Changing the Blueprint

Situation

A privately held company in the custom-engineered products arena was experiencing serious cash flow problems over multiple months — with no end in sight. A trusted advisor referred the owner to Platinum Group to uncover the source of this dilemma and make recommendations to get through this critical transition.

Challenges

• The core issue was not apparent at the outset.
• Finger pointing had led to a breakdown in cooperative behavior among the sales, design and manufacturing groups.
• Quality problems were damaging the company’s reputation.

Solution

Platinum Group advised the owner and senior managers to emphasize the sale of standardized products and reward its sales representatives more highly for selling them. In addition, it was recommended to increase the price for customized products.

Results

As Platinum Group “peeled the onion” to understand the product offerings, competitive forces and margins, it was determined that the company performed well when filling orders for its standard products. However, in order to meet customers’ requests and win orders, sales representatives were over-promising on the company’s ability to engineer customized product modifications. This led to increased costs, extended time schedules and diminished margins. What seemed like only small changes to the sales reps were time-consuming and lacked appeal to the designers and engineers. What’s more, the blueprint drafting process became a bottleneck for the entire operation, which severely constrained both the design team and manufacturing operation. “Rush” jobs occurred regularly to meet deadlines — or minimize a product’s tardiness to the customer — resulting in a frenetic manufacturing pace that led to quality issues and failure to integrate design elements and improvements back into the base design. The senior officer did not have a strategy about whether or not to offer custom product design, which proved to be the reason why the company was in chaos.