During WWI and WWII, they were able to adapt their products to wartime needs and were able to build a sizable government contract. This revenue stream provided the capital needed to expand and add manufacturing space. Although they had some ups and downs, the company continued to grow and build a reputation for high quality in everything they produced.
After WWII, they were well-positioned to take advantage of the prosperity of the 1950s and 1960s. They continued to expand, and by 1965, built a national distribution network. By the end of the decade they had several high-end and specialty products that were in high demand, especially in the building and construction industry.
Acquisition Mania. In the early 1970s, the company was purchased by a large industrial firm that pumped cash into its newest division. Growth continued into the early 1980s, when a couple of the executives were able to successfully orchestrate a leveraged buyout. They liked the potential of the business and set their sights on expanding product lines that supported the retail construction industry.
In the late 1980s, the equipment division changed hands twice! The “big boys” seemed to think that the potential of this business was unlimited, given the growing market and continued demand for the products.
Life Is Good. Business in the late 1980s and early 1990s was good. All the competitors were “playing in their own sandboxes.” The equipment division was positioned nicely in the retail market it had established over the years. There were a few niche players, but that didn’t impact them much. In fact, price increases of 5 to 10% each year were commonplace. There were a few problems. Quality slipped and shipments were too often late. No showstoppers, though. The brand still remained strong.
Wake-Up Call. Who said that the 1990s would be different? Well, that prediction rang true for the equipment division.
Life sure changed. The economy remained stable overall, but outside factors even beyond competition began to impact the business. The EPA passed legislation that banned a harmful raw material that was being used heavily in the products. And if that wasn’t enough, the parent company was exerting major pressure, with the spotlight on profitability and efficiency. Each operating division was expected to hit aggressive targets each year as part of their strategic plan.
The key divisional objectives focused on the following areas and indicators:
1. ProductDevelopment Speed: Reduce cycle times by 25%, from 12 to 9 months.
2. Cost of Raw Materials: Reduce overall costs from $750K to $600K.
3. On-Time Deliveries: Increase on-time deliveries from 88% to 95%.
All of this now became the price of admission to defend their position in the changing marketplace.
You Make the Call. The company has hired you as an outside consultant to examine the problems recently identified and advise them on a course of action. The company will depend on you to help fix a long-term problem. Although objectives have been set each year, it seems that the ongoing measure of success has been lacking. The discipline of tracking and monitoring results needs to be modeled for them.
As you begin your work on helping to determine where the company stands on the three key objectives, you’ll want to address the following questions:
What data should be collected?
What format should be used to collect the data and how often?
How will the data be reported to the company management?