Bagging The Big One

Dec. 21, 2004
How small and midsized manufacturers can land "big league" contracts.

It was amid the sleek designs and hulking displays at the annual office furniture show, NeoCon, in June 2001 that Inscape Corp., Toronto, had its first taste of the big league. Representatives from Best Buy, which was planning to build a new corporate headquarters in Minneapolis, had traveled to the Chicago show to meet with major manufacturers to find a provider for about $17 million worth of office furniture systems for four buildings -- six floors each. The contract was a plum. Not only was it for all new office systems, but the industry had been in decline for more than two years, and jobs of this size and scope had simply disappeared. The largest manufacturers -- HermanMiller, Steelcase, Knoll -- trained their arrows on the job. But some smaller companies, including Inscape (CA$152 million in sales that year), had been invited to bid as well. The show was a crucial hurdle for any company that wanted to advance with the giant electronics retailer. Inscape executives knew the company's size would be considered a disadvantage. "There just weren't jobs like that out on the street," explains Joe Cyr, executive vice president of operations at the Toronto-area company. "It was a big deal. Our competitors were selling $1 billion to $2 billion a year. So it was very much a David and Goliath kind of a setting." It was up to Cyr to turn that disadvantage into an advantage. "A big issue in terms of my involvement at the Chicago meeting was, 'Can you guys really pull this off?' When they're dealing with a company that's $150 million versus over $1 billion, the big questions was, 'Your product is good, but can you really do it?' " Cyr was convincing, and Inscape made the cut list. There were now two potential suppliers, and Best Buy decided to make a site visit. The team walked into the Inscape plant the following March and saw a sea of yellow. Each of the 300 employees was wearing a t-shirt that boldly stated: "Inscape: The Best Buy For Best Buy." After a rigorous inspection and review of the plant and the company's manufacturing practices, Best Buy chose Inscape for the job, which required delivery of 5,500 workstation between October 2002 to March 2003. Best Buy was so pleased with Inscape's performance that last June it flew representatives to the company's plant to personally thank employees. Cyr looks back and says undoubtedly the contract has placed his company in a new league. Certainly some measure of good fortune was present (Cyr says if it had been two years earlier, the company wouldn't have been ready for it.), but when it comes to small and midsized manufacturers landing big contracts, Cyr and others say the most important elements are the basics: a proven system and proven people. "It was a validation that our manufacturing systems, our process capability and the capability of our people is at a level where we can play in the big league. It's just a matter of time before we grow, but there's nothing that's stopping us from accomplishing our goals. We aren't just little guys." Confident From The Start Cyr and leaders from other small and midsized companies say the No. 1 rule to going after a new market or a larger-than-normal or high-profile contract is to know for sure that your company can do the work. Otherwise, the risk is not worth it. "We could not fail," Cyr says of the Best Buy job. "There were penalty clauses related to delivery and installation that were quite arduous. They had tremendous leverage on this. So this was really a situation where you just can't go wrong. To some degree you are betting the company, both in terms of profile and financial exposure." Cyr's confidence sprung from a cellular manufacturing system that the company has been developing and working to perfect since 1987. Cells are connected and carefully synchronized so that panel systems, filing systems and work surfaces all arrive in the shipping area within a four-hour window. There are checks and double checks on the packaging of the goods to ensure that all the components needed for a work area arrive together, and the leaned system meant the company could meet the short cycle times the contract called for. In Cyr's mind, the system had evolved to the point that he was absolutely certain Inscape could handle the job. His advice to others: If you aren't that confident, don't go for it. "It could be the best thing you ever did, or it could be the worst thing you ever did. You don't fail at this. If you do, it has a devastating career impact." Agreeing with Cyr is Timothy J. Hutzel, a partner with MainStream Management LLC, Cedar Rapids, Iowa. His firm, which advises manufacturers on setting up lean systems, landed an agreement with a U.S. Air Force logistics center that he expects will lead to 500% growth in terms of revenue and staffing at his company. MainStream, too, has a system that the company has shaped, reshaped and reshaped again until its leaders were confident enough they could take on the Air Force job -- even though they had only 10 employees at the time. "You can't be stupid confident," Hutzel says of going after big contracts. "If you aren't confident with your own leadership, your own people and your own systems, then you aren't ready," he says. In the cases of both Inscape and MainStream, the companies took what could have been seen as a disadvantage -- size -- and turned it into an advantage. "We're a small organization, and we have very little hierarchy, so we can talk directly to the customer," says Hutzel, who formerly served in manufacturing management at GE Aircraft Engines. "For the first time [at the Air Force logistics center], someone came in and asked, 'What are your needs?' rather than saying, 'Here's what we do, and here's what we have.' " Hutzel says MainStream frankly told the Air Force center that if it went with a larger competitor, it would be getting "one week of every four in a month," while MainStream would be on the job constantly. "We can give comfort to the client by being here as they need us." For Inscape, Best Buy was sold on the product, so that battle was won. But easing the company's concerns about size was a challenge. Tactics were inclusion of all top executives in every step of the process and promising to station a representative at the site, which increased Best Buy's confidence level. "They kept asking, 'What if this happens . . . What if that happens.' I said, look, understand what this means to us. There is no way we are going to fail." Marketing Strengths Tooting your horn can be tough for small to midsized manufacturers, especially in these times, when competitive pressures are coming from forces they can't control. But selling strong points -- a marketing basic -- is still valuable. Take the case of EMI Industries, Tampa, Fla., a $36 million maker of store fixtures such as coffee and condiment stations. The company had several large, high-profile clients in the grocery-store-chain market, but only one large client in the convenient-store market, Quick Trip Convenience Stores, says David Hahmann, vice president of marketing. EMI decided it wanted more of the convenience store market, and launched a marketing campaign after investing in a customer-relationship management system from Siebel Systems. Through repeatedly targeting a list of potential clients with sales calls and mailings about its success with Quick Trip, EMI landed a $3 million agreement to remodel drink stations at 300 stores a year for another major national convenient store chain starting last year. A typical convenience store contract is for 10 to 20 new stores or remodels a year. The new client had never heard of EMI before, and Hahmann attributes landing the agreement to "a consistent marketing message" as well as the fact that the company brought the client a solution that fit its needs. He expects the agreement will definitely help EMI grow its convenience-store base. "Using their name verbally and having the experience of doing a nationwide, high-volume roll-out in the convenience store industry . . . people say, 'If you can do that, you can handle our smaller or same-size campaign.' " Which is the ultimate reason why a small to midsized company would want to go after a "stretch" contract: To move to a bigger league full of untapped sales. As Cyr says of Inscape, "Never again will we have to apologize for our lack of size.

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