Source: Stewart Florsheim, Industrial Distribution
Every business aims to be “agile,” and agility is especially important for product companies that operate in an increasingly competitive global market. Agility — flexibility, scalability and readiness to seize opportunities and avoid pitfalls — can mean the difference between success and failure.
For product companies to become more agile, they need to:
- Identify organizational bottlenecks
- Seek best-of-breed solutions to resolve them
- Prepare for constant change
Identify Organizational Bottlenecks
In every product company, bottlenecks occur that can delay the processing of an order, the production of goods or perhaps delivery to a customer site. To understand where your organization could increase efficiency, first look to the areas where the entire process slows or even grinds to a halt. This is usually a sign that you need a better solution.
The GM of a manufacturing-based business recently shared an example with me that was simple, but illustrative of the problems we don’t often recognize. Each purchase order coming through his system had to be personally signed off by the controller with a physical signature. Since the controller had to physically be there to sign off, imagine the impact that a slow-down in those signatures might have on customers if they don’t receive a product when they need it.
Many organizations recognize and resolve bottlenecks, such as the ones that faced Blue Clover Devices, an original design manufacturer (ODM) with offices in China and the U.S. There, two incompatible systems handled purchase orders and inventory management, so when the company received goods, it had to do manual three-way matching of inventory and purchase orders. A scarcity of programming resources created an additional bottleneck, making it hard for the company to adapt its back-office systems to fix inefficiencies or evolve to meet changing requirements. By moving to a cloud ERP system that was designed to manage the entire order-to-cash process, Blue Clover gained real-time visibility and insight into work at all stages, from production to shipping.
Many companies are frustrated by bottlenecks in the sales process, too. A global manufacturer of lead and acme screws had a system that forced its salespeople to go through at least three different screens to get status on inventory and orders. Once they identified that this issue was costing time and impacting their ability to give prospects critical information, their IT team was able to target a solution. Now, the sales team has instant access to all the information they need from a single screen, wherever they are — even at a customer’s workbench. Machinists back at the shop access the same system on their tablets, so they can pull up work orders and quickly check the status of the required parts.
Seek Best-of-Breed Solutions
To deliver “intelligent” products in a world of connected devices, a company must also be “intelligent” in the way that it operates. After all, can a 1990s system really support 21st century needs for agility? Innovation cannot just be present in the products and services businesses deliver to their customers — it should also be evident in the partners and solutions they select.
For example, when the Merrow Sewing Machine Co. invented the world’s first branded stitch, the ActiveSeam, it also created an entirely new business model, requiring customers to license use of the stitch. For a more than 150-year old family-run business, this was a very new approach that could offer a big upside — if they could adapt the business to a new model. With clients customizing the stitch to suit their own brands, Merrow needed a much more organized way of tracking components and customers across multiple lines of business, a task that had seemed manageable until now.
Frustrated by the limitations of its legacy ERP system, Merrow adopted a cloud-based solution. “It’s been an unbelievable change for us — a game changer,” says Charlie Merrow, CEO of Merrow Sewing Machine Co. “We’ve been able to improve performance with a small staff, which simply wasn’t possible with our prior ERP system.”
Companies need to stay aware of the impact that technology can have on their businesses and, in turn, seek the appropriate solutions to take advantage of the advances. By the year 2020, there will be over 75 billion connected devices in the world. To leverage all the information these devices will generate, companies will need the tools to gather and analyze the “big data” to help improve their businesses. Make an investment in keeping your organization innovative inside and out by staying informed and curious about technology advancements.
Prepare for Constant Change
It’s simply not feasible to overhaul a business from top to bottom overnight. Even small changes to processes or culture can take time to implement. But simply because change is difficult is no reason to delay or stymie it. Instead, embrace the fact that your business will change because your customers will change. By keeping close tabs on the evolving needs of your customer and business, you will gain a better view of the transition that you must make to stay competitive and profitable.
There’s opportunity everywhere — but companies have to see it coming and know how to seize it. When you’re constantly preparing for the next step in your business, you’ll be able to set a timeline, manage your budget and plan a slow shift that contributes to long-term success.
