I interviewed Mike Carpenter who discussed Visibility and Scalability.
I’m looking forward today to hearing your views on visibility and scalability in the supply chain. Can you talk a little bit about what do you mean by visibility and scalability with some maybe specific areas that you are focused on?
Sure thanks Dustin [ph], it’s great to visit,it's a little bit damp here in Atlanta with the tendency to rain over five days. Anyway, my current challenge is to assemble and deliver and install a pretty technical, expensive device into polymer plants and there’s a number of bottle necks right now from vendors to our shop, assembling them to information from our customers in the customer website. What we are trying to do, taking, given the different levels of maturity, we’ve installed a CRM system, it’s got a lot better information, visibility into the sales cycle, budget cycle, decision making cycle of our clients. That’s worked a lot better at predicting closes from weeks to months,to quarters, used to be we think we're going to close this in 6 months.
Now we can get it down to a quarter and we are pretty close to gettingit down to a month. As we understand that, we build, we have engineering build some material,we have assembled bills of material. We’ve built out tons for every component. We have worked with vendors to get what they can assemble into sub components logically, what’s there sweetspot for us. All of this is now shared and accessible from our team from the sales team to the engineering team to the manufacturing team to the delivery team, now to our vendors. We can all log on and look at availability and look at orders and look at assemblies, and look at assemblies on order and assemblies in the inventory.We're pretty certainly capitalized, so we trying not to carry that much inventory.
It’s about a 12 week process with 60 day lead tons,12 week process once assembled to work,to get it up and running at a client. It delivers big value for the clients so they want that shortened, 60 day lead times on parts. If we want to cutthe lead times on parts in half and we want to shorten our assembled tests and sell time. We can do that with resources, we can have a few people, we can double up field engineers, but we are seeing a lot of power by sharing orders earlier with vendors, giving vendors, sharing, making available to vendors our financial plans and sales plans. We have gotten, we are in the middle of using that visibility to information, visibility to forecast. We've got another vendor involved and interested because these are big deals to them as well. I guess,I mean visibility, I'm using visibilitybased problem, where sharing information,we are making ERP level transactions visible. But that’s kind of baby steps, the second level of visibility to our sales cycle on our sales plans, that’s getting vendors interested in partnering with us more.
From your point of view, why is visibility and scalability important?
We cannot deliver to our investors on our promises, and we can’t, we lose all those orders that we can’t deliver. The situation we face is, these are very good problems,you get into a global chemical manufacturer, and we test this thing out, do a proof of concept on one reactor. The results are dramatic, payback is in 6 months on the device and these guys have a hundred to 300 reactors where this could be deployed. It goes from one order, an order of one to a second order of two, to a third order of 20. It’s not going one at a time in other words. We can’t be, we don’t want to put ourselves in a position of saying, okay we can deliver it.
At current, 3 months ago, delivery times, we could do 20 in a year, we need to do 20 in a quarter for instance, without investing a huge amount of money. We want to push things back to the vendors to get them to assemble, to get them to hold inventory. We want to do what we're good at, which is a science, which is the burning and testing and install and training. We want to keep that, that’s were good at, and we’re going to bring on more sales people. But that visibility up and down the supply chain from the customer all the way back to the vendor, makes the vendor go, wait there really is 20 and there’s a reason for me to play ball because they share all this information. It makes partnering real instead it just lip service.
Can you talk a little bit out of how it’s done in practice?
Very good question. This is person to person meetings. Now we've got about three and a half to three and three quarters years of operations, pretty year last year and a half we sold four of these devices. It has, that is what interested people is. We’ve opened, we've opened a communal obit to some of these vendors, but this is personal face to face meetings, CEO, CFO and in occasionally the chief science officer. To get them, it’s almost like selling a venture capital deal.
Here's our business plan, here’s our business case, this is why you should be very interested partnering with us. Whether they’re financing our inventory by building things and holding them in inventory, whether they're giving us better terms, it’s all, so far information exchange and trust. Showing them how they, in another over used term, showing them how it's a win situation, we can deliver volume to them in space they were not in, and it serves our purposes as well.
Thanks Mike can you also share a brief background of yourself.
I’m a long time KPGM guy. I started in audit like 30 plus years, started an audit many years ago, became an audit partner, switched to consulting in the early 90’s. I have done everything from ERP implementations of large scale to global shared services for fortune ten sized companies, ended up leading and building some pretty large businesses for the consulting practice like I’ve ran 500 person, hundred twenty five million dollar consulting business. I've spent a lot of time with GE and a lot of time with UPS and many others. Interestingly enough, I started in Mom and Pop oil field service companies in the Louisiana oil field. I know what it's like from both ends of the spectrum.
Thanks Mike for sharing today.
Fantastic, it’s great to talk to you, it’s always great to share, and I learned a lot from others who’ve shared, so I’m happy too to share as well.
About Mike Carpenter
CFO - APMT, Inc.
President - Hibernia Management Consulting, LLC