31 May

Business Transformation Requires a Fresh Mindset

This is a brief story about business challenges and different ways to develop solutions?

Ms. Smith has recently been promoted to lead her family-owned, West Michigan based company. She grew up in the company before attending an undergrad program and completing her MBA. The leadership team is well established and talented with deep industry experience.

Widget Corp. was founded by her grandfather several decades ago. They manufacture components and sub-assemblies for the automotive industry. The company is financially solid with a backlog of contracts extending over the next two years. Business is good, but there is a lot to worry about for Ms. Smith and her leadership team.

The car companies have asked for annual cost reductions to help them continue to be competitive with global brands, economic uncertainties and consumer demands for better products at lower prices. The cost of raw materials and purchased components make up a majority of the final sell price of their products. Labor and operational costs make up the remainder of COGS. Margins are tight and there is not a lot of room for rebates or cost reductions.

Widget Corp. has an entrenched legacy and mindset around long-established processes and the way things have always been done. Operational silos result in slow communication, iterations and process iterations. The company CFO wants to know why key cost saving initiatives have not developed to plan and why more money is required to fix weak or broken processes and systems. This pattern repeats itself over every fiscal year and annual budget. There has got to be a better way to operate!

Company morale is low. Top talent within the leadership team and operational areas of the company are disappointed with financial results and a lack of follow through on key initiatives. Strategies and projects are announced with minimal follow through or results. People want to know that they are making a difference through their hard work. The mind set is fast becoming, “why should I offer any new ideas when nothing ever happens?”. After a short while, even new hires give up and just show up at work.

These are very difficult business problems that will not be solved quickly or easily. The mindset needs to change at the top with a commitment to invest in new systems and methods to regain competitiveness and build for the future.

Our work with large corporations and mid-sized companies has motivated us to evolve our perspective on business transformation and innovative ways to work with cross-functional teams. This fresh perspective enables us to help your company realize: decreased time-to-market, cost reductions and improved profitability, as well as market differentiation.

Decreased time-to-market

For Widget Corp. to maintain a sustainable competitive advantage, their engineering and operations teams are obligated to tackle the all-important issues of reducing time-to-market, meeting customer orders, and doing so economically.

Often, the lack of identifying gaps, inconsistencies and opportunities, i.e., what the customer will benefit from, stems from organizational silos. As mentioned before, Widget Corp.’s Leadership team is well established and talented with deep industry experience. These are smart people working somewhat in isolation and working hard to achieve the art of the possible within their own discipline. Suggested ideas for system improvements often lack the right context. However, when employees from different disciplines come together, ideas remain contextual and pragmatic.

We can help companies like Widget Corp. to streamline communication between silos, blur boundaries between engineering, technology, marketing, sales, and operations.

Widget Corp. is facing countless daily issues that stretch from the initial conception and design phases, to prototyping, on to documentation and efficient manufacturing. It?s common for each phase of the process to pass through at least a couple of trial and error runs, control point adjustments and final validation before the results are acceptable.

What if gross approximation and uncertainty were removed from the equation?

We can help companies like Widget Corp. to develop a solution that provides a unified and comprehensive method for managing manufacturability, removing the gross approximation and uncertainty from the equation – from the early design stages, through manufacturing process planning, and ultimately execution. The outcomes resulting from rewiring the capabilities lead to business transformations for manufacturers and quicker time-to-market.

Cost reductions and improved profitability

We acknowledge manufacturing is more than just a very broad activity; it is a system encompassing many functions – everything from procurement to quality control. Therefore, viewing manufacturing as a system provides a holistic way of identifying and treating which factors, internal or external, are contributors to better results. This point of view aids decision-making about improving manufacturing operations.

To increase profitability through better control of procurement costs, it is important for procurement officers to understand their operations costs and processes. This includes the suppliers’ costs, their material costs, manufacturing costs, machine rates, labor and burden costs, quality, capability etc. This wealth of information provides a foundation for procurement officers to qualify and judge if the price quoted by the supplier is realistic, improving their negotiating position and allowing them to take control of procurement costs.

Every business faces unique challenges depending on their strategic objectives and process improvement initiatives. Because of this, any proposed capabilities must be shaped specifically to fit into the business landscape. We can help companies like Widget Corp. to understand their initiative owner, the importance, the value to the business and the target time frame for providing a solution for cost reduction and profitability improvement.

Innovation drives market differentiation

Making the right decisions is key to delivering successful products; that goes for every single person at every stage of a product life-cycle. Every decision that is made ultimately effects the success or failure of your products.

In a new world of smart, connected products where entire markets can vanish with a single innovation, manufacturers must take innovative approach to business in this new era of industrial revolution also known as Industry 4.0. This near future world of smart, connected products has already arrived.

Even if you know what to make, you still must differentiate your operations to better make it. That?s why manufacturing, the realization phase of innovation, is vital in this new era.

We help companies like Widget Corp. to find and implement the key solutions to digital transformation. We can help manufacturers find the best solution to weave a digital thread through ideation, realization and utilization. Digitalization makes the digital thread of knowledge a proactive agent in driving your business.

Conclusion

Ms. Smith is not alone in her business landscape. These challenges (and many more) are found across industries and in companies of all types and scale.

The journey begins with a reality check to identify big areas of improvements. This tough, objective exercise informs the development of a roadmap and plan to jump start the team working on a few key initiatives to begin making a positive difference. Business transformation is a long-term commitment that requires an organizational mind shift, resources (read budget) and collaboration from the top down.

Please contact us for a more detailed case study or, better yet, a review of your current systems. We would love to work with your team!

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