Manufacturing Trade News

Kitchen Incubator Fueling New Careers [top]⇑

By Betty Dillard

Culinary entrepreneur Sandie Nathan is stirring up the regional food industry.

Two years ago when Nathan decided to switch careers, she found the ideal recipe for the growth of her start-up, and she's sharing its ingredients with other budding entrepreneurial foodies while giving them a place to realize their dreams.

Elixir Bakery, Nathan's one-year-old enterprise on Fort Worth's north side, rose from the owner-baker's desire to ditch the corporate world and pursue her own business dream.

The 30-year-old Chicago native and her husband Aaron Nathan, a civil engineer, moved to Fort Worth about 10 years ago for his job. A graduate of Northern Illinois University with a degree in information systems, Sandie spent a decade working in IT before leaving to launch her custom-order bakery specializing in individual size sweet treats.

"I've always been interested in baking and cooking," she said. "I went to school at night at the Culinary School of Fort Worth while working during the day. After a semester there I realized baking was what I really wanted to do."

Eager to start her bootstrap bakery, Nathan quickly ran into the perennial problem start-up food businesses face: where to do the cooking.

Most start-up food manufacturers begin in a home kitchen, but strict food-safety regulations make it illegal to sell products made at home. Once a product is tested and ready for the marketplace, the food industry newbie must legally manufacturer his or her product from a professional, licensed commercial kitchen. Those are as scarce as hen's teeth, as Nathan discovered.

She had scoured the area for a commercial kitchen where she could bake her made-from-scratch cupcakes, pastries and muffins off hours. But when Nathan couldn't find a place that fit her schedule, she opened her own kitchen.

That's when Elixir Kitchen Space – the first and, according to Nathan, only kitchen incubator in Tarrant County – was born.

Sharing the ideals of traditional business incubators, the kitchen incubator concept started in California in 1984 and slowly has spread nationwide. According to CulinaryIncubator.com, there are about 60 kitchen incubators in the U.S., including two in Austin and one in Houston. A kitchen incubator recently opened in Garland.

"I started researching and talking to friends and realized there was quite a bit of a market for this. A lot of people were looking for the same services," Nathan said. "We're providing a facility for people who can't afford a huge capital investment in a commercial kitchen. This gives them a way to step in the industry and test the waters. In two or three years they can go out and open their own kitchen with their own equipment."

Fully licensed and equipped with standard professional grade equipment, the 1,500-square-foot Elixir Kitchen Space, located on North Beach Street, is rented on a flexible time share basis to early-stage, small- to mid-size catering, retail and wholesale food manufacturers. Two certified commercial kitchens are available 24/7 and provide shared workspace, equipment and locked storage. Elixir Kitchen Space also assists clients with business planning and access to mentoring and networking with other professionals and agencies in the food industry.

Nathan's shared-use kitchen is helpful to local aspiring entrepreneurial chefs, bakers, restaurateurs, caterers and vendors. About 10 regular tenants currently lease Elixir Kitchen Space - rates start at $25 - while another batch of clients uses it seasonally or for special occasions. Requirements to become a client include a valid Food Managers Certification from the city of Fort Worth and a general liability insurance policy with Elixir Enterprises LLC listed as an additional insured.

Susan Webb, owner-cook of a specialty food company in Euless called that's Serendipity, found Elixir Kitchen Space through Google.com when searching for a commercial kitchen.

"She's doing a service for the community," Webb said. "Finding a commercial kitchen is fairly new. There are so many strict rules and regulations related to the food industry that not many places are willing and able to allow small food companies to come in and bake."

"Sandie's kitchen affords a small business to learn the food industry from the ground up. It gives you a taste of what it's like to start a business. And Sandie really goes out of her way to help you," she said. "She takes the time to provide contacts and information and really tries to help clients get their feet on the ground and their business started."

Launched in December 2008 just as the recession hit full force, Nathan's own business has tapered somewhat, she said. She's now concentrating less on her corporate breakfast business and focusing on a new product line of cake balls, rolling out this month.

"We've been hit with the recession in two different ways," Nathan said. "My personal baking business is not as much as it was but on the other hand, we have people like Lonnie Smith who have been laid off and are now pursuing their passion for food. It's two-fold. Some people are trying this on a part-time basis but others are changing careers like I did."

