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  • Understanding our financials, growing our business


    Today we hear from Warren & Jane Lefbvre – CEO’s, WRL Engineering Pty Ltd, Warren NSW

    Are these the kind of results you have been looking for?

    WRL Engineering “Working with Jason helped us to understand our financials in a way we have never done in our 18 years in business.

    We now know where we need to focus our efforts and we have a system to allow us to see our future workload so we know where we are going.

    We have improved our Marketing materials and process with a lot more people knowing who we are and what we do.

    We are now really proud of the information we send out about our engineering services.

    We have plenty more work to do and working with Jason has us started on growing our business and our financial rewards.”

    Warren & Jane Lefbvre – CEO’s, WRL Engineering Pty Ltd, Warren NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


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    Tales From The Real World: Stability Black Belt Model for Improvement


    Here is this weeks ‘Tales from the real world’ extract from our book ‘Manufacturing Money’ White Belt to Black Belt Journey of Stability

    Stability is about helping the organisation improve the way it delivers value to the customer. We are looking to have the business system lift its treatment of the customer to such a level that the performance is the source of key competitive advantage in the market place.”

    You can read about the full ‘White belt to black belt journey of stability’ (see image on right) in Chapter 6 of ‘Manufacturing Money‘ in paperback or kindle versions.

    Today we will look at specific real world examples from the Stability ‘Black Belt’ level and will look at the ‘Stability Model for Improvement’ in detail. 

     

    The Villa San Michelle in the hills outside Florence is the finest hotel I have ever stayed in. A converted monastery with a facade designed by Michelangelo this hotel is a total customer focused experience from when you exit the taxi and are received into the reception area. The outlook from high in the hills gives you an incredible view of the city of Florence, the grounds are immaculate, the rooms are perfect, and the dining is pure class. The hotel is not focused on giving you a clean room for the night (on target, minimum variation, Blue Belt); their staff are focused on giving you an experience that you will remember for the rest of your life.

    Yes, it is more expensive, and that is a good thing. It is not illegal to make money in business and we encourage our clients to charge more because they are worth more.

    You willingly pay the higher price, and perceive it as great value at the Villa San Michelle.

    The closest to a Black Belt experience I have had in an industrial company is with Apple where the products work, the support at their stores is excellent, and their phone support service has been fantastic. This is all functional and could be argued as being Blue Belt Level performance. What makes Apple a Black Belt (at the time of writing) is the way that the products are designed to easily integrate and give me an ease of use that had not been done before. The whole experience is fantastic, not just the technology.

    So, what would be the benefit to your business if your marketplace saw you as Black Belt providers?

    I bet you would be more profitable.

    There are three core areas to focus on when building your business from where you are now to a performance level where your system is a key asset of business value and competitive advantage in the market place.

    The Client Experience
    • The Design, and
    • The Process

    The Client Experience
    All of your customers have an experience when they work with you. For some it can be a very valuable and advantageous relationship. In a business-to-business relationship we usually want the experience to be easy, effective, no fuss, no worries, and commercially beneficial. We will return time and again to a supplier who can deliver on these outcomes.

    A supplier who does not meet these minimum requirements will rarely be tolerated for long.

    If you think about your own suppliers then think about the issues you have when dealing with them. There is a list of some of the common complaints I hear from people about their suppliers. There are plenty of ways that suppliers hurt customers.6.2 Stability

    • They often deliver late
    • The quality of what we get is not consistent
    • They don’t return phone calls
    • The part doesn’t fit
    • The machinery doesn’t work
    • I can’t get an answer of where my job is
    • They promise us things and don’t deliver
    • They don’t give me quotes when I need them
    • They tell lies
    • We can’t trust them
    • The invoices don’t match what was sent
    • They always have an excuse
    • Their drawings are wrong
    • The product is damaged when it arrives.
    • It is never their fault
    • The lead time is too long
    • They want us to solve their problems
    • They are very inconsistent
    • They are too expensive
    • I am sick of being let down by them

    This list is by no means exhaustive.

    I am certain that when you think about your suppliers you can relate to some or possibly all of these issues at times.

    You can probably add a whole lot of your own.

    You are the customer of these suppliers so in this instance you can rate them on the white belt to black belt journey of Stability.

    Now, let’s turn the mirror onto ourselves. This is the purpose of Stability in the first instance.

    Imagine three of your customers walking into a bar…..No, this is not the beginning of a joke.

    Imagine three of your customers walking into a bar and after pleasantries are exchanged and drinks are ordered the three customers start to talk about you and your company.
    What are they going to say?

    Do they see you as an essential partner in their business who is easy to work with who never causes them a problem?

    Or are you tolerated only because they have not yet found someone better or cheaper for the same hassle?

