The Presenting Problem: Management had been frustrated with the performance of Engineered Products for many years and had tried different improvement programs with little or no success. It was important for EP to perform at a substantially higher level because it represented the opportunity for future growth. (Hand Tools operates in a mature market with severe competition.)
Delta Dynamics was engaged to assist management in developing the Engineered Products business. Specific goals of the project included:
- Position EP to maximize growth and profits
- Achieve double digit operating margins
- Provide “real time” business training for staff
- Establish an agreed upon philosophy for the future
- Establish business targets, strategy, and coherence at the executive level
Solution Approach: It quickly became apparent that the primary problem was conceptual. EP was seen as a department, not as a distinctly different and separate business. Fundamental business differences between Tools and EP were not being recognized and managed. For example, Tools operates on a build to inventory model. Orders are filled from finished goods inventories which are replenished through an MRP (materials requirements planning) system. EP, on the other hand, is a make-to-order business where products are manufactured to exacting customer specifications and shipped immediately upon completion. These are radically different organization “architectures” and business processes.