Page 3 - Upper Peninsula Busines Today -- December 2019
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DECEMBER 2019
UPPER PENINSULA BUSINESS TODAY
PAGE 3
   Jeff Ketchum
 This month’s highlight in U.P. Business Today is on Manufacturing and U.P. made. These two topics are close to the hearts of many readers of this publication including the author of this article. Manufacturing is of historical importance to our region, critical to today’s economy and imperative to the future devel- opment of the U.P. and the States of Michigan and Wisconsin.
Over the last several decades, our firm has interfaced with hundreds of manufacturers of all size. Through- out these interactions, we have observed a commit- ment to develop and manufacture quality products here in the USA. However, we have also observed that business owners and leaders can become so opera- tionally focused on working in the business, they forget to set aside time to reflect and work on their business- es. In other words, many manufacturers tend to be good at designing, developing and making products, yet struggle with stepping back and looking at the broader picture of where their business is going and planning for the future. An example of this is a capital equipment manufacturer we served in 2007. Although the company designed and manufac- tured great products, they were highly focused on the whirlwind of keeping up with demand for their prod- ucts, constant hiring and managing day to day opera- tions. They left little time to think, plan and act strate- gically which prolonged key decisions that should have been made earlier about the direction, structure and growth of the company. As a result, the business was challenged in later years due to changing market con- ditions.
Why do many business owners and leaders struggle with objectively reviewing their businesses and plan- ning for the future? Based on our research, we believe
Planning for Manufacturers
there are two primary reasons for this condition:
The first reason is pretty obvious, manufacturers are makers. They design, develop and make things. The skills required to do so include creativity, technical knowledge and the ability to produce and get things made. Manufacturers generally live in the tactical to produce a desired product today. Business owners and leaders of manufacturing companies tend to be prima-
rily operationally focused.
The other reason why many manufacturers struggle
with planning can be traced back to the core beliefs about planning which may be held by a business owner or primary leader. Reasons we have heard for planning avoidance include “planning isn’t effective because plans always change” while others believe that plan- ning is restrictive, lacking in flexibility and inhibitive of freedom and creativity. We often observe these beliefs in organizations where managed chaos reigns or where firefighting problems occur frequently. Accom- panying these beliefs is often a high degree of opera- tional waste, a lack of organizational efficiency and a management team that is often fractured, not aligned and who often play the blame game. The cost of all these disfunction’s can equate to 3-5% or more of prof- it margin, which depending on the size company, could equate to millions of dollars in lost profit.
Although many manufacturers are overly opera- tionally focused and generally avoid planning, there are some that practice taking time each year to reflect on their businesses, where they are going and how to achieve their goals through regular planning. We were exposed to one such client in 2005. The company was an automotive supplier of metal fabricated products near Chicago, IL. The economics of their core business had been deteriorating and a strategic decision was made to pivot into other markets. They identified the medical device market as a primary target and believed they could deliver more value to this segment through their ability to develop proprietary alloys. Within 5 years of committed effort the market transition was a success. Ironically, the very reasons stated above for avoiding planning within many manufacturers, including restriction, inflexibility, lack of freedom and creativity, were not experienced by our client. Howev- er, had they not planned and stayed exclusively devoted to the automotive industry, they would have likely experienced significant challenges.
The month of December and year end provides an
ideal time to reconsider your core beliefs about plan- ning and the amount of time you regularly devote to such thinking. December also allows us to practically experience the results of planning as we celebrate the season of Christmas. The birth of Jesus Christ was foretold by the prophet Isaiah more than 700 years ear- lier and is just one of an estimated 300-500+ messianic predictions in the Old Testament. This points to a grand plan of freedom and eternal life extended to all humanity that is thousands of years old. Perhaps if our
creator plans and does so with that type of time hori- zon, having a plan for our businesses over the next one, three and five years is a wise thing to do.
Jeff Ketchum is a 20-year resident of the Upper Penin- sula and the Founder and President of several U.P. based small businesses. One of them, Lordstone Business Advi- sors, Inc., helps guide small business owners ($1M - $50M) who are looking to grow their business through effective planning, hiring, leadership development and execution.
  
















































































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