    Businesses that provide lousy service are under more price pressure than those who provide great service. No, I don’t have statistically backed research to support this, just the results from my clients who, by improving their performance to the customer, have gained more orders, have been able to resist downward price pressure, or have been able to increase prices.

    Providing great service that is a step above the competition is a way to help hold a price premium.

    Your service levels are not an accident. They are the result of the decisions you and staff have made in the past and continue to make each day. If you have not carefully designed your service to your customer then it will evolve on its own, usually in a way that is not the best it could be. Usually you will end up with performance that is much the same as the rest of your industry.

    You will blend in with mediocrity.

    Is this what you want for your business?

    The objective of Stability is to help lift how you are seen by your customer.

    The Design
    “You can’t make a silk purse out of a sow’s ear” Stephen Gosson

    In 1579 English clergyman Stephen Gosson published a romantic story called Ephemerides and used the expression “Seeking to make a silk purse of a Sows ear” not in the context of manufacturing but to describe people who were engaged in a hopeless task. It is coincidental that the metaphor has a manufacturing context; it is as elegant a summation of the problems that poor design causes business that I have ever heard.

    We have spoken about the client experience above and you have already begun to redesign the client experience based upon your insights. We are now exploring the design of your product. These questions and concepts apply to not just your product, but also your supply chain, your manufacturing concept, and your management system. We are going to explore this in the context of product design just to allow us to learn the concepts in a more narrowly focused activity.

    Poor design can come from a number of sources, some technical, and many emotional. Here is a short list of typical failings:

    • Incorrect assumptions about the functioning of the product
    • Insufficient insight about the market issues that the product is to solve
    • Lack of skills in the designer
    • Poor quality, or little input from the end users of the product and themanufacturing areas
    • Incomplete or inadequate prototype testing
    • Unnecessarily complex design for the results required
    • Rushed design changes in the late stages
    • Ego

    This list is not exhaustive; however it covers many cases I have come across. None of the people involved in this were bad, that is not the issue. The issue is that the way the design was created was inadequate in one or more of these areas.

    In Chapter 5 (Delivery) I wrote about ‘Student Syndrome’ where work is left to the last minute and there is a mad rush to cram the work necessary into the time frame available. Not only does this occur in the production phase, it occurs in the design cycle also. Late design changes because of inadequate testing, or that themselves have not been adequately tested are an absolute killer when it comes to building stability into the quality of the customer experience you are creating.

    Tales from the Real World

    I was the Quality Manager of an engine plant many years ago and we had launched a 2.2L DOHC (Double Overhead Cam) engine that was being exported to the North American factory of one of the Japanese automakers. This was an important program for us as they were a new customer and this project had been worked on in design and manufacturing engineering for many years. It had been a global design effort and everyone involved wanted it to work.

    There was a considerable period of months after we began to produce the engine before these vehicles began to appear in the field so there was little feedback about how things were going except for defects that were build issues in our plant and the assembly plant. We did however have a couple of engines that had failed due to low oil pressure. The engines were being returned from the other side of the world for investigation. All of this took too long. Vehicles began to enter service and we had some more very low mileage failures for low oil pressure. At this time everyone started to realise that we had a problem.

    This example will be explored fully when we discuss process as it involves failings and fixes in both areas. Let’s stick with the design aspect for now.

    The problem was in the oil pump. The oil pump takes oil from the sump and pumps it through the cylinder head to the engine providing lubrication to the moving components. As the engine speed increases, so does the speed of the oil pump. To prevent an over pressure situation occurring as the oil pump speeds up each oil pump has a pressure relief valve which is spring loaded and once the pressure reaches a determined level, the relief valve opens to allow the excess oil to go back to the engine sump. This is a common approach to providing engine lubrication.

    The reason for the low oil pressure failure was that this relief valve was becoming stuck in the open position. A small sliver of metal that was left in the engine after the machining process had become lodged between the relief valve piston and the bore it fitted into. This caused the valve to jam open and meant the oil pressure was low at low engine RPM.

    We manufactured 5 or more different oil pumps and had done so for years without a problem. What was different?

    This oil pump had a different design where the piston met the bore. All oil pump designs are supposed to go through a rigorous and vigorous testing process to prove that they can handle contamination in the oil without a problem. It took a number of months before the truth came out. This test was not performed on this oil pump; no explanation about why the test had not been performed was received. When the test was performed on this pump, not surprisingly it failed. The design was modified to reduce the sensitivity and the problem disappeared.

    The cost of this poor design making it to production because of inadequate testing was that the whole stock of engines, in the field, in the vehicle assembly plant, and in transit half way around the world had to be drained, flushed free of contamination, and in the later stages (once we had new pumps) have oil pumps replaced. The cost of this was horrific for everyone; a lot more than performing a standard test procedure.

