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An Opinionated Perspective on Custom Manufacturing in America
By Greg Williams -
December - 2011
10 Ideas for Success in 2012
In 2012 some of the same challenges of the last few
years will remain, but there are many areas of improvement and new
opportunity for the New Year that we should all take advantage of. This
year’s last feature article offers 10 ideas to help you make the most of
your brand new year, decorated with an assortment of quotes from some famous
and not so famous people whom I have learned from. Hopefully they will help
these ideas to inspire your creative thinking.
1 – Knowing your numbers and use them wisely.
"Wealth depends chiefly on two words, industry and
frugality; that is, waste neither time nor money, but make the best use of
both." -- Benjamin Franklin
If there are still parts of your operational financials
that you are basing on guestimates or on dated information, now is the time
to change. In order to have the best opportunity for growth in 2012 you will
need to nail down any assumptions about operational and process specific
costs, profit sources and cycle times for turning over cash in your
business. Having real, process and product specific financial information to
work with will enable you to see opportunities for improvement and also to
take advantage of some “new economy” strategies that have been proven to
work. For example – if you haven’t heard the phrase “Operate for Cash Flow,
Quote for Profit”, then you might want to begin 2012 by learning new
strategies for growing profit by knowing and using your numbers.
2 – Managing workforce issues.
"Any supervisor worth his salt would rather deal
with people who attempt too much than with those who try too little." -- Lee
Iacocca
The issues that small manufacturers face in dealing
with today’s labor force are not only serious but they will likely outlast
the issues with the economy. The lack of young people interested in any type
of manufacturing job is due to the lack of our US educational systems
encouraging graduates to seek manufacturing as a career. There is also a
huge lack of “soft skills” among graduates of public and many higher
educational institutions. And there is the issue of so many skilled
individuals leaving the industry for retirement or greener pastures.
Virtually all workable solutions to labor issues for
2012 will be internal. Apprentice programs, self improvement programs and
loyalty programs are great options for companies that can support such
practices but what about the very small shops? The answer there lies in
improving and managing your processes in a way that reduces the skill
requirements for as many jobs as possible and then rewarding a few highly
skilled workers on a scale that keeps them with your company. If you have
less than 20 employees and most of those positions would take more than a
week to recruit and re-train a replacement worker, you have urgent changes
to make in 2012.
3 – Taking advantage of the buyer’s market in
technology and equipment.
"An architect's most useful tools are an eraser at
the drafting board, and a wrecking bar at the site.” - Frank Lloyd Wright
The primary benefit of computer based technology is in
running repeatable, profitable processes that let you do the work right the
first time. All types of technology that can help your business be more
profitable are available at prices that are the lowest they have been in 10
years, but that is a temporary opportunity. While the newest, latest,
greatest machine or software application may still seem pricey, there are
still bargains everywhere if you look for them.
Many technology companies who sell to the wood products
industry have introduced new entry level products that offer substantial
value and performance for less than half of what their flagship products
cost, enabling companies who have not yet embraced technology to do so.
Technology training and integration services have seen major price
reductions and good used technology is still abundant, helping companies who
need to upgrade to do so at reduced costs. Why is this critically important?
See item 2 above for one good reason of many.
4 – Finding profit from your suppliers.
"Imagination is everything. It is the preview of
life's coming attractions" - Albert Einstein
Just because your company is small, don’t assume that
there aren’t dollars waiting to be harvested through better arrangements
with suppliers.
I recently worked with a client who was able to reduce
laminate pricing by almost 20% by using a very simple strategy. He told all
of the reps from his major suppliers to take a good look around his
operation and help him find ways to reduce costs before he was forced to
expand his vendor base and bring in cheaper parts and materials. After
seeing his shop’s panel laminating equipment, the vendor was able to
reclassify his business as a panel processor and offer the reduced rates.
Another client using a similar strategy discovered that his hardware vendor
had a less expensive line of drawer guides available that met all of his
specs. He saved almost 40% by making the change.
Don’t assume. Take the direct approach and be
persistent.
5 - A new perspective on outsourcing.
“There are only as many days in the year as you make
use of. One man gets only a week's value out of a year while another man
gets a full year's value out of a week.” - Charles Richards
Outsourcing has always been an option for eliminating
cost heavy processes if there is a vendor that is a good fit for your
operation. You should re-evaluate processes and available vendors for
outsourcing components every year.
