Retooling a high-tech manufacturer for sustained growth.

• Manufacturer of high-quality aftermarket diagnostic equipment experienced explosive growth, but lacked organization, internal planning and systems to handle new revenue and customer base.
• Insights & Opportunities process identified major value drivers and opportunities, providing action plan with completion dates and defined outcomes.
• Advisors implemented necessary strategic improvements, while working with company owner on day-to-day operations.
• Company is now substantially more productive and profitable, with a culture geared toward continuous improvement and operational excellence.

Overview

The company, a manufacturer of high-quality replacement diagnostic equipment, had been in business since 1993. By 2005, it was profitable, but had reached a point where its organization and systems could no longer support the level of excellence necessary in this technically challenging market segment. We began our engagement with an Insights & Opportunities Report, which revealed multiple issues:

• Manufacturing operations depended entirely on the company owner.
• The owner handled sales, while all employees participated in a bonus program based on sales.
• All financial/accounting data, sales, purchasing, inventory and manufacturing records were manual entries.
• The company lacked job descriptions, employee practices (including confidentiality and non-compete agreements), formal performance objectives and reviews.
• Manufacturing, testing and QA processes were inadequately documented.
• Credit memos for product failures were much higher than industry benchmarks.

Challenges

The company lacked the basic structure to sustain profitable growth. Haphazard communications were more problematic because the staff included the owner’s relatives. A lack of accountability made inefficient operations worse and there was no process for addressing problems openly and with a sense of urgency.

Solution

With the Insights & Opportunities process complete, AMS went to work on the company’s organization, systems and procedures. At our recommendation, the owner hired key personnel in administration and manufacturing. We installed PLEXUS®, an integrated business software system, to handle all planning and control of key operations. We eliminated the bonus system and a costly SEP plan, making compensation performance based. Most importantly, we guided the ISO 9001:2000 quality certification process, giving the company the credentials to pursue a multi-year strategic supplier alliance agreement with a major customer.

Results

By July 2007, AMS had retooled the company for sustained growth, having posted a 20% revenue increase in each of the last two years. All team members now participate in developing continuous improvements and measure their progress.

In October 2007, the company signed a multi-year agreement with one of the world’s leading multinationals to supply high-quality X-ray tube assemblies, providing significant revenue potential with a marquee customer. The company recently signed another one-year contract with AMS, to ensure continued access to our advisors and resources.

For more detailed information on this case history and its relevance to your high-tech manufacturing opportunities, contact Fred Rappaport, AMS CEO, at 843.422.1610 or email.