    Reviewing an existing design is worth it even if you do not believe you have any significant problems or opportunities. You will need to have input from all of the stakeholders and be prepared for some conflict in the discussion. If you have a passive discussion with everyone agreeing then I suggest that you are glossing over the issues and the causes. Conflict, even confrontation isn’t a bad thing in itself. If you are all in agreement all of the time you will not achieve the breakthrough ideas that you need to improve your business. Rod Keane, the former Executive Director of Manufacturing for General Motors in Australia would say to us that ‘problems need to be solved on the merits of the issue, not by the stripes on the shoulders of the people involved’

    The prerequisite for this discussion is that people leave their egos at the door. If that is not achievable then the leader of the group needs to be up to the task of ensuring that ego does not prevent the open discussion of relevant issues.

    The designers are the most likely group to feel very threatened by this activity. This is not surprising and completely normal. The maturity of all groups to be objective and frank in the conversation is a developmental activity that is invaluable. There is usually plenty of shortcoming to be spread around, likewise there are likely to be plenty of good things that occurred that should be retained in the corporate knowledge bank, not just the memory cells or ‘experience’ of a few people.

    The money to be made is in rectifying the ‘bad’ parts of the design and in locking in the parts of the design that work well so that you do not mess it up in the future, which is what we did in our ‘Tales from the Real world’ example above.

    Keeping it simple there are two categories into which each aspect of the design can be fitted.

    • Do More (innovate an existing design)
    • Fix, Never Repeat

    If you use an Apple Macintosh as I do you will be aware of the magnetic attachment that connects the computer to the power supply. This attachment is not fixed and will separate from the computer in the event you trip over the cord. This is far preferable to pulling the computer to the floor and smashing it. This design would be clearly categorised in ‘Do More’.

    In the Fix, Never Repeat category is the problem of smashed screens across most smartphones. The elegant, integrated screen looks magnificent; however the fragility of the screen and the ugliness of what a smashed screen looks like places this aspect of the design into the Fix, Never Repeat category for me. This issue does not appear to be resolved as yet, however I am certain it is on the list of improvements

    The Process
    “If you don’t have time to do it right you must have time to do it over” Unknown
    “All roads lead to Rome” Unknown

    The idiom ‘All roads lead to Rome’ is recorded as being in use in the 1100s. It means that there are many ways you can achieve the same result. Every business process is unique, even if the design that is being produced is identical. This plethora of different ways to achieve what should be the same result is a key weakness in our pursuit of the most effective way to run the business operations.

    In design we specify a dimension on a part and then a tolerance on that dimension. It is clear that anything outside that tolerance range is a reject. There is no room for interpretation. An engineering drawing is a black and white document. An engineering drawing is not an Impressionist artwork by Monet or Renoir and open to interpretation by every individual.

    Great processes are the same.

    A process is a clear set of instructions on how to perform a task in the most effective, reliable, and repeatable manner that is currently known. This process is the rigid and inflexible prescription of how work is to be done. It is not a democratic process, nor is it optional, or open to change on a whim.

    When we have variable processes, or variation within the processes we lose our reference point on how a product or service was created and delivered. This makes troubleshooting and problem solving more difficult as we do not have a stable base of reference for our activities: we are forced to run on assumptions.

    A few common examples of typical variations in processes that can cause problems for customers and detract from stability are listed below:

    • Different shifts having different settings for machines
    • Variation in the way different people assemble products
    • Changes in cutting tool quality because Purchasing changed suppliers
    • Machine variability due to wear and tear
    • Inherent machine stability is not tight enough to meet tolerance demands
    • Manual work

    There are plenty more, the point is that we are looking to reduce variation in the process so that we reduce variation in the customers experience.

    Whilst all roads lead to Rome, some are faster than others, some are safer than others, and one will be the best overall solution of all. Every time we deviate from the planned process we do by definition detract from applying the ‘best’ solution. Our objective is to determine what the best overall solution is and then rigorously apply it across all shifts, areas, etc.

    This sounds very inflexible.

    It is.

    And it isn’t.

    We want to be continually looking for ways to improve our process and find a ‘better way to Rome’. We do not change our process until we reach an agreement on the better way; it is then implemented, documented, and rigorously rolled out in full.

    Tales from the Real World

    The root cause of the oil pump failure was that the test program, which would have detected the flaw in the design, was not conducted. That is all well and good; however there were some other contributing factors that mean that other parts of the business were failing in their role to the customer.

    If the contamination in the engine was not present the oil pump would never have jammed. We tested how much contamination was actually inherent in a typical engine and it was not a pretty result. We had iron and aluminium swarf from our machining processes. All of these processes had post machining washing systems so this contamination should not be there.

