In part one of this article, Greg Heinemann, who was recently appointed CEO of Metro Mold & Design (MMD; Rogers, MN), explained how a family-owned business learned to adapt to the challenges of growth and articulate a sustainable value proposition. Here in part two, he explains the importance of breaking down silos in a growing company and why it's important to learn to say no.
Over the four decades of Metro Mold's growth, the company developed significant breadth to its capabilities and services as it responded to customer requirements and implemented new technologies. However, Heinemann noted that it was "like seven or eight small companies" existing in silos rather than one $40 million company. "I thought I'd see a lot of cross pollination among these groups, but I only saw that in one or two areas," he says.
|Greg Heinemann, CEO.|
With Heinemann's vision and the technical expertise that was started by [company founder] John Holland and continued by [son] Tim, Metro Mold developed a culture of problem solving through the eyes of the customer. "We found that we could take on challenges—those that the market failed to solve we could solve at Metro Mold," Heinemann states. "We could see the problem through the customer's own lens rather than strictly an injection molding or machining lens, for example. This shed light on the problem that allowed us to solve the problem, while eliminating portions of the business that caused distractions to what we do well."
Metro Mold currently has three defined business areas: Medical, "manufacturing the impossible" and the industrial business. For the medical focus, Metro Mold's core value proposition is manufacturing components for Class II and Class III implantable medical devices with the ability to get customers into production quickly by eliminating wasted steps and automating other processes. "Whether it's a transfer program, a new product or a new generation of an existing product, we get them into production quickly," Heinemann says. With an 86,000-square-foot medical manufacturing facility in Brooklyn Park, MN, MMD has cleanroom capabilities and a broad range of processing and machining equipment required to manufacture micro-devices and perform micro molding for high-tolerance parts.
With Metro Mold's engineering resources, another focus of the company's business is working on difficult parts. Customers come to Metro Mold to find manufacturing or design solutions that others have failed at. "For these customers, failure is not an option when looking at a new product or new technology," says Heinemann. "Our success in manufacturing the impossible is due to a diverse team of unique problem solvers who enable us to look at opportunities from different angles to find the right solution. It may take an injection molding expert looking at a machining issue to come up with the right solution. Sometimes this allows us to create hybrid solutions that leverage manufacturing methodologies differently, like combining machining and injection molding."
Metro Mold's industrial business operates according to the Pareto principle, focusing on the 20% of programs that drive 80% of profitability. To help reduce costs, Metro Mold has worked with customers to simplify manufacturing processes by reducing shorter runs and focusing on eliminating cost from longer ones. "We've learned how to help the buyer deliver on year-end goals by taking cost out of the parts that are responsible for the majority of the spend," says Heinemann.
Learning to say no
As Metro Mold narrowed its focus following the Pareto principle, it began to identify the capabilities, services and technologies the company needed to stay relevant to its customers and prioritize them. "Every successful custom manufacturer has to determine what it is they will say ‘no' to and what they will say ‘yes' to," states Heinemann.
Capabilities and resources are often used for customers that, at the end of the day, won't provide a good ROI. That is due to the cost involved to maintain and improve capabilities, which means it's important to understand when you should—and when you should not—invest. "For one customer, we spent a ton of time and energy making components, and ultimately the question wasn't one of can we manufacture these components—we were able to mold the parts—but rather, based on what we invested, should we have wanted to?"
Heinemann added that Metro Mold used to do quite a bit of work with startup companies. "Ultimately we found that we were better manufacturers than angel investors," he stated. "Often it can be tempting to tackle a technical challenge of any nature, and it can feel altruistic to help someone get a start, but at the end of the day we owe it to all stakeholders to invest prudently."
Heinemann notes that the moldmaking industry tends to be entrepreneurial, and advises that companies need to do a better job of looking back in time and assessing the engineering resources used on particular jobs, and ask, "how much did we spend on that job versus how much did we make?" "Something we've started doing is telling companies that we will do the bridge tooling and development if we get the production. If not, the cost is a million dollars, as we have to make money on each deployment of resources.
"We're not consultancies, we're manufacturers, and we have to be diligent," Heinemann emphasizes. "People want to use you for the development but want the pricing advantages of companies that will not or cannot invest the upfront engineering resources it takes to get a program into production. We have become very deliberate and intentional about how we spend our resources."
In the end, Metro Mold & Design is confident in its new course, building on the competencies of both the previous leadership and the new generation of leaders. Metro Mold builds upon its tool-making roots, and the expertise brought to the company by each generation of leaders, while continuing to narrow its focus to deliver the highest value for all its customers.
Read part one of this article.