Smith is one of Elixir's success stories. Laid off after a 30-year career in manufacturing, Smith turned to making his family's recipe for cheese dip. Another client who found Elixir Kitchen Space online, he recently debuted Lonzo's Jalapeno Cheese SpreaDip at Central Market in Fort Worth.

"Sandie taught me how to get started. I've learned a lot from her," Smith said. "A shared commercial kitchen is cheaper to do and the camaraderie and help from others has also been great."

Nathan said understanding the food business has been an experience for her as well as most of her clients.  

"It's been a learning curve," she said. "I'm always willing to help people through the process. I share what I've learned and can help put people in touch with the right agency or resource.

"I never realized the different things people make," Nathan said. "Now I walk in the grocery store and pick up something and realize it's made in a space like ours. My plans are to continue growing my business and helping expand everyone else's."

Source: Fort Worth Business Press, Texas (www.fwbp.com)

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Future of Jobs Looks Familiar [top]⇑

By Cori Urban

GREENFIELD - In a town once known for its machine tool industry, young people are again being urged to consider a career in manufacturing.

Eighth-graders at Greenfield High School recently spent 45 minutes in small groups inside the Massachusetts Manufacturing Extension Partnership Mobile Training Unit learning about computer numeric control machining, computer-aided drafting and computer-aided manufacturing.

The bus-sized training unit, which was parked outside the school for two days, is equipped with 12 computer stations and two computerized mini-machines that perform actual machining operations. It also has a video system that allowed students to watch two videos on career opportunities in the precision machining industry.

All 108 eighth-graders participated in the program, which is part of their career exploration curriculum.

"Our message is that, 'You can be anything you want to be,'" said Kerry C. Heathwaite, eighth-grade team leader. "We expose them to a variety of careers."

She noted that a recent study by Northeastern University in Boston estimates that Massachusetts could see more than 100,000 jobs opening in manufacturing by 2016.

The goal of bringing the mobile training unit to the school was to provide students with information on manufacturing as a career with the hope that the data would assist them and their parents in making an informed decision about where they will go to school in the ninth grade.

Under the direction of Matthew R. Healy, of Charlton, program instructor for the Woburn-based Massachusetts Manufacturing Extension Partnership, about 10 students per session learned how to program a computer to have the machine cut a star in a circle in a small block of blue material. "That's so cool," one student exclaimed as they watched the cut being made.

Stephanie M. Dancause, 13, of Greenfield, said she liked watching a computer numeric control lathe make a chess pawn. "It was amazing," she said.

Stephanie said she "probably could" have a career in manufacturing, an industry she said could be used to create a product for "people who need it."

Classmate Eyan J. Raymond, 13, of Greenfield, found the entire program interesting. "It taught me a lot about computer programming and how to make shapes with CNC machines," he said. "It could be a career I'm interested in. I enjoy working with computers."

Healy said the program promotes manufacturing in the United States and "keeping good-paying jobs here."

Though not every student would be interested in a manufacturing career, Heathwaite said all of the eighth-graders were engaged in the program, enjoying the hands-on learning.

The program is funded by a Science, Technology, Engineering and Math grant from the U.S. Department of Labor.

Healy also has taken the program to Frontier Regional School in South Deerfield.

Source: The Republican, Western Massachusetts (www.masslive.com)

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Lista Lean Manufacturing Initiative Relies On Company's Products to Improve Quality and Speed Delivery [top]⇑

By ThomasNet News Staff

It seems fitting that a company that provides storage and workplace solutions for business and industry - and whose motto is "making workspace work" - should embark on an innovative lean manufacturing program to drive waste out of its own manufacturing processes, resulting in top quality, competitively-priced products, delivered in the shortest time possible. And it is even more fitting that the company would turn to its own products to make the move to lean an especially successful one.

"Our goal as an organization is to delight the customer with all aspects of our products and service," says Peter Lariviere, President of Lista International Corporation. "We achieve this through the elimination of costly waste and the implementation of standard work throughout every aspect of the organization, from quoting an order to receipt of payment. Our goal is to provide our customers with moments of excellence throughout our value stream. We strive to be best in industry, in terms of quality, breadth and flexibility of product line, and lead time. Integrating the use of Lista products into our processes has resulted in significant progress in achieving our objectives."