    Our customers visited to look at our investigations and told us that we had ten times the amount of residual contamination in our engines than they would accept in their engines. We also had six weeks before they would return to recheck our contamination improvements or they would look to break our supply contract.

    Our process to clean all of the machined components was pathetically inadequate and not by design. We had failed over the years to maintain the cleaning systems that were designed to flush out the machining scarf. We had lost control of our process.
    Over the next six weeks we refurbished the cleaning systems and added in contamination checks to confirm the effectiveness of the changes. Greater disciplines on the process were introduced. Contamination levels dropped and we were able to have confidence that we were shipping engines that were clean, not just to the new customer, but to all of our customers. In hindsight there were other low frequency ‘one off’ engine failures or problems that could have had contamination as a contributing factor. We were just not looking at our process and assuming that it was functioning correctly.

    A rigorous process focus saves lives! It is a key part of medical practice globally. Michael (co-author) has experienced this firsthand. He describes below.

    Tales from the Real World

    To use a hospital emergency room situation as an analogy. I had the experience of seeing my second daughter, 13 at the time, losing some of her brunette hair colour and drinking more and more water. Working late at night after travelling, I thought this was unusual. I thought it was just her growing into a woman. She was always squinting and experiencing stronger headaches.

    Some of our relations were doctors and many nurses and when asked, we had many observations. Many trips to the medical centre and various tests showed nothing unusual. She got worse and one day looked white and faint, so off to the hospital we went. She was minutes away from sinking into a diabetic coma. The Children’s Hospital was alerted and we made it in time. The doctors and nurses assessed her condition and consoled us by say “we will stabilise her blood/sugar and insulin levels and observe her system in this ward with the other diabetic kids, once we know her system, we will control her insulin but she is Type 1 Diabetic”. She is what? Not one direct or immediate family member we knew of from both sides had either Type 1 or 2 Diabetes.

    She is now 34 and living with Type 1 Diabetes, she is stable and very much in control

     

    Please note that in our book Manufacturing Money, we have included “Rapid Action Steps” throughout the chapters which are activities relating to your business that you can complete in order to identify areas for improvement.

    If you would like to read our book Manufacturing Money, you can buy a hard copy here, or alternatively download a kindle version here.

    Comments are always welcome.

    Have an Awesome Day!

    Jason


    0 comments.

    We have not had to look for other solutions as the project with Jason has really worked


    Today in our Current Client Result Series we hear from David Norris. He is the General Manager at Waterloo in Bathurst (NSW).

    Are these the kind of results you have been looking for?

    ‘It has been just over 12 months since we began the project and the changes we made working with Jason have become part of our culture. Our schedule performance and job status are very visual and it helps all areas of our business understand the progress status of the work and stay on track. The business now has a measuring tool that has supported us achieving 16% sales growth at the same time as reducing our inventory by about 16% also.

    Previously we had to turn away work, especially during our busy times as the business was unable to handle it. We had to change as we needed to grow the business to support our markets. We could sell more but could not produce the work for the customers. All of this was effecting me and my people from looking at the business due to the days being taken up with customer enquires relating to late or urgent jobs. I was continually being sucked into day to day manufacturing issues instead of working to improve the business.

    These days I am not continually dealing with questions about ‘Where is my job up to’. The system and changes have taken away the worry and the stress. We need this system more than ever as we are continuing to grow. A great factor has been that all have embraced the changes and ran with it. We have not had to look for other solutions as the project with Jason has really worked.’

    David Norris – General Manager, Waterloo, Bathurst NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Have and awesome day.

    Jason


    0 comments.

    5 Brilliant Business Lessons I have Learnt From Cricket


    I have always loved cricket. I was a useful cricketer, not necessarily brilliant, and have returned to the game in the last couple of years to play with and mentor my eldest son.

    We have a lot of fun (which for me is followed by pain on Sunday mornings) and we also learn a few lessons along the way, not just for cricket. Here are a few for you to reflect upon

    1. System Beats Brilliance

    As a former opening batsmen, trying to get back into the groove of things I found that having a system (technique) to batting was invaluable; Leaving the ball outside off stump in the beginning; Play Straight! And having the feet move towards the line and length all served me well once I got going again. I was never a flashy player; my shot selection was limited to the ‘tentative prod into the covers’. You have to have a system, and you should follow it. I saw people trying to bat based upon a ‘see ball, hit ball’ approach. Most of them spent a lot of time watching the game from the boundary line. There are a few people who are brilliant and can play impossible shots. Most of us need to follow a system to win. Does your business have a system that you all follow to manage risk and ensure consistency?

