9% two decades ago to 5.1% in Q1 2025. By potentially increasing productivity and reducing costs, 'MODE' could enhance the competitiveness of the industry, contribute to GDP growth, and help control inflation. This initiative could also alleviate pressure on wages and prices, thereby improving living standards. The success of 'MODE' could serve as a model for other industries facing similar challenges, promoting sustainable productivity improvements and economic resilience.
What's Next?
Argon & Co plans to implement 'MODE' across Australia's manufacturing sector, aiming for a conservative 10% productivity uplift and a 2% improvement in cost levers. The firm intends to integrate AI into 'MODE' to provide insights and analytics for continuous improvement. The system's flexible framework is designed to be scalable across various sites and sectors, supporting government goals for national productivity and inflation control. As 'MODE' gains traction, it could set a new industry benchmark for performance and capability, influencing recruitment and operational strategies in the manufacturing sector.