Lista International Corp., an ISO 9001 certified company, is one of North America's leading manufacturers of storage and workspace systems. Established in 1968 in Holliston, Massachusetts, the corporate headquarters houses a 225,000 square foot manufacturing facility, as well as design and engineering offices. Lista North America is part of Swiss-based Lista Group, a world leader in the manufacture of modular drawer storage systems, workbenches and storage solutions for a wide range of markets and applications. Lista Group employs more than 600 people worldwide.

A Lean Philosophy

Lista's goal is to use lean manufacturing concepts to provide customers a broader, improved offering of high quality custom-configured products with the shortest turn-around time in the industry. Lista's emphasis is on driving out complexity to create a highly flexible manufacturing environment. The results are impressive.

The foundation for the lean program began with material flow and process flow improvements made about four years ago. In the last year, Lista has really turned the corner and has steadily reduced its turnaround time from more than two weeks to as little as 2 to 4 business days for many popular products. Along the way, they've moved work centers close together, eliminated travel in the process line, and significantly eliminated waste throughout their delivery system. The company has been able to reduce its inventory by over 35 percent, while at the same time reducing lead times and improving customer service. Overall, Lista has realized greatly increased productivity and efficiency, and reduced its requirements for floor space.

"We made fundamental changes in the order and delivery system and the manner in which we drive customer orders through our production process with demand replenishment concepts and principles. Kanban is a major component of our manufacturing process, and Lista products are ideal for the application of the Kanban systems," said Lariviere. "We've always had fully customizable solutions in our standard two-week delivery program, and now we have customizable products in our Lista Xpress 2 to 4 day turnaround express delivery program. Lean manufacturing allows us to extend our capabilities - to expand what we can provide to customers in the shortest lead time possible."

Lean Manufacturing Toolkit

Lean manufacturing uses a set of tools that assist in the identification and steady elimination of waste. Among the ones Lista uses are value stream mapping, the 5S workplace organization and housekeeping system (sort, set in place, shine, standardize, sustain), and a Kanban order and inventory withdrawal system.

"We are always looking internally to reduce non-value added process and movement time," said Aaron Tessitore, Director of Operations, who says that lean methods enabled the Xpress delivery offering to consist of configured, built-to-order products rather than off-the-shelf stocked products. "Lista shares the same types of concerns as its customers, such as reducing inventory, consolidating facilities, minimizing floor space, and increasing cash flow," Tessitore adds. "A welcome by-product has been waste elimination and cost reduction."

Storage Company, Store Thyself

One of the interesting features about this particular lean manufacturing process is that Lista uses its own product line to help implement the results of the value stream mapping, the 5S and the Kanban set up. Lista products are now totally integrated into its manufacturing process.

"When you think about it," says John Grover, Director of Lean Manufacturing, "it's like the reverse of the old saying that the cobbler's children have no shoes. In our case, as an industrial storage company, we had access to a product line that helped us implement waste elimination through space reduction, organization improvement, and inventory management. Lista storage cabinets and workbench products are designed to allow dense storage and a smaller footprint. From a material flow standpoint, the Lista flexible workbench line and modular tables made it very easy to add flexibility to the production lines that facilitated faster turnaround time."

In fact, Lista has long been a solutions provider for lean manufacturers, whether the company needs high-density storage or a highly flexible line of workbench products. The 5S's are a capsule description of the leading features of the company's products: highly organized (Sort), ideal for tracking inventory (Set in place), aesthetically pleasing and easily kept clean (Shine), modular in design (Standardize) and scalable (Sustain).

The system is set up so everything has a place that is available when needed, from the finished goods area where products are being packaged, through the equipment maintenance area. Everything is labeled and identified using Lista's built-in labeling and identification features, making a 5S system that is very flexible for whatever the organizational needs may be. Local storage minimizes travel time, and adjustable storage and workbenches make it easier to adapt to the differing needs of individual employees.

Lean Manufacturing Benefits Customers

Although lean manufacturing is sometimes thought of as the ultimate cost cutting program, Lista's program focused more on customer benefits. "All the work we did in our program took aim at compressing the cycle time, which gives our customers added flexibility, and minimizes the lead time for our product line, which gives us a competitive advantage in the market," said Tessitore.