    2. Watch the Ball

    It took many, many weeks, for me to retrain the eyes to truly watch the ball out of the bowler’s hand. Not watching the right place in space for the ball to appear, reacting to the bowler’s body language and thinking I knew the ball would be short or full were all errors I made. Allowing fatigue to break my concentration and distract me from being truly ‘on’ when the bowler let the ball go was another. Distractions are a constant in our business. Thinking about tomorrow when today’s challenges needs to be dealt with; involving ourselves repeatedly in issues when our team should be handling them; and plenty of others. Distractions abound! We need to watch the ball and not be distracted. In business this is what I call ‘Watching and boosting operational cash flow’, if this is going well you can do other activities. Never take your eye off of the ball of operating cash flow.

    3. Cut the Fat

    Over the last 3 years I have traveled a lot, built a business, and used that as an excuse to not do much exercise. As a consequence I have gained a lot of weight. Running up and down a pitch on a 35 degree day when you are carrying a lot of extra weight and you have lost your aerobic condition is not a lot of fun. I remember my son sledging me when what should have been a comfortable two was turned into a cheeky single because I was absolutely stuffed! Running quick singles every ball to rotate the strike and force the opposition to change the field is a great idea, and a very effective strategy. It worked for a few overs and then I was starting to struggle. Inside your business processes you have fat, it is slowing you down, it is closing off opportunities for you, and it is making you feel sick! Get rid of it! My challenge during the off season is to drop a whole lot of weight, it will be good for my health, good for my business, and probably more than any training I can do, it will improve my cricket for next season.

    4. Build the Team

    We had a few young guys starting to play senior cricket and some others who had never played cricket competitively before. Cricket doesn’t work as an individual only sport; it is a combination of people that has to work in order to have success. Individual brilliance is great, however it is damn hard work trying to control the opposition if you are the only one fielding. Working together was the only way to try and win. The key for these people who did not have a lot of experience was giving them an opportunity to have a go and supporting them as they learn. We had some people develop tremendously in their skills, but mainly their confidence from the first game to the last game. Create opportunities for your people to shine, protect the risk, be able to step in if things are going wrong, and take pleasure in seeing them succeed.

    A young guy who started with us was coming back from a really badly broken arm during last winter. Over the ten games or so he played, he relaxed, gained his confidence in his body, and began to bowl at the batsmen rather than just roll his arm over and react. He ended the season winning our bowling averages and his batting improved from being a walking wicket to being a guy I could rely upon to hold up an end and not get out if that was what was required.

    5. Have Fun

    We had some really hot days, and at the end of many days I could barely string two words together, let alone move. We played 40 over one day games and being on the receiving end of your opponents making 280 in 40 overs was not fun on a 32 degree day. At best it was a learning experience for our team about the importance of taking your catches! There are bad days, get through them, figure out how to make the next day a little better and ideally how you can make a breakthrough step up in performance.

    If you are miserable and cannot see a way out, and don’t want to do it anymore then get out, or in the case of cricket, retire. It is not worth persisting in something you hate. It is the same in business, you may not be able to walk away immediately but if you are not having fun, find a way out.

    The whole experience has been great, Playing in the same team as my son was just incredible and the fathers in the team appreciated that opportunity as a precious privilege, I am looking forward to next season and given I have three sons (the youngest is ten and can’t wait to be old enough to play with Dad) I am going to be padding up for a few years yet!

    Have an Awesome Day!

    Jason


    1 comment.

    5 Steps Of The Cash Flow Cycle


    All business is about cash flow. No cash flow equals no business. We need cash flow to reinvest, pay bills, pay dividends. Costs and profits are important, however cash is supreme. When business conditions tighten everyone focuses more and more on cash flow.

    We need to evolve so we are thinking about generating, increasing, and managing cash flow at all times not just when it is tight.

    Cash will flow and recycle through the business in 5 distinct phases.

    1. Assets that create Value

    We use cash to buy assets that can be used to generate more value for the business by increasing Throughput. If the ‘asset’ does not generate value then it may be an asset on the books but as it has decreased cash flow, I call it a liability. Buy Assets that create value.

    2. Sales with Margins

    Assets create value by generating saleable product that has sufficient margins so as to generate a return on investment. Sales without margins are pointless; it is too much hard work to then give the product away. Always know and work on building margin.

    3. Profits with Consistency

    It is far easier to develop a business that has stability in its performance as you can then validate the effect of your actions, and predict (to a point) the future, on a short term basis at least. Unstable Boom/Bust behaviour is stressful and can be disastrous for cash flow.

    4. Cash Flow with Immediacy

    Profits must generate cash flow and we want that cash flow now! The faster we can get cash into the business the better. Far better to have it in our bank account than as an amount sitting in Accounts Receivable. We want that money back in our hands.

    5. Choice with Responsibility

    When we have the cash we have the choice. Dividends, reinvestment, etc. Whatever choice we make we are responsible for the consequences of that choice.