But you should also realize that outsourcing is now a
two-way street in terms of helping build your bottom line. If you have a CNC
machine or another work cell that is not at capacity, remember that shops
who used to be your competition before the recession may now be potential
customers. There are also builders and other businesses that use wood
products that are looking for competitive local sources to fill the emerging
need for quality and variety in their businesses. Make outsourcing work both
ways for your business in 2012.
6 - Improving quality.
"The value decade is upon us. If you can't sell a
top-quality product at the world's lowest price, you're going to be out of
the game." -- Jack Welch
Regardless of what type of product you manufacture, the
number one aspect of your business that will insure your success in the new
economy is quality. Total quality in terms of company image, products and
services is critical. The consumers (both business and retail) who are
spending and driving all business growth today are demanding quality. This
should be a major priority for every business that plans on increased
profits and growth in 2012.
The key to quality is knowledge. Make sure that you are
taking advantage of every opportunity available to improve processes as well
as image, products and service. In working as a consultant in this industry
I have always been amazed at the quality improvements that have been
discovered, often at little or no cost, just by evaluating all aspects of a
business from this perspective. Quality will be more important in 2012 than
any time in the last 50 years.
7 - Growing your customer base.
"The majority of men meet with failure because they
don't create new plans to take the place of those that fail." -- Napoleon
Hill
Since 2007, over 30% of small manufacturing companies
in the U.S. have simply ceased to exist. Wood products were one of the
industry segments that were hard hit in those numbers. One of the most
common reasons for failure was that many of those businesses relied on a
single customer or very few customers for the majority of their revenue.
In preparation for 2012, every small business should
ask this question: If my biggest customer went out of business, how would my
business survive? You can’t leave this to chance. If at all possible,
aggressively go after more customers in 2012. You may need to spread out
into a larger market area. In some cases you must look at new types of
products for different types of customers. Who is making speaker boxes for
the regional chain of car audio stores in your area? Who supplies your
builders with custom closet and storage systems?
Re-evaluate the challenges involved in expanding your
markets. Network with local and regional businesses and find all
opportunities outside your markets. But in any case, if your answer to the
question was anything but certain, make this idea a priority for 2012.
8 – Don’t ignore your business on the Internet
"Unless you try to do something beyond what you have
already mastered, you will never grow." - Ronald E. Osborn
One of the most neglected opportunities I consistently
see in our industry is the Internet. Either the website or other web
presence is poorly designed, missing critical information or totally
non-existent. With a huge percentage of all retail, commercial and
industrial sales being either initiated or validated on the web today, every
company needs a quality web presence out there.
The most important thing to understand about being on
the web is the fact that you are already competing there, whether you
realize it or not. Every customer and potential customer can find something
on the Internet to compare your business and your products to. What
statement does it make if they can’t find you there? This is an easy way to
improve your business in 2012.
9 – Don’t wait for “things” to change.
"Every successful man I have heard of has done the
best he could with conditions as he found them, and not waited until the
next year for better." - Edgar Howe
If there is one thing that should be obvious to small
business owners by now it is this: There is no bail-out coming for us. It’s
time to settle in for the long haul back to the sort of national prosperity
that we used to know, and it’s up to us to get there on our own. But that
doesn’t mean we can’t be prosperous.
Many people feel like the recession of 2008 has changed
the game and the scoreboard has been reset. It’s true that the boom days are
gone and new strategies for business growth are required, but the basics
still apply for 2012. The principles and practices of business success
haven’t changed drastically, but the application of those fundamentals will
require greater agility. In 2012, new opportunities may be missed without
the ability to make the right decisions quickly and act on them immediately.
Be ready.
10 – Plan your new year now and work the plan all
year.
"In the absence of clearly-defined goals, we become
strangely loyal to performing daily trivia until ultimately we become
enslaved by it." -- Robert Heinlein
If this top-ten list has been of interest to you, print
it out and start your written plans there. Write in the margins and on the
back as you think through your plans and then organize and transfer all of
that potential action to a new list. Identify what you need to learn and
then organize those actions into a supporting set of sub-items within a
clearly defined list of goals with a workable timeline. Then take massive
action. You can work hard, do research and make changes as time permits but
still wind up with little progress at year’s end. 2012 will be gone before
you know it. When you are operating from a written list of goals that
include support actions and timelines your chances of success increase
exponentially.
In summary - one final quote, from one of the most
unique people I have read in my efforts to learn about success in business:
“If you do not change direction, you may end up
where you are heading.”- Lao Tzu
Thank you for visiting my website. I wish the very best
for you and your business in 2012. As always, please call or email with any
comments, questions or if I may be of help in reaching your business goals.
Comments or feedback?
Click
here to email 1Goal.net.
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