Rogers Consulting Services (hereafter, RCS) found the primary source of the problem to be in the manufacturing area of SDI’s business. Upon the initial meeting and plant tour, the manufacturing facility was found to be small, cramped, dimly lit, dirty, cluttered, and unorganized. Partially assembled product was strewn all over multiple tables with no apparent purposeful order or placement.
The second problem area RCS identified was with production cost. The Red Cedar Country Style feeder cost more to produce than the Town Style feeder, yet the Town Style feeder was marketed as a higher-priced item.
The third problem area RCS identified was with SDI’s marketing and adverting brochures. The brochures were costly to print due to their intense use of color, and the style/theme, while creative, used was found to be out-dated and ineffective.
Issues Management Needed to Address
The business case summary and subsequent facility tour provided to RCS was enlightening and provided a good deal of information about SDI, its goals as a company, and its management team. Upon analyzing all the documentation provided, and after interviewing Bo Haeberle and Ed Welsh, RCS determined that the following issues needed to be addressed by SDI management:
- Production cost was too high.
- There was no documented standard for building each feeder, nor was there strict engineering documentation.
- There was no quality policy, nor were there any manufacturing quality guidelines or procedures.
- The marketing material was outdated and ineffectual.
RECOMMENDED STRATEGIC VISION FOR SDI
In order to increase sales and increase total revenue, while reducing costs, RCS recommended the following strategic vision for SDI:
Short Term Vision – In 2 years, become the de-facto recommended standard Bird Feeder for the American Birding Association (ABA), while continuing to pursue local and regional sales opportunities.
Long Term Vision – In 5 years, expand sales through corporate sales contracts with Lowe’s, Home Depot and Wal-Mart.
Further Explanation…
RCS concluded that an exclusive product endorsement agreement/contract with the ABA would provide the following benefits to SDI:
- A consistent source of interested customers.
- Customers who are willing to pay a premium for the right product.
- Nationwide exposure through inclusion in the ABA’s published member materials.
A successful relationship with the ABA would provide SDI the financial footing it would need to meet the corporate sales contract goal.
OBJECTIVES FOR SDI TO PURSUE
RCS’ analysis determined that SDI’s first objective was to cut manufacturing costs for each of its product lines by 1/3 in 90 days (from $95 for the Town model, down to $63.65 and, from $105 for the Cedar model, down to $70.35). The cost reduction would allow SDI to increase is unit margin to acceptable levels and would allow SDI to sell their units at a more attractive wholesale price point to retailers. The second of RCS’ objectives for SDI was to establish a set of product manufacturing guidelines and procedures. The procedures were to include such things as a comprehensive parts listing (akin to an engineering BOM), comprehensive assembly instructions, and a quality policy statement. The third of RCS’ objectives for SDI was to change the theme of its existing marketing material to more accurately reflect the short-term goal of securing an ABA product endorsement.
ACTION RECOMMENDATIONS TO IMPLEMENT AND EXECUTE THE STRATEGY
In conclusion, RCS recommended the following action items to SDI:
- Create thorough and complete parts lists for each product and draw installation diagrams and instructions that can be easily followed even by a non-employee.
- Organize the production facility in a way such that parts are identified with a part number and are stored in clearly labeled bins.
- Re-focus the primary material used in the Country model from Cedar to a more affordable and more local variety such as Maple or Hickory. Stain can be used to achieve a coloring similar to cedar (if desired).
- Design a marketing campaign to specifically target the ABA member demographic.
- Create a “feeder-kit” consumer option for each feeder. The kit would include all the parts and instructions necessary for the consumer to put together the feeder themselves. Offer assembly assistance via a local phone number.