    Know that business can go bust whilst making a profit, it happens most days. The key is to both increase and speed up the cash flow throughout the five stages.

    Comments are welcome.

    Have and awesome day!

    Jason


    1 comment.

    We have doubled our sales over a four year period…


    Introducing our Current Client Result Series. A short series of results from current clients that we are showcasing once a week over the next few weeks.

    Today we hear from Richard Ellis, General Manager of  Ellis & Sons in Cowra, NSW

    Are these the kind of results you have been looking for?

    “We have doubled our sales over a four year period whilst actually having less people in the business. Further, this wasn’t achieved by outlaying huge funds on equipment or Marketing. Conversely it was accomplished by careful calculated fundamental changes to the way the business was run, the only cost was some mental thought and effort, particularly centred around Jason’s process of eliminating bottlenecks and concentrating on the weakest link in the chain.

    For a long time we have struggled in one of our main markets with a commodity product and had no competitive advantage. I would visit the major buyers for years and fail to gain any traction. They were happy with their current suppliers and we were a ‘me too’ product. The market value was being destroyed by people competing on a ‘cost per square metre’ basis and we were seeing volume and margin erosion. Working with Jason we researched what the customers really needed, not just what they said they wanted, and have developed significant intellectual property that is patent protected. It has been a long road but we can now sell a system solution to the market that our competitors cannot copy. Volumes are increasing as we are going to market with a total package. We take this product to market in a systematic fashion that is quite different and better than our old approach.

    We repeated this market and product development process with a different segment. We would make large protective shade sails on an ad hoc basis when people contacted us. We once again went to examine the broader market and design a superior solution. We have now built a systematic way to communicate to the market about our value and consistently deliver a superior product on time, and on budget to our clients. This ad hoc segment is now core business and a major source of our revenue growth.

    We used to be very haphazard about how we ran the business and would often take a shotgun approach to what we would do. Now we are much more in control. We are methodical and plan our approach. Our factory is now efficient and can be relied upon to deliver on time and on quality to our customers even at our increased volumes. Our DIFOT (Delivery In Full On Time) is superior and stable.

    The workload is still intense for us and there are times that we still feel that we are ‘under the pump’. Our anxiety levels have dropped, we are more in control, and we all have the feeling that we are ‘getting somewhere’. We manage our time much better and are not worried that we have ‘forgotten something’.

    There is more to do yet, but we now know what it is we need to do. This is a huge advantage because having this clear sense of direction allows us to progress much more quickly. On a final note – you can’t do it alone, so we are building the team required to get there – our accountants, legal advice, bankers, suppliers, industry connections, our work-team, and mentors like Jason to bounce ideas against and provide some clear impartial advice.”

    Richard Ellis – General Manager, Ellis & Sons, Cowra NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

     

    Jason


    0 comments.

    DIFOT of 100% can be done!


    Today we hear from Phil Brodbeck – Operations Manager, Flexco, Baulkham Hills NSW

    Are these the kind of results you have been looking for?

    “As a new Operations Manager I had a baptism of firePhilBrodbeck - Flexco 250 px in 2013. The business was late shipping to our distributors and end-users, we spent a lot of money on shift penalties and overtime and profitability was poor. Production was a high stress environment where each day was full of unpleasant surprises. Tying down performance levels was like herding cats and we were in a continual state of fire-fighting. The pressure on everyone was intense.

    We worked with Manufacturship® to help our situation and the results were immediate. After the initial training we knew where to focus our attention, how to determine if we were truly being effective, rather than efficient, and what to do to ship more product at a lower cost. We rapidly dropped a large back order and I was able to spend time improving the business further because all the fire-fighting stopped. We have fixed the system that has then allowed us to fix the specific parts of the process in order to get a financial return quickly.

    Customers can now rely on our delivery dates and our lead time has dropped by half. DIFOT of 100% can be done.

    As we saw the results we were achieving Jason asked me “If I had told you before we started that these would be the results, would you have believed me?” I have to honestly say ‘No’ the size of the results, and the speed at which they have been achieved was beyond what I thought possible.

    When I first saw the price for the project I did raise my eyebrows but I can now say it was cheap!

    We have a system to give us instant visibility. Production is regular, reliable and routine. Quality has improved, more people are now trained, and our financial performance has improved. The project has more than paid for itself in the first three months. We have achieved all this without upsetting people and actually it is now a safer, calmer, and easier place to work for everyone.

    If you want a manufacturing operation that is a competitive advantage for your company, you need to talk to these guys!”

    Phil Brodbeck – Operations Manager, Flexco, Baulkham Hills NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


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    How To Achieve A Superior ROI


    So, how do we achieve a superior ROI?

