In aviation, when an aircraft is climbing too steeply it stalls. That means it looses all lift and begins to fall back to earth. It’s a scary situation and if it isn’t handled quickly and correctlyit can cause the airplane to crash.
Businesses can stall the same way. When a business increases sales too rapidly they too can stall and often have the same result. Crash and burn!
Wait. I thought increasing sales was a good thing. Isn’t that one of the measures of success? YES! They key is to manage that increase and not to stall.
At Ebsco Spring we are currently recovering from a “stall”. A few months back after adding a few significant new customers, the economy kicked in and we experience dramatic increases from several of our largest customers. New customers and increases from existing customers! WOW! So what’s the problem. STALL.
Everything seem to happen at once. Orders flowing in from the new customers and our existing customers were seeing this sudden dramatic increase. They needed parts, NOW.
Increased business is great but you pay for raw material and labor when you produce the parts. The customer may not pay for those parts for 60 to 90 days. Increased labor cost, overtime costs and raw material costs significantly increase yet your income doesn’t. It put a strain on your cash reserves quickly. For some companies it may even mean the need for new machinery, a huge cost. Thankfully we had the equipment. Without cash reserves and a good relationship with your bank these can cause a company to go into a stall, and then crash and burn.
The increased demand is great but few companies can stay in business with excess manpower sitting around waiting on more business. The orders hit and you need manpower to make the parts. You resort to overtime eating up the profits you will not even see for 2 to 3 months. You have to pay the employees now. So you start hiring. We have increased our staff by 15% in the past 3 months. It would be easy to lower your standards and hire anyone that comes in the door. Then quality fails and you stall. Customers return parts and begin to look elsewhere for a supplier. You begin loosing as many existing customers as you have brought in new. STALL. It takes discipline to maintain your standards in this situation. You must invest time in the selection process to get quality people who will maintain your standards. You don’t have time to wait. You don’t have time to sit through all of the interviews. But the real solution is you don’t have time not to. You take the time to find the right people who will eventually have the skills to correct the stall and put you back on a steady flight. At Ebsco our non-production team pitched in to help. IT, Purchasing, Sales and everyone headed back into the shop to help. It was a real team effort. I can say we have been fortunate to find the right people. Our new team members have high standards and want to be part of a winning team. We could have staffed up the first month but in the long run that would have caused us to crash. I credit the culture we have at Ebsco for attracting great people. Good people want to work at Ebsco. Our efforts in the past to make Ebsco a great place to work are really paying off.
Now you have all these great people wanting to take the controls and be a part of the team. The easy answer is throw them in there and get the parts out, right? That is the easy answer but it will quickly lead to disaster. Without proper training, mistakes will be the norm. Non-conforming parts and rework will back up the process. It will take longer to get the parts out and they will not conform to your standards. Training is not an option. It may take longer for the new employees to contribute but when they do they will become and answer to your problems not another problem themselves. Ebsco has and is constantly improving a great training program to allow people to succeed. We have not compromised on training and it is really starting to pay off. We have hired future superstars and are giving them the tools they need to succeed. It may take a little longer to recover from the stall but you can be confident your team has the skills to make the recovery happen.
With all of this it is inevitable that lead times and on time delivery will suffer. Lead times and on time delivery are essential to your customers. With just in time production they count on their suppliers to deliver the goods in a reasonable time and be on time. Not meeting their expectations is the quickest way to loosing customers. As you bring in new business through the front door you lose existing business out the back door. STALL and CRASH! So how do you avoid a crash? Communication and good relationships. Customers are more than orders and accounts receivable. You develop relationships and partnerships. At Ebsco our sales team work with their customers. When our stall began our sales staff were honest with our customers and explained what was happening. Our customers worked with us, letting us know what orders were critical and which ones were not. Our sales team communicated with the production team to meet our customers critical demands. It requires a great deal of flexibility and sometimes a bit of creativity in production schedules. Often jobs were not processed in the most efficient order to enable us to meet those critical demands. Schedules were reviewed and adjusted daily, sometimes several times a day. Communication, and understanding our customers needs allowed us to control the stall until we recovered.
Surviving a stall and making a recovery is one of the greatest challenges in flying and in business. To climb higher and higher is exhilarating in both aviation and business. The key is your ability to avoid stalling and to recover if you do. I am very excited about the future at Ebsco. New customers and expanding business from existing customers. It is what all businesses dream of. We have not made a full recovery yet, but our finances are strong, the new team members are on board and learning daily. The lead times are falling and on time delivery is improving rapidly. It has been a wild ride but with the team we have at the controls we are recovering to a brighter future.
Now if you’ll excuse me I need to go check the production schedule.