July 26, 2016 Keeping Customers Cool

Volume 6 | Issue 4

As competitive pressures heat up, Red Dot maintains the healthy temperature of its business using a successful strategy.

In 1965, H.G. “Harky” Runnings founded the West Seattle Radiator Company, a moniker he thought too long and boring. Seeking something catchier, Runnings was inspired by the “Blue Dot” flash cubes the Kodak Corporation was then heavily advertising for its cameras. By substituting another primary color, the Red Dot Corporation was born. It was reborn again some 30 years later when Runnings transferred ownership completely to the company’s employees. And while the “Blue Dot” was just a quick flash that has long since been overtaken by newer technology, its brighter namesake has prospered by constantly incorporating the latest technical innovations and best manufacturing practices.

Today, Red Dot is a major worldwide manufacturer and supplier of mobile heating and air conditioning systems for the heavy-duty trucking and off-road industries. One of the first manufacturers of integrated heating and air conditioning systems for trucks, Red Dot custom designs and manufactures both component parts and complete systems for industry leaders in a variety of markets. The company introduced many industry firsts, including separate heater/air conditioning for the sleeper compartment, solid state electronics, low-profile roof-top condenser; air-operated water valve, air-operated vent door, and patented cable-operated vent door, among others.

Over the years, there has been a slew of challenges; current economic uncertainties are but the latest. Says Marketing Manager Robert Gardiner, Red Dot has been able to “stay cool” under the most heated business conditions through a combination of product excellence, lean manufacturing and marketing acumen to maintain its market leadership.

Fine Tuning Business Flows from Start to Finish
“We’re vertically integrated,” Gardiner points out. “That’s one thing that makes us distinct from our competitors. We do all the design and manufacturing in-house, so we have complete control over product quality and innovation. We employ 25 engineers equipped with the latest 3D computer modeling systems and testing equipment in a dedicated Technical Center that is among the most sophisticated research facilities in the industry. One of our more recent design results is replacing much of the sheet metal with plastic, which not only reduces weight, but results in a more stylish product that can be seamlessly molded into the dashboard with the same look and feel as the other controls.”

Registered as an ISO 9001 company since 1994, Red Dot’s “flow” manufacturing process continually strives to increase efficiency and quality while reducing waste.

Parts are assembled only as they’re needed and in smaller batch sizes, often fewer than 100, to keep inventory levels low and workers tightly focused on immediate tasks. Since its implementation in 1995, warranty claims have dropped while on-time shipments have approached 100 percent.

Red Dot has tightened its manufacturing focus further to achieve a series of “Kaizen” events. The Japanese word means “gradual and orderly, continuous improvement” and the Kaizen strategy is to make changes in small steps; as each step affects the improvement of the next step, the overall efficiency of the business process improves, without incurring huge capital investment.

“We started this approach a year-and-a-half ago, and we’ve just successfully completed our 15th Kaizen event,” Gardiner says. “What we’ve done each time is completely tear down and rebuild a specific manufacturing cell to improve its productivity. Over time, each reconfigured increment adds up and you’ve got a greatly improved manufacturing operation that is more nimble to address changing needs, more customer-focused, more cost-effective.”

Making Market Adjustments
Like any industry, the heavy truck business is cyclical. Red Dot tries to sidestep downturns by diversifying its market concentration. “OEMs represent about 40 percent of our business,” Gardiner says. “In addition to complete custom systems, we also sell component parts, both through the OEMs as well as independent distributors. We’ve also branched out to the agricultural and off-road segments, with companies such as Caterpillar and John Deere as major customers.”

While headquarters and manufacturing facilities are based in the Pacific Northwest, Red Dot also operates a 40,000-square-foot distribution center in Memphis, Tenn., to better serve its customers on the East Coast. It also recently opened a European branch, with JCB and Volvo Sweden as one of its major customers. Besides a different driving wheel placement for the U.K. market, Gardiner notes that the major difference is that European trucks are generally smaller and lighter.

Working for Yourself
What’s also unique about Red Dot is that it is completely employee-owned. With 335 “owners,” that can be something of a challenge to manage in and of itself.

“The fact is that you can’t manage by committee,” Gardiner points out. “We do have a board of directors and a senior management that is responsible to make major decisions. The trick is to integrate middle management into that decision-making process and for the middle managers, in turn, to involve the workers on the shop floor.”

Every month, middle management takes part in a budget meeting that is called “The Great Game of Business.” The way the game is played, Gardiner explains, is that, “We look at specific budget items and provide our input as to how we can make more profitable improvements. Then we have to take any approved plans to improve these budget numbers and get the people in the shop involved to make it happen.” This way, workers can see that they’re being included in something that affects not only the bottom-line, but also their individual return-on-investment.

All of this makes Red Dot Corporation a pretty cool company.

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