    In our recent book Manufacturing money, we describe how business owners and managers can work their way up to a ‘black belt’ in a manufacturing and distribution business to create “a business that is truly in charge of its own financial destiny”.

    In the Nov-Dec 2016 Issue of MHD Magazine my recent article on ROI explains how your business can take it one step further to achieve a superior ROI.

    You can download and read the article in pdf format here:

    ROI – MHD Nov/Dec 2016 pp56-57.pdf

    Your comments are welcome below.

    Have an Awesome Day

    Jason


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    In the next calendar year we expect to put $100,000 to the bottom line


    Today we hear from Christian Kath – State Operations Manager, Steri Health, Yatala QLD

    Are these the kind of results you have been looking for?

    “My name’s Christian Kath, I’m the State Operations Manager for Steri Health. I’ve just finished the 3 day Manufacturship® course with Jason and it’s been a fantastic help.

    When I first moved from a manufacturing background to a service industry I wasn’t at first sure how I could use the skills and knowledge that Jason has previously taught me and transfer that to a service environment. But with a little extra help and some coaching, we were able to develop a structured process and Jason could show me where bottlenecks and where constraints exist in the service world, as they do in manufacturing.

    With a little help we have come up with a detailed plan which I can take back, and in the next calendar year we expect put $100,000 to the bottom line from that.”

    Christian Kath – State Operations Manager, Steri Health, Yatala QLD

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.

    Top 10 Challenges for Manufacturing Business Owners


    The Challenges faced by Australian Manufacturing Business Owners

    A Manufacturship Research Briefing presented by Bede Boyle, Chairman, Manufacturship at Advanced Manufacturing Forum, Sydney 15&16 November 2016.

    The challenges of manufacturing in Australia continue to change dramatically and seemingly faster and faster. Business owners and leaders face critical challenges to survive, grow and thrive into the future which is looking more complex and uncertain.

    Top 10 Challenges for Manufacturing Business Owners and Leaders

    This briefing highlights the findings of Manufacturship 2015-2016 Research with +200 manufacturing business owners and leaders across diverse sectors including aerospace & defence industries, automotive, biomedical, building and construction systems, food, materials handling and mining technologies. The process was based on questionnaires and in-depth conversations with clients and attendees at Manufacturship CEO Forums on ‘what really works’ in addressing the identified critical challenges.

    Our research highlights that although the ranking may differ in different sectors the top 5 challenges are consistently in the top 5.

    1. Cost Competitiveness

    Australian manufacturing industry operates in an increasingly competitive global market as evidenced by the announced withdrawal of GM, Ford and Toyota from vehicle manufacture in Australia.

    In the late 1900s productivity gains were achieved by business process reengineering primarily in headcount reductions. However, in the early 2000s new competitors from low cost countries emerged and cost savings from headcount reductions were overtaken by the increasing speed and productivity of these new market entrants and their ability to produce the same products at a much cheaper price. In the post GFC environment these factors have accelerated forcing the need to achieve further cost reductions back to the top of the CEO agenda.

    But there is a new layer of complexity that is making implementing cost reduction more difficult than before. Heavy resistance is being encountered from both inside and outside the business enterprise. Internally, managers responsible for implementing cost reduction are reporting that too much has already been cut. The pressure is also applied externally from customers expecting Value for Money to continuously improve. Trading reduced services for lower prices is no longer an option.

    The big agenda item is replacing the cost of input materials, work in progress and product inventories with ‘end to end’ data across supply chains underpinning enhanced production and supply chain management.

    It is absolutely critical to have no exposure to Warranty Claims from quality failures which can destroy the business. There is a graveyard of manufactures who ‘saved cents’ and destroyed their brand and business by quality failures fracturing the technical integrity of their products. Aggressive cost cutting within the globalization of automotive supply chains has resulted in safety failures and in costly vehicle recalls by GM, Ford, Toyota and VW.

    2. Increasing the Rate of Revenue Growth

    Cost and Revenue are the drivers of Business Profitability.

    Increasing the Rate of Revenue Growth in an increasingly volatile market is achieved by Managerial Effectiveness in rapidly aligning Operations and Innovation with an outward focus on Niche Market Opportunities.

    The highly competitive global manufacturing environment has resulted in a relentless cost / price squeeze for many firms. As a result, many firms have become inwards looking with a myopic focus on cost reductions. However, in reality profitable growth is paramount to ensuring business success. This requires an outward looking customer-centric firm with a willingness to adopt new ideas and methods [called innovation] to secure and retain customers to drive revenue and profitable growth.

    3. Improve Cash Flow [equal 2nd in research]

    If 1 & 2 are about Profit, Cash Flow is about Survival of the Business. Business owners consistently tell us they are concerned on a day to day basis about the amount of cash they have in the bank above their liabilities.

