To be sustainable a business needs to be dynamic and continually evolve. It needs to innovate developing new product service offerings that can be taken to market. Long term contracts where a business relies on a small number of high value customers are fine.
However, the impact of losing one or more of these key accounts is potentially catastrophic, particularly if the loss accounts for a significant proportion of a company’s revenue.
Last year Nautech Electronics experienced such a scenario first hand. After 20 years of designing, developing and installing emergency lighting, power management and associated equipment in to New Zealand Police vehicles. The contract was lost and with it a substantial proportion of the company’s business.
In many instances, such an event may have resulted in the loss of the entire business. However, after the dust settled it proved to be the point that Nautech Electronics transformed from being a product centric traditional manufacturing business into a lean, agile marketing led, Solutions provider building electronic and electromechanical sub-assemblies for some of New Zealand’s leading technology based exporters.
Today assemblies manufactured by Nautech can be found in OEM products sold around the world.
In business for over 25 years Nautech has always operated within a number of distinct market segments. Specialist vehicles, contract manufacturing and more recently race track control systems.
With the loss of the police contract came the realisation that there was no other specialist vehicle fleet business anywhere else in NZ that came close in either fleet size or installation value.
This meant that in order to survive and prosper the business needed to re-focus and change.
Following a comprehensive review of the business and its market segments a strategic decision was taken to focus on developing and expanding its contract manufacturing division.
With small but established customer base. Contract manufacturing offered the biggest single opportunity for short to medium term growth. Market research indicated that with carefully targeted investment in advanced manufacturing technology and systems, combined with a small number of additional personnel. There was capacity and the opportunity to potentially double revenues from this sector.
NZ has a buoyant and expanding niche hi tech scientific/engineering sector that values local manufacturing against outsourcing overseas. Issues of security, the protection of IP and supply chain management mean that the attraction of so called low cost manufacturing does not always deliver value in real terms.
The key to Nautech achieving success was to gain a detailed understanding of the value proposition required by customers so that Nautech could develop and enhance its product service offering in order to differentiate the business from its competitors and gain market share.
The themes of agility responsiveness lean principles and quality were all highly valued by customers in addition the ability to offer design, design for manufacture, software, firmware development and validation and mechanical assembly also rated highly. Armed with this information Nautech set about to re-engineer its business processes and manufacturing systems to become aligned with customer expectations.
How could the themes above be captured and translated into a value proposition and incorporated into the product service offering?
The pace of business today is frenetic, for the most part meeting customer expectations means producing goods quicker, to higher levels of quality and cheaper than at any time previously, by understanding this Nautech could see an opportunity to differentiate itself from competitors by endorsing these principles and developing a strategy to suite.
New product development is about speed to market, getting there before your competitors and growing market share rapidly. From the very beginning it became apparent that the speed of developing prototypes was key to success. Nautech set up a dedicated prototype production line with a view to reducing lead time from weeks to in some cases a matter of a few days. Beyond this, many companies who develop product value highly a manufacturing partner with design capability and the ability to undertake design for manufacture (DFM).
With an in-house team of design and production engineers Nautech are well placed to offer this service. Developing a lean agile and flexible manufacturing system whilst maintaining stringent levels of quality is more of a challenge.
Nautech chose the route of advanced manufacturing technology and automation.
Starting at the beginning of the process. Nautech invested in the very latest automated environmentally controlled materials inventory and handling system. Kitting jobs directly from the ERP system and delivering them to the shop floor.
The integrity of some sensitive electronic components can be adversely effected by changes in temperature and humidity.
Over the past year Nautech have installed 4 such systems manufactured by Essegi Storage Solutions in Italy. Each ACS 1100 unit is capable of holding up to 1100 reels of surface mount components. Ensuring that levels of both inventory and component quality are maintained simultaneously right from the very start of the manufacturing process. This is critical when you are serving 3 production lines, with each one utilising multiple Juki “pick and place” machines each having the capacity to place up to 23,000 components per hour and controlled by the very latest Juki intelligent system software.
As a result of this lead times for both prototypes and production have decreased, whilst simultaneously machine utilisation and productivity increased. To capitalise on this and further increase capacity additional investment was made in the form of the latest Juki KE 2080L pick and place machine and a EBSO selective soldering machine.
With the additional capacity and increasing order book Nautech has recently pp commenced a second shift in order to continue reducing lead times and provide enhanced levels flexibility and responsiveness to accommodate customer’s requirements.
If proof is required that adversity can be overcome through innovation, ingenuity and sheer determination. The experience of Nautech over the past year is a positive example. Less than 12 months ago the company had lost a substantial proportion of its business and was facing an uncertain future. Today the business is enjoying a resurgence and forecasting record revenues from an increasing customer base.