Fifty Year Old Company Survives
Economic Tsunami Through
Operational Excellence and Flexibility

Situation:

Five years ago, a fifty year old landscaping equipment company learned that their manufacturing, product development, procurement and regulatory functions were too slow and bogged down to satisfy customers, making them vulnerable to the effects of an economic downturn that affected their core markets. Their operations and supply chains required a great deal of inventory, tying up precious cash, and they had inconsistent quality, with high warranty claims and low customer satisfaction.

Actions:

They undertook a comprehensive operational excellence program to streamline operations, including the move away from building inventory to build-to-order. At the same time, they improved quality to lower warranty cost. Then they turned their attention to product development, where a focus on flexibility and knowledge-sharing gave them the ability to cut time to market by 50% for new products.

Results:

In September of 2008, the economic tsunami hit hard: the company lost 80% of its orders overnight. But they were ready.

Unlike their competitors, they did not have a lot of inventory, overhead expense or warranty claims to tie up cash. That helped minimize the damage from the sudden drop in orders.

They were also able to turn their product line ups on a dime, refocusing development efforts to deliver low cost products and enhancements that their customers could continue to buy with reduced budgets.

As a result, the company was doing so well a year later that they began to buy out their competitors who did not fare so well.