The company is also able to roll out an improved Xpress delivery program offering, with a much more flexible and configurable product, all with a 2 to 4 day shipping time. Before, because Xpress program products were pre-built and stocked in a warehouse, it was not possible to change anything about an Xpress product to respond to a specific need. The new lean process gives Lista a lot more flexibility in delivering virtually the same turnaround with a much more customizable product that is exactly what the customer wants, not just "pretty much" what the customer wants.

Higher quality is also a result of this effort. Fewer components are being made on a job-by-job basis and there are fewer components to deal with during final assembly. This significantly reduces the potential for short shipments and/or mistakes.

Value Stream Mapping - Driving Waste out of the Delivery System

Lista used value stream mapping to analyze the material, process, and information flow used to drive customer requirements and satisfaction goals across the organization. The information was used to develop a current state map, which sets out how things were done. The firm then used a cross functional team to analyze the current state map to identify opportunities for waste elimination. Finally, the team envisioned a future state based on the exercise. Lista employees at all levels were deeply involved in the value stream mapping and remain involved in the implementation, which gives the organization access to the best thinking and input.

Lista then began work on implementing the future state. The process is iterative; the future state becomes the current state, and Lista uses a continuous improvement process to go back and identify new ways to reduce waste. Waste is defined very broadly, and includes things like waste in the movement of material, carrying too much inventory, defects or rework, or producing scrap.

One concrete outcome was the elimination of the need for the company's 17,000 square foot finished goods inventory warehouse. Since moving towards a build-to-order Xpress system, Lista no longer needs to stock finished goods and has been able to eliminate the warehouse requirement.

Kanban - Sophisticated Stocking and Replenishing System Reduces Overstock

Another key step that drove turnaround times down to the 2 to 4 day shipping window for Xpress products was the institution of a Kanban system, an inventory replenishment system for just-in-time production.

The system calls for a careful analysis of the manufacturing process, which determined that fabrication of the steel parts prior to being powder coated took the greatest amount of time. Rather than basing manufacturing on customer orders, the new Kanban system is directed by usage models, which ensures that just enough stock is ready to paint and assemble to fulfill customer orders. This means Lista no longer has to keep finished goods inventory in stock, but always has material ready to paint and assemble to order.

Lista's Kanban system uses a visual board set up with all the parts listed for a particular work center. Signals are loaded based on consumption, and the operator can see the rate at which parts are being consumed. The entire manufacturing activities are the result of a visual-based demand replenishment system. Operators can see how fast the parts they manufacture are being consumed and can react quickly and decisively to ensure customer requirements are met. The system empowers employees, and allows them to fulfill needs in real time, rather than making products in a sequence which is based on paper-intensive Material Requirements Planning (MRP) documents.

The Kanban system is used to streamline production for Lista's high volume, repetitive demand products, primarily the company's most popular workbenches and cabinets. This is about 80 to 85 percent of the company's output.

"It's a shift in a way of looking at the process," says John Grover. "This is what is meant by lean - not just eliminating waste in the process, but doing things that are required to add value to the customers, at the lowest cost point in the process and earliest phases. Lean manufacturing pulls all these pieces together, giving you the toolkit, mindset, and the methodology to keep working at a continuous improvement process in an extremely effective manner."

Source: ThomasNet News (news.thomasnet.com)

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Recalling Recalls – Improving Your Quality Control [top]⇑

By Amanda Earing, News Editor

Manufacturing.Net

From cribs to beef to vehicles, what do they all have in common?

Recalls. Recent large-scale recalls by Toyota, Nissan and two major cribmakers in the midst of a recession will likely put a damper on their fiscal earnings. Could it have all been avoided?

When times get tough, manufacturers need to remember to stay diligent to their quality control process. But even the most diligent manufacturers can still see quality slide -- especially during a severe recession -- as focus shifts elsewhere in the company.

Ron Atkinson, past president of the American Society for Quality, says quality issues aren't necessarily due to workers not doing their jobs; instead it's often the result of significant changes in the workforce.

"Typically during a recession mass layoffs occur, and it takes time to train people in their new roles and in some cases the knowledge of what has gone wrong in the past has been lost at companies," says Atkinson.

To help minimize these types of problems, manufacturers should have clear, thorough standardized work procedures in place that will help workers understand their roles better.

