Ask HN: Bought manufacturing biz – how to bring into modern age?

6 points by redfalcon6 10 years ago | 9 comments

I'm in process of completing an acquisition of a 30 year old manufacturing business. 9 employees. Machine tools, some of which are CNC, some aren't. A bit over $1M in revenue. (Single product type, but each product is customized for the end user. Sorry for anonymity but not done with purchase yet.)

This business has not been brought into modern age. Manual hand drawn designs for the products (which again, are done differently for each customer). Old school hand recording of timesheets. No HR system. Accounting on quickbooks. CRM is a paper file system. No sales staff to speak of (just answer phones.) 7 step manufacturing process is done by moving hand written order forms along the production line for each step.

What would your priorities be as you took this over to apply all the best of breed productivity tools, SAAS tools, hacks, etc to bring this business into the modern age?

DanBC 10 years ago |

I used to work for sub-contract electronic engineers. I was working there when almost everything was done on paper; I was working there when they transitioned to computer based systems. It was a fucking nightmare because nobody buying the new software bothered to speak to people doing the work; and then when the software was bought the people in charge of changing stuff didn't bother to understand how the data would be used.

Here's just one example: The software had an internal part number field, and 2 description fields. The guy in charge of part numbers and descriptions wanted 5 digit numbers and wanted the description to start at the top level and drill down.

Here's one description:

    RESISTOR MRS25 100K

That looks okay until you realise that people need to search on the descriptions, and the software only allowed searched on the first 16 characters.

    RESISTOR MRS25 1

That's a lot of components, and so people have to search through a bunch of stuff to find the item they want.

The first thing you must do is learn and understand the system. It works for them, and anything you replace it with is likely to break things and to make life worse.

Most places will have payroll software. And so a bunch of manufacturing software is an add on or extension to that software - maybe some accounts stuff for handling invoicing, and then for handling buying materials and stock, and then for handling stock internally. But accountants (who create this software) don't understand how shop floors run, and so you end up with frustrating weirdness.

avitzurel 10 years ago |

First, congrats! Buying a business is not an easy task.

Before anything else, I would sit down with all the employees (together and separately) and hear from them what are the problems in the business and what they think should be the priority.

This will have 2 affects.

1. They will respect you for giving them a voice. 2. You will get smarter by the minute on what the business needs.

After that, before anything else I would just set up systems in place, processes and systems are super important when you run a time and materials business.

Understanding the cost and getting the cost of goods and labor down would be my first priority. Processes will help with that since less time will be lost.

Systems I would put (in order of priority)

1. Orders and production 2. CRM *customer service, customer relations, sales and more should be included to make sure you maximize your business.

Without more details it's hard to give more tips, but depending on the business type a website with online orders and online quotes can go a long way, for other types it's not that important.

Above all, good luck with your journey and your business. Take care of your employees, they will take care of you a lot more in return.

If there's a single tip I can give you is to treat your employees as equals, as you want yourself to be treated, they are your single most valuable asset.

redfalcon6 10 years ago | |

Awesome. Any tips on order and production systems?

And totally with you on the employees - they know way more than I do and are the ones who built this business!

avitzurel 10 years ago | | |

I don't have any system in mind but really anything that will streamline production and manufacturing.

One of the biggest problems usually in this sort of business is inventory management and getting from the inventory to final product to the client, this is where you money is.

I realize this is a bit generic, but you are missing a lot of details here (and that's fine, in your place I would do the same until the deal is final).

From the sound of it though, this is a business ripe for improvement, almost anything you'll touch with good spirit and intentions will likely benefit.

tixocloud 10 years ago |

Congratulations for your impending purchase. Looks like there's lots of opportunity to modernize things but I would begin by having a chat with the employees, get deep into the trenches and understand the entire process (or as much as possible).

Collaborate with your employees and map out the entire process from start to finish. This will give you a good overview of what the current state is.

Avoid solutioning at all costs at this point. Everything may be done manual at this point but will it make things faster? If your employees aren't willing to change to new tools, it could well affect your productivity. Let them guide you to the solutions.

The best hack is to listen to your employees, show them what's possible with new technology and get their buy-in.

chris_va 10 years ago |

People are usually the most limiting factor. What is the machine utilization? Just one shift? How long do the workers take to setup each piece (zero each block, etc)?

You may find this semi interesting:

http://mmstopshopsexecsummary.epubxp.com/i/552707-2015

redfalcon6 10 years ago | |

Just one shift. Haven't done the benchmarking so far. Has to be improvement opportunity just given the walk through from my eyes.

gesman 10 years ago |

I would start with customers and the end product.

Then think how would you build business from scratch to deliver products that customers need.

Then come back and make adjustments into the existing operation that fits your vision.

SAAS, hacks, shmacks may (or may not) be part of the process to optimize the business. Nothing wrong in paper, excels, quickbooks and order forms per se. If business is a smooth machine in operation - be careful in making drastic changes.

kspaans 10 years ago |

I once heard of a woodworking shop that would sticker parts & components with RFID tags. Each product as it went step to step along the production line could be physically tracked along the shop floor with a hand-held RFID scanner, and there was a sales/production backend system that tracked all components and progress as they moved along production.