Manufacturing Imagineer: “Drop-Manufacturing”
It is rather sad to see the number of manufacturing company insolvencies pushing higher and higher, due in part to geopolitics, higher energy prices etc.? It you are a smaller business you may be struggling to find further economies because you could already be “bootstrapping” your operations – working to wafer thin or non-existent margins?? With winter and the “festive” season fast approaching there is the added worry of an additional cash flow squeeze due to holiday pay, client entertaining/PR, and a thinning of the order book etc.?
There is no “perfect” way out of this predicament; the times are and shall remain challenging – despite well intentioned consultants advocating that you adopt this or that strategy.? It may or may not work; have a go but do not assume that it is the “magic bullet” that shall miraculously solve all of your commercial problems?? But do indeed continue to ask as many people as possible for ideas – one or two may just help to plant a seed that bears fruit for you in the near future?? Sometimes it is just good to share your worries with an empathetic and considerate ear…?
When bogged down by the day-to-day concerns of operating your business it can be all too easy to become caught up by the minutia and lose sight of your “grand” (for you) commercial vision.
Taking pragmatic decisions is all part of the “game”…sometimes your business is just not viable “as is” but it does not mean that you should automatically close the doors nor would you want to?? A little creative thinking would not go amiss: what about if (arbitrarily) 20-25 similar and complementary businesses to yours (in your locale) decided to collaborate?? Assume that they are all micro/small manufacturing businesses but with one having relatively larger business premises from where you could all potentially operate from but neither large enough to have a formal “second-tier” management team in place.? For example, using engineering as a case study, the businesses comprise (amongst others): a small fabricator; a CNC machining business; manual machining entities – small, medium and large components; a grinding business; a specialist metal plating/finishing business; a prototype developer business; a CAD/CAM design studio, and so on.? A “Group” structure (with the help of your trusted advisors) is created, with a share swap for each “subsidiary” in proportion to their enterprise value; looking amongst the existing owner/operators and staff for a formal management team, put into place to oversee and operate each “department” (subsidiary); all associated operating “costs” are shared fairly between the business sections; the “lead” (that is, the largest business from whose premises all the entities operate) has final say on all commercial issues, including production flow; the rest of the owner/managers continue to operate but permanently virtually and on a “locum” rota basis (in order of “commercial size”) should the “lead” be on holiday, ill etc.?
The “core” idea is to manufacture to order (“drop-ship” one off and small batches, as opposed to “contract-machining” repeat orders – which could be a further possibility); the end-customers “book capacity” via an integrated online platform; aim to keep costs low; and, maintain critical stock levels for “key” clients only?
In simple terms, many businesses become a “single” commercial entity, but each “department”/subsidiary continues to operate autonomously, share costs; “professionalise” operations with a strong management team derived mostly from the existing talent pool; and, generally, only manufacture to order unless regular (profitable) contract orders can be secured?
Some businesses operate very heavy machines, the cost of relocation and re-installation may make it prohibitive to move – in which case, where practical, they could potentially become the “lead”? ??
There need not actually be 20-25 business, this is quite arbitrary – it is merely to convey the point.? If you consider the “Hawker” Singaporean model, the idea could be expanded to the hospitality sector: where several small “pop-up” restaurants and food trucks operate from a soon to be abandoned single gastro-pub/restaurant building using (in accordance with strict hygiene and other regulations) communal kitchens – complemented by a takeaway/home delivery service.? The range of cuisines being offered may help (but not guarantee) to increase future footfall?? Each participant provides a different price point so that as money gets tight customers can still select from every day to luxury menus to help mitigate any anticipated drop in income/footfall?
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Kip
The EBO Guy????????
…Acquiring businesses for employees
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