High-Performance Offshore Boat Builder

BACKGROUND

The owner, a second-generation boat builder, had spent considerable time building the reputation of the company as the offshore performance sport boat manufacturer. The brand had the cache to attract many high-profile, high-income individuals as the company is considered an innovator in the industry. However, the market is very competitive as few new customers are available. There are only a few builders servicing this market, and most are under-capitalized. Although there is some brand loyalty, customers are finicky and quick to buy the latest and fastest boat.

PROBLEM

Company operations did not match up to the market reputation. Customers were frustrated by the company’s inability to deliver quality boats on time, given the very expensive product with a short seasonal use of only a few months. Internally, major problems included: a chronic cash flow problem resulting in such poor vendor relations that most required COD or advance payments; chronic parts shortages were the norm from both cash flow problem, incomplete BOMs and poor inventory control; high labor costs and low productivity; customers were only required to make a small downpayment but no progress payments; management worked 80 hour workweeks on a regular basis and delegation was a foreign concept resulting in decisions that took weeks; boat builds were each considered custom, standard process discipline was generally unknown and allowed customers to make changes without charge right up to the time the boat was shipped; flawed service model further upsetting customers and compressing cash flow. ...{Read More}

Privately Held Small Manufacturing Company

BACKGROUND

This privately held small manufacturing company produces engineered molded plastic parts using a proprietary and patented process. The company designs and builds most of its key manufacturing equipment. Innovative product designs and low manufacturing costs are a key part of their strategy of competing with products produced in China and other low-cost countries.

PROBLEM

Despite healthy gross margins, the company is losing 65% of revenues. The more it increases sales, the higher the losses. Credit lines are maxed out and the owners are wary of investing any more money into the business without a plan for fixing the underlying problems. Company is too inventive and spends almost 40% of revenues on product and process development. As a result, most of the production equipment is underutilized ...{Read More}