A New Marketing Mindset

One of GMT's client success stories is a 75-year-old division of a Fortune 100 company that began working with us not because it lacked profitability or a secure market position. In fact, this manufacturer of specialty industrial products was highly profitable and leading its market—just as it had since the 1920s. However, the division recognized that its marketing, product engineering, and manufacturing processes had lost their competitive edge over time.

Many companies in a similar position would have never seen a need for sweeping process and strategy changes, but the success of this company has always been based on its forward-looking philosophy. That's why the division's president asked GMT to work with teams of key people to streamline and improve its order management, engineering, and production processes as the foundation for a refocused marketing strategy.

Working with senior management, GMT helped to take the division well beyond the accepted industry standard, to target quantum performance improvements that would ensure its continuing market leadership.

Like many companies in its industry, the division designs and manufactures a wide range of stock products. However, a high percentage of its revenue comes from products custom designed to meet each individual customer's needs.

The company had traditionally adopted the same process for all sales opportunities: encourage salespeople, product managers, and engineers to reengineer each product "from the ground up"—a process typically taking 10 working days—then spend an additional week moving the product through various manufacturing processes before customer delivery. Total cycle time, from order through delivery, averaged three to four weeks.

The senior team recognized that the division's commitment to custom-tailored specifications was vital to its past and future success—but also recognized that more streamlined, standardized processes would provide a significant reengineering opportunity, while still honoring this customer commitment.

All of the organization's processes were repetitive, but their combined results were unique to each customer order. Process improvements could improve service to customers by allowing the company to deliver a greater number of specialized products at a much faster rate.

Though the focus was on process improvements in engineering and manufacturing, GMT began its work in an unexpected place: the Marketing Department.

In partnership with Marketing and Sales, GMT determined that the division's highly specialized products could in fact be manufactured using standardized, repetitive processes—with 90-95% of current business volume falling under a set of clearly defined and repetitive manufacturing parameters.

The team discovered that there was no need to "reinvent the wheel" each time a "custom" order came in. Instead, individual processes and options could be defined and documented one time—resulting in pre-engineered bills of materials, routings, and drawings which could be repeated, in varying combinations, for nearly all customer orders.

Instead of asking Engineering to draw a brand new blueprint for every order, Sales could go directly to the shop floor with new orders—choosing from a wide range of predefined options to customize every product.

The end result was highly specialized products, meeting the full array of market applications, manufactured using standardized processes—and a reduction in delivery time from three or four weeks to three days. This approach represented a dramatic departure from the "job shop" philosophy of the previous four decades.

But the benefits of the joint efforts went far beyond cycle-time reduction. With product specifications standardized and documented, all manufacturing equipment was realigned into five product family work cells to match repetitive specifications—eliminating the need to move products over great distances while in-process.

These facility improvements slashed indirect labor costs—which represented 15% of total product costs—by up to 95%. They also resulted in far more credible delivery schedules—while more than 50% of orders were previously being expedited to meet deadlines, these "fire drill" situations soon became the exception, not the norm.

In addition, Engineering was able to devote all its energies to those few highly specialized products that fell outside the range of "normal" capabilities, and to developing new market applications. The 80% of Engineering effort formerly expended on order support was suddenly free to develop new business.

This division accomplished what few companies today have the foresight to do—integrating its marketing needs with its manufacturing capabilities. The division began to focus its marketing efforts on those products that formed the best "fit" with its manufacturing equipment and processes—without sacrificing new market opportunities.

And, when truly "special" orders—those falling outside the 95% of standardized processes—were received, the team of Engineering and Manufacturing was able to respond far more efficiently, and deliver these products to customers much faster.

The division quickly realized the results of its team efforts with GMT. "Our work with GMT positioned us for our next 75 years of success," said the division's president. "What GMT helped our team to deliver was really a common-sense solution—bringing together Marketing, which best knows our customers, with Manufacturing and Engineering, which best know our capabilities. Our competitors are years away from implementing anything like this—and that will give us a significant marketplace advantage as we enter the 21st century."