    Manufacturing is generally identified as a comparatively risky business sector by banks. Business owners cannot afford to default on Loan Payment Covenants with banks due to problems with cash flow or risk foreclosure by the bank.

    Cash Flow Management is actually about increasing speed from order to invoicing the customer and cash in bank, and is achieved by compressing Time from Order to Delivery with100% Delivery in Full on Time [DIFOT].

    4. Building Managerial Talent

    Is about developing the ability to Manage Complexity and Ambiguity.

    An increasing number of organisations are operating in a multi-national, multi-locational environment. Quite apart from the inherent complexity, managers have to balance the demands of simultaneously driving cost out of the business, whilst simultaneously increasing service and value to customers to enhance revenue growth.

    Successful Australian manufacturers now focus more on upstream activities including design, development and innovation rather than manufacture which has been their historical focus. The imperative for Australian manufactures is therefore to focus on design, development and innovation to deliver superior quality and reliability backed up by excellent service and support. In effect manufacturers will need to become customer-centric if they are to survive and thrive.

    5. Attracting and Retaining Skilled Labour

    There is a demonstrated causal link between workplace culture and productivity.

    Firstly, think about removing your HR department [which is a cost centre – not a profit centre] and make attracting and retaining skilled and experienced labour a Management Responsibility. This is a proven transformational cultural change to become the employer of choice with a highly productive workplace culture.

    6. Better Managing Material Costs

    Leveraging Australia’s Free Trade Agreements [FTAs] to achieve low cost country sourcing from China and ASEAN countries who are our closest trading partners.

    The China Australia FTA [ChAFTA] was signed on 17 June 2015 and covers 23% of Australia’s total trade. ChAFTA provides opportunities for Australian manufactures to source low cost materials and manufactured components from China which can be integrated into Products for Australian and ASEAN markets.

    Australia’s closest trading partners are members of the ASEAN Economic community of 10 Asian nations including Malaysia, Singapore, Indonesia, Philippines, Thailand, Brunei, Lao PDR, Myanmar, Cambodia, and Vietnam. ASEAN is expected by ANZ to replace China during the next 10 years as the world’s manufacturing hub and ANZ expects it to become the fifth largest economy in the world by the end of the decade.

    7. Rapidly Boosting Profits

    Elevating Enterprise Value and Return to Shareholders is the purpose of business enterprises. This requires Strategic Actions to Strengthen Capability to Improve Return on Investment and position the firm to seize Opportunities for Strategic Growth.

    Quality Failure is the Elephant in the Room that was identified when manufactures are struggling to boost profits. The Elephant comprises:

    – Waste and Rework within the Factory – Significant ‘but very skillfully’ hidden Costs

    – Product Failures, Recalls and Warranty Costs – High Cost and damaged Reputation

    – Failure to achieve Delivery in Full on Time – Loss of Market Share and Revenue.

    Strategic Quality and Productivity Improvement reflects an obsession that involves an entire enterprise in driving Quality and Productivity Improvements continually in all processes to deliver Value for Money.

    Strategic Quality is an enterprise-wide obsession with Quality that builds a reputation for Getting it Right First Time which can be a powerful competitive advantage in an increasingly discerning market.

    Strategic Productivity measures the efficient use of resources. It matters because doing things more efficiently is what drives profitable growth for manufactures by creating competitive advantage.

    – Labor Productivity measures the output of workers per hour worked

    – Capital Productivity measures the “bang for buck” output per dollar invested

    – Total Factor Productivity, sometimes called multifactor productivity, combines the two.

    8. Increasing Market Volatility

    Australian Manufactures will encounter increasing volatility over the next decades, compounded by imports from low cost countries in Asia. Business owners’ talk about the imperative to reduce product development cycle times from concept to market

    The Australian resources infrastructure investment boom was in response to strong Asia demand for Australian iron ore and coal, and cushioned the Australian economy and manufacturers to the 2008-2009 Global Financial Crisis. However, Dramatic falls in coal and iron ore prices in 2012 resulted in the downturn in construction investment in mine, rail and port infrastructure.

    Increasing Market Volatility requires developing Strategic Agility to capture Market Opportunities by continually revisiting the question to make the fundamental decision – What Business are we really in? This requires granular market intelligence and continuing discussion with customers.

    9. Financing Business Expansion, and 10. Funding Strategic Growth & Acquisitions

    For most manufactures this is really about making the business attractive to Banks, Equity Investors and Joint Ventures by consistently achieving Profit Targets and delivering Superior ROI.

    However, the ability to fund business expansions, strategic growth and acquisitions from retained earnings is a true differentiator of successful manufacturers who continue to go from strength to strength.

    Your comments are welcome

    Have an Awesome day

    Jason


    1 comment.
     
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