1. The Presidents’ Forum of Orange County
Tuesday, March 11, 2008
Building Value in Your Business
Through
Lean Business Management
David Jacobs
Anchor Audio
Chairman
13. Question: How Does Anchor Audio
Succeed 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.
14. 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)
17. 2. Lean Distribution
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.
18. 3. Lean Vendor Management
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.
19. 4. Lean Engineering
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
20. 5. Lean Finance
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
21. Summary
Recession
Closed Europe
Large Dealer BK Sales
Incr by 14%
Introduced New Products
Improved Dealer Management
Gross Profit
Lean Manufacturing Incr by 39%
Product Redesigns
Lean Mfg Overhead
Cut Reps Decrease by 19%
Closed Europe Debt Income
Increase by 617%
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09