CSense SME Consulting Case Study
Will Increase in Production Volume give Higher Profits?
The Volume Game
I received a call from my friend. I know him for few years and we were classmates during our MBA. He takes care of his family business which more than a generation old. They manufacture electrical insulation boards.
I knew they have a decent business with a good reputation in the market and long term customers. But things were not rosy as previous years. There is competition coming from all around and even the loyal customer started pressing for the price reduction. They expanded the volume of their business to compensate the lower margins.
Slowly, the operating expenses started climbing and the factory has simply become ‘cash sucking vampire’ (in his own words). Materials started to pile up everywhere in the plant. Even their long term customers started leaving them citing delays and quality problems. None of his people were happy about the working conditions.
My friend is the only saviour of his business, running all seven days to the factory and to the market. We started planning together and worked up clear plans for marketing and production. We made some changes in the way they operate. Some of the improvements using CSense Consulting approach increased the profits by 10%. With structured problem-solving approach and root cause analysis, we were able to root out many of the quality problems.
With regular interventions at their factory and marketing office, we designed a management system and made processes to run on their own, needing the manager’s support only occasionally.
Together, we arrived at key strategies and worked up clear plans for marketing and production. Some of the improvements in the production increased the profits by 10%. With regular interventions at their factory and marketing office, we designed a management system and made processes to run on their own, needing the manager’s support only occasionally.
The Future is clear
We devised the mission for meeting customer requirements for the next 5 years. They started progressing towards those goals. There was some resistance to those missions and goals within the Management team (family members) but a year later everyone got convinced that those targets are achievable. The company has seen a multi-fold increase in profit and profitability. With a 5-year plan in hand, they are now identifying new products, new customers and new opportunities.