david jacobs
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The Presidents’ Forum of Orange CountyTuesday, March 11, 2008
Building Value in Your BusinessThrough
Lean Business Management
David JacobsAnchor Audio
Chairman
Portable Sound Systems
Lecterns
Wired & Wireless Intercoms
Assistive Listening Systems
Politicians
Military
Educators
Churches
Corporate
Emergency
EntertainmentRene Russo in “Hostage”
Question: How Does Anchor AudioSucceed in Competition With
Foreign Manufacturers?
Answer: Lean Business Management
1. Lean Manufacturing,2. Lean Distribution,3. Lean Vendor Management,4. Lean Engineering,5. Lean Finance.
1. Lean Manufacturing
Action Steps (Over a 3 Year Period):
• Hired CMTC to Consult on Lean Manufacturing Techniques• Point-of-Use Storage (Minimized Movement of Inventory)• Cellular Manufacturing (Eliminated WIP Inventory)• Single Piece Flow (QC Each Unit to Assure High Yield)
• Improved Receiving Inspection (No Bad Raw Materials)• Invested in Automation Equipment to Manufacture Circuit Boards• Re-engineered Products to Capitalize on Manufacturing Capabilities• Created Incentive Programs for Every Employee
Results:
• Reduced Direct Labor By 50% (7% of COGS)• Failures Reduced to 0 – 2 per Day• Reduced Inventory by 45% (No WIP)• On-Time Delivery is 100% (Promise 3 Day Shipping)
Liberty Manufacturing Cell
Automated Surface Mount Equipment
Action Steps:• Improved the Management of Our 3,000 Dealers
– Fired Independent Manufacturers Reps in the US– Expanded Our Sales Department to Provide Dealer Support,
• Phone, E-mail, Web Support, Trade Shows & Field Visits• SPIFF Awards to Dealers’ Salespeople
• Closed Barcelona Distribution Center– European Operating Costs Too High,– New Transportation & Communications Services
Results:• Sales Increased After the Reps Were Fired,• Eliminated Rep Commissions (6% - 10% of Sales),• Improved Dealer Communication (Dealers Prefer Direct Contact)• Eliminated European Inventory, Staff & Overhead.
2. Lean Distribution
Action Steps:• Custom Parts (Plastics & Metal)
– Designed Out Custom Components As Much As Possible– Studied & Improved Vendors’ Manufacturing Processes
» Material Handling Procedures & Fixtures» QC Procedures to Align With Anchor QC Standards
» Replaced Non-Performing Vendors
• Commodities (Electronics)
– Qualified Multiple Sources
» Price, QC & Delivery Requirements
• Accurate Forecasting to Drive the MRP and Purchasing.
Results:
• Gross Profit Increased By 10% (Parts are 87% of COGS),
• Very Few Receiving QC Problems,
• Almost No Raw Material Parts Shortages.
3. Lean Vendor Management
Action Steps:• Efficient Project Planning & Control
– Initiated Daily Project Management Meetings– Involved Marketing, Sales, Production & Finance– Improved BOM & BOO Documentation.
Results: • Rapid Decision Making to Guide the Projects• Organization Operates as a Coordinated Network• Time-To-Market Dropped Dramatically• Accelerated New Product Development:
– AnchorMAN Wireless Intercom – Patent Pending
– Beacon Portable Line Array – Patent Issued 2/08
– Acclaim Portable Lectern– MiniVox Lite – Upgraded Electronics in Existing Products– Improved Enclosures for Human Interface
4. Lean Engineering
Action Steps (Eliminate the Outside Cost of Capital):
• Bought Back All Outside Shareholder Stock• Paid Off All Bank Debt• Purchased a Building for the Company
Result (Positioned to Pursue a New Growth Phase):
• No Payments for Dividends, Interest or Rent,• Cash Flow Is Available to Fund Company Growth
– New Product Development– New Market Development (Europe)– Acquisitions
5. Lean Finance
Summary
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09
SalesIncr by 14%
Gross ProfitIncr by 39%
OverheadDecrease by 19%
IncomeIncrease by 617%
Debt
RecessionClosed EuropeLarge Dealer BK
Lean MfgCut RepsClosed Europe
Introduced New ProductsImproved Dealer Management
Lean ManufacturingProduct Redesigns