What is TOS

TOS is a methodology used by precision and custom manufacturers that want to get their company to the next level and find a way to deal with the inevitable tension associated with ramping up Sales, Engineering and Operations.

THE STATUS QUO

TOS is geared for CEO’s and Presidents whose original vision for their business has changed. Instead of running the business, it is now running them. It is also design for companies that have hit the all too familiar “ceiling”- the inability to move to the next level in terms of growth, profit and internal capability.

Business professionals intuitively understand that a company is more than the sum of its parts. Yet in our day-to-day world, this truism is quickly overwhelmed by the pragmatic need to resolve urgent problems. Instead of working to resolve root cause issues, we are continually side tracked into making ad hoc decisions that often come back to haunt us.

Typical responses to correct this situation may include an assortment of remedies: upgraded business software, attending various seminars, reading the latest books, joining a CEO roundtable,  initiating  new incentive programs or continuous improvement programs, etc. Although these can be valuable tools, until your business has fully integrated a system that effectively balances sales and operations, you may find it difficult to increase profits beyond business as usual.

THE SHIFT

Because attempts to reduce manufacturing costs will encounter diminishing returns, we believe that a sustainable continuous improvement initiative must be predicated on margin growth. TOS is a framework that increases profit margins because it creates profound awareness of your company’s strategic leverage points, and aligns activities to maximize them. TOS consists of two elements:

Element 1: The Five Necessary Business Conditions: For a company to be effective five necessary conditions must be not only be in place, but operating at a sufficient level:

I. Clarity and agreement on the overall vision and business strategy

II. Sound financial model to make good decisions

III. Organizational strategy that assures the best people are on board

IV. Viable sales/marketing strategy to assure we are pursuing the right targets

V. Viable operations strategy to make all of the above happen

Element 2: The Focusing Engine: A continuous improvement process must also exist. The process should assure the company is using its scarce resources wisely and focuses on only in the right areas. The 5 step-focusing engine identifies and utilizes the company’s strategic leverage point with all functions correctly supporting this task.

The TOS Approach

With the focusing engine running in the foreground and with leadership attention assuring the 5 necessary conditions your company will be in a position to grow by increasing sales utilizing capacity and capability currently hidden within the company. By thinking different, you can take control of your company and break through to the next level.

PROBLEMS

We know there are many problems out there:

  • Price pressure
  • Uncertainty on project/job margins
  • Uncertainty about revenue projections
  • Estimates and bids take too long or are not accurate
  • Low sales hit rate
  • Sales not linking directly with prospect’s true decision-makers
  • Sales thinking more as order takers and account reps, rather than demand generators
  • Too many “surprises” before production starts
  • Festering conflict between sales and operations/engineering
  • Not everyone pulling in the same direction

SOLUTIONS

TOS approaches manufacturing a little differently. There are plenty of consultants that employ methodologies that focus on cost reduction. These methods may include Lean, Six-Sigma, Just In Time (JIT), Total Quality Management (TQM), etc. Although these methods are proven and sound, cost reductions alone will not necessarily grow your company’s profits.

The issue with any methodology is that it may be appropriate for some people some of the time, but it certainly won’t work for all people all of the time.

Therefore, the best methodology is a principled approach that is disciplined yet flexible, that’s built upon your strengths and core values.

  • This is where TOS can help. You will learn how to synchronize your operations and sales such that everyone develops a more complete understanding of your company’s objectives.

HOW?

You will achieve this understanding by identifying and selecting your company’s strategic leverage points.

More specifically, TOS will help you:

  • Gain agreement on sales and operations strategy (i.e. agreement on targets)
  • Creation of a functional Sales and Operations process
  • Leverage current idle capacity by proper market segmentation
  • Improve estimating and quoting process
  • Get you Team pulling in the same direction

SUCCESSES

The Delkor Story

Delkor Systems designs and manufactures end-of-line automated packaging systems with our major customers in the food industry. Our current planning process was limiting our continued growth. We attempted to resolve these issues internally. Upon further analysis, we did not fully understand or appreciate some of the key principles to move from theory to practice.

Therefore, we engaged Rick Bernett to guide us. Instead of upgrading systems, we re-examined the entire sales and operational strategies and adjusted accordingly. The real benefits were the result of improved processes and more importantly, in the culture required to sustain the improvements.

As a result of the partnership created with Rick, we have doubled our throughput capacity with only a 10% headcount increase, we reduced inventory by 18% and improved our material availability from high 88% to high 97%; resulting in much less expediting and chaos on the floor. With respect to productivity as measured by actual hours, we reduced engineering time on average by 24% and our assembly time on average by 33%.

I highly recommend Rick.

Terry P Cook, CPA, Chief Financial Officer