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Case Study 3

Staff & Leadership

A meeting between family friends led to an introduction to this small but well-established manufacturing business after they privately admitted to having some concerns about the growth and direction the company appeared to be going in. Although as management consultants we are industry agnostic, we’d built a trusted history of working with manufacturing businesses which made this a natural fit.

The company was in its first-generation of ownership and was run by two-family members, employing a modest and largely young but dedicated workforce. They had a good track-record for investing sensibly in new machinery, purchasing some outright and others on lease contracts; they occupied suitable leased premises in terms of size with appropriate administration and operational capacity and had for many years remained ‘busy’ without breaking any commercial growth records.  The company crafted bespoke joinery products and applied great care and precision on each commission. This blue riband approach epitomised their professionalism and standards which was the conduit for new commissions amongst their narrow but loyal customer base.

manufacturing business owners

Then they gradually began to notice problems with a reducing order book (which fell by almost half), taking lead times from twelve weeks to just over seven. A closer look at the enquiries which had been buoyant for years continued to shrink, and those customers who were still placing enquiries were now asking for discounts on premium products. Suddenly a nervous appreciation of the new situation they found themselves in grew, and we were brought in to assist them.

These were tough lessons to learn when you’re a business who has always delivered an exemplary product and been proud to be associated with this level of output. The ‘natural’ demand that’s kept you afloat for so long shrinks and these owners began to do what many SME’s choose to do…discount. The news of this was shared amongst the workforce, but rather than garner support as was intended, it only added to the general unease. Employees who gave no thoughts to finding employment elsewhere naturally felt customers no longer appreciated the quality of the company’s output. Everything that they’d all worked so hard to accomplish became surrounded by a tangible nervous tension.

The company then began courting large building contractors with the intention of securing more lucrative contracts to lessen the burden. Initially, this secured some early tendering opportunities and offered a ‘ray of hope’, as these potentially new and ‘exciting client businesses’ looked to increase their own profits at the risk of making our new client’s far worse. This decision taken by the management marked our formal arrival and led to private meetings with the board whilst also chairing meetings with the rest of the team to warn of the risks of working with such organisations.

These larger firms may have dangled some rather ‘eye-watering’ contracts, but the pitfalls (many of which hadn’t been considered) were numerous and have been referenced below:-

  • More cash would have been required to finance the purchase of additional stock
  • Creditors invoices for raw materials would have been due for payment long before payments were made by the debtor
  • These demanding clients would have moved attention away from where it was needed most, a deeper not broader client base.
  • Exterior fitouts were required at sites across the whole of the UK, something which would have challenged the small installation team, kept them away from home for longer periods increasing associated costs and decreased their own enjoyment of the role, thus stretching the client’s ability to resolve on-site ‘snagging’ issues
  • No existing, pre-approved third-party installer network was currently in place to extend the trust and confidence with the installation of these contracts
  • Delayed payments would have increased the risk and need for greater financial support, either forcing or compelling them to spend longer resolving ‘snags’
  • The demands for increased administrative governance and system commitments would have become significant hurdles at this time, and
  • A general reduction in the ability to continue servicing the historic customer base would have hastened the demise

To illustrate these concerns, we produced financial forecasts that highlighted the additional burden that the company could be exposed to if they pursued this change of direction. This led to the client taking the decision to withdraw their interest from in this niche sector and that effectively formed the start of this new discovery phase.

We agreed that whilst the overall financial position would need careful appreciation, it would be essential to understand the extent of the issues now being faced by their current and former customers.

Two things were particularly relevant here, the first was to convey how all companies are creatures of their environment and they are shaped by many factors. In much the same way flowing rivers shape the hills and mountains, companies are shaped by environmental, political and technological issues, to name a few. Such an appreciation highlights how formal research studies have a genuine part to play in business growth and stability. Secondly, it gave the company its first meaningful opportunity to ask relevant questions of its customer base so that they can see there is a genuine desire to help and adapt their offer to integrate new solutions. Business conducted in this way, creates a combined approach to overcoming barriers and provides a seed for a longer and more integrated solution.

Cabinetmaker

The survey was compiled using our professional research software to critique our existing suspicions and hypotheses and integrate this learning into a new strategic plan. The questions asked for information on different aspects of the customer’s business needs and in turn their relationship with their own customers (if relevant). Using the software’s attributes and those of the researcher we were able to cross-tabulate multiple elements and build greater insight before sharing the findings.

We identified valuable customer segments and the need for improved levels of communication that were vital for a client’s success; we evaluated the skills across the general workforce and in particular the management skills of the ownership and its senior members on the shopfloor; we critiqued the company’s presence in the marketplace and assessed the gaps that remained; we completed a review of the main processes to assess where time might be unnecessarily taken, reviewed it’s supply-chain and looked at the lead-time and realistic waiting time during a period where price had become a key driver for many.

Throughout this process, our aim was the same as any other situation, to be able to share our knowledge and empower the board and the leadership team. Our work resulted in our evaluations being accepted and this gave the company the confidence to take meaningful decisions based on a clear set of outcomes against predetermined KPI’s. An agreement was reached with the management team, that they would meet weekly whilst we agreed to initially chair the meetings to discuss the position vs target KPI’s.   

Whilst we are not able to share specifics due to the nature and privacy of the work involved, we can provide you with a summary of the areas of our involvement in this example.

The following list highlights some of the changes that were introduced:-

  • Process mapping for gap analysis
  • Extended appreciation of the interconnectivity of the supplier/client relationship
  • Systematic approach to challenge existing attitudes and reposition beliefs
  • Widespread improvements for the attraction, support and retention of staff
  • Recruitment of specialist personnel in new customer facing roles
  • An appreciation of the quality and efficacy of the existing workforce
  • Improvements in the professional skills of the SLT
  • Increases in accountability
  • Identification and adoption of new operational systems, including estimating
  • New methods for data acquisition and segmentation
  • Identification of appropriate markets, resources and financial targets
  • New policies adopted for Privacy and Data Security
  • Improvements to the reporting cycle and the integration of relevant KPI’s
  • Review of markets, customer groups and medium-term opportunities
  • New company and vehicle branding
  • New website and communications plan

Whilst the changes act as the catalyst for increased levels of invigoration and optimism, introducing new adaptations to any business can often be a challenge for those exposed to them. So, to underpin any long-term changes our remit will always pay particular attention to the attitudes and opinions of those staff responsible for ongoing delivery so as to provide a seamless transition as we complete our objectives.

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