Reengineer Your Business for Growth by Improving from Reactive IT to Proactive OT

BY: GEORGE SINGOS

In my role as a Business Leader Advisor, I often speak with small manufacturers in Michigan that are looking to grow. Many are family-owned companies founded by grandparents, who grew the company’s revenue to $1M, which was then passed onto the parents, who further grew the revenue to around $5M, and the grandchildren are now looking for ways to continue this growth to $10M and beyond – but their growth is stagnant and they don’t know why.

In situations such as these, the first step is to begin with evaluating the organization’s structure. Most family-owned companies started with the owner being responsible for nearly every aspect of the operation – including purchasing, sales, scheduling and so on. This works sufficiently long enough for the company to experience adequate growth, but at a certain point, delegation is necessary. They become a $5M company still functioning like a $1M company, lacking the proper systems and organizational support needed to continue growing the company. This can produce a number of significant challenges within the organization, from fragmented family dynamics to profit erosion and growth stagnation.

To resolve these issues and more, operational transparency is key. Having real-time, comprehensive insight into every aspect of the operation is essential for companies seeking to continuously improve and grow. Typically, companies will attempt to achieve operational transparency by implementing an Enterprise Resource Planning (ERP) system, only to claim that it “doesn’t work” because they fail to use it to track vital aspects such as schedule compliance, profitability, inventory control and scrap and rework. With these companies, I ask them to consider the following: Who uses the ERP system? What modules does the system have? Do you report out of the system? Have you maintained the system with updates and bug fixes over time? Based on these answers, it’s clear that most companies are not using their ERP systems to their full potential.

Along with not using the ERP system properly, many companies also fail to connect their equipment to the system. Some may have the Information Technology (IT) in place to track and report on data, but they have not yet added Operational Technology (OT) to directly monitor and manage processes and activity.

Establishing this connectivity between IT and OT frees leaders from having to continually walk the plant floor to determine live scrap numbers, which equipment is running and schedule compliance. Instead, connectivity between equipment and IT does all this heavy lifting for them, gathering and presenting real-time data right from the plant floor. With this completed automatically, leaders have more time to spend on implementing future improvements and walking the floor to bond with workers, rather than only visiting them when there is a problem. Additionally, when equipment and performance is being monitored through the use of sensors, for example, employees tend to work harder and spend less time on non-value added activities, further improving productivity and efficiency.

Companies must evolve organizationally and operationally as they grow if they wish to sustain expansion long-term. Reengineering your company for growth will enable your company to grow to $10M in revenue and beyond – with the right support in place.

To help identify potential efficiencies and develop a plan for continuous improvement at your company, ask our experts about completing an Opportunity Assessment at inquiry@the-center.org.


MEET OUR EXPERT

George Singos, Business Leader Advisor
George Singos is the Business Leader Advisor for the Michigan Manufacturing Technology Center. He has more than 30 years of manufacturing experience in various capacities. For the past 20+ years, he has focused on sales and marketing management both domestically and internationally. Prior to joining The Center, George spent the previous 10 years working in International Business Development. His primary focus was growing International Sales in Europe and East Asia while supporting North American, South American and ASEAN operations.  

Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.