Survey Results Focus on Four Pillars
Recently, Harbour Results Inc. conducted a survey of more than 150 manufacturing companies that have less than $50 million in annual revenue. This survey focused on the four pillars of a solid company: finance, operational excellence, sales and marking, and leadership and people development.
The survey found that the most significant challenges facing small to medium sized manufacturers in the next 12 months are: 1) raw material markets—pricing and availability of material; 2) sales demand—who will be our customers and what will demand look like; 3) underlying macro economics—what will happen in the rest of the world and at home with our economy; and 4) operational capabilities—what will my company be required to do and will we be able to meet demand with a high quality part, on time. Beyond 12 months, companies are also concerned with globalization, finding the right talent for their organization, government policy and supply chain capabilities.
With those challenges in mind, Harbour asked companies more specific questions about the four pillars of their business. The results for 2011 were staggering, particularly when compared with 2010. With volumes way up in 2011 and businesses beginning to feel good about the return to profitability, there were new concerns with the data highlighted.
Sales and Marketing. Companies are going in the wrong direction in terms of their ability to plan: 60 percent of the population does not do long term sales planning, and 52 percent of the group do not meet internally to discuss sales plans or metrics. More concerning is that 74 percent of the companies do not have regularly scheduled communication. Last, when asked who has primary responsibility for sales in their company, 80 percent of the group said the top executive or owner, and this is up from 48 percent in 2010. Companies went after sales in a more reactionary way led by their leaders, and there was no planning because business owners are convinced they know what is required.
Finance. Most companies are profitable in their businesses today. During the last few years the data tells us that companies hunkered down and focused on cash and management of cash.
They cut costs and were able to grow in profitability. Companies are dealing with a lot more complexity and that is having a negative effect on profitability, but in most cases, the data showed that companies were consistently making a minimum of 6 percent net operating margin or more.
Operational Excellence. The data indicates that as volume increased, companies went back to their poor habits and drove inefficiency. Setup times are still poor, and companies are allowing scheduling disruptions in their business 91 percent of the time in less than a 24-hour period.
This causes major problems for the shop floor. Beyond that, companies have abandoned continuous improvement programs and have significant problems with program management. The data shows that companies are fire fighting in program management and are not using tracking tools or metrics to meet timing and deliverables on programs. And all of this operational data is trending in the wrong direction compared with 2010.
Leadership and People Development. In the last pillar, leaders are still not doing much long term planning, with only 49 percent of the companies putting together a formal plan. Seventy four percent are doing 1-year planning, however, only 17 percent indicated that it is highly effective.
Companies are not engaging their employees, and in the year of getting back to high volumes the data shows that teamwork is slipping to an all-time low within companies. Only 41 percent of the population says they have a training plan for employees.
Overall, sales and marketing is continuing to be taken for granted that it will just be there, so little to no planning is being done. In operations, companies have gone back to firefighting their way through the day. Financially, companies are strong because they needed to put their energy here to survive. But developing people and leading the organization took a huge backseat to putting out fires.
Bottom line is that the leaders of organizations are spending too much time working in the business, making sure the day-to-day issues are taken care of. They needed to do this to get through the recession. They need to step back and begin working on the business to ensure long term survival.