But even with every precaution in place, quality control issues can happen anywhere in the manufacturing process -- from product design to the sales pitch.

"If consumers do not get adequate warning on how to use a product -- whether in documents or by sales people, this can result in a recall," says Atkinson.

As a result, manufacturers need to be as proactive as possible when it comes to quality.

"You need to be extremely diligent and communicate extensively with your supply chain, your workers and your sales force. In all stages of design, it is important to have communication with all parties involved," Atkinson advises.

The product may have been designed properly, but if it is used in a way it wasn't designed for, manufacturers should still issue a recall.

"It's a moral responsibility to make sure no one else gets hurt doing that same type of thing," says Atkinson. "In the design criteria, you really need to understand how the consumer is going to use these products and anticipate what could happen," he notes.

This is where the sales force can provide important feedback from customers to improve quality control. If sales people communicate with their customers and report back on how the product was used, or what instructions might have been skipped that could cause injury -- this can help determine design flaws to fix in current and future products. Consumers may have a different set of criteria and shed new light on using the product in a certain way.

It is also becoming more and more critical with a global economy to communicate with your suppliers. The more suppliers you start using from other places around the global, the more you have to interact with them.

"Global suppliers don't intentionally do something to cause you problems because it affects them also. However, communication and education are key -- if they don't know what to be aware of suppliers can inadvertently do something that could result in a recall," says Atkinson.

For instance, Atkinson points out that a lot of regulations we take for granted, such as lead limits in paint, may not be an issue in other countries. Studies over the last 30 years show lead is bad for you, but without education and communication, some global manufacturers may not even know about it. So while it may not be a significant factor for global suppliers, for North American manufacturers there are regulations they must follow. Atkinson advises manufacturers to thoroughly communicate with their suppliers to make sure quality criteria and regulations are met.

"The way we do things in North America isn't going to be the same as the rest of the world. You have to make sure that whichever global manufacturer makes your product understands exactly how the product should be made," Atkinson adds.

To help maintain a high level of quality, Atkinson also recommends minimizing the number of suppliers used and focus more on a developing partnerships whenever possible.

Lastly, Atkinson suggests when a major recall does occur, the obvious immediate first step -- if possible -- is to fix the product already produced to protect the consumer. But to prevent issues from happening again, manufacturers should take the time to develop a problem-solving initiative to determine what changes need to be put in place to modify future products as well.

Ron Atkinson, past president of ASQ, is a Six Sigma Black Belt and holds certifications as a quality engineer, auditor, manager, and quality improvement associated. For more information, visit ASQ at www.asq.org.

Source: Manufacturing.Net (www.manufacturing.net)

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Manufacturer Reinvents Itself To Clean Up In Its Industry [top]⇑

By Donnelle Eller

Scranton, Ia. - Scranton Manufacturing Co. knows about surviving tough times, leaders of the family-owned company say.

The 1980s farm crisis pushed Chief Executive John McLaughlin to reconsider making cattle gates, horse feeders and other ag-related products.

"It killed us," said Mike McLaughlin, John's son and company president. "We were struggling to find things to do."

By 1984, John McLaughlin - whose son by the same name is a meteorologist with KCCI-TV (Channel 8) in Des Moines - decided to buy New Way Refuse Trucks, a Des Moines garbage truck manufacturer, and move the operations to Scranton in Greene County.

"You could say the farm crisis was good for us," the company founder said. "It got us into a product that's stable, and we've been able to grow."

A willingness to reinvent the company has led the father-and-son team to add an eclectic mix of products - mobile veterinarian clinics, a trash compactor line, embroidery and screen printing company, and 427 roadster kit cars. The men believe the products, built primarily on the company's expertise in iron and fiberglass, will help the business emerge from the current recession poised for growth.

"You don't sleep some nights wondering if you made the right decisions," said Mike McLaughlin, who asked company executives to take a 10 percent pay cut and 200-some workers to cut back to four-day weeks to help weather the recession.

"Through our acquisitions and lean manufacturing, we're setting ourselves up for tremendous growth. We just have to stay strong and profitable."

Helping the company through the downturn are joint ventures established more than a decade ago with two Chinese companies to build New Way garbage trucks for the Asian market. Scranton, the first U.S. refuse truck manufacturer in China, supplied 280 trucks to Beijing for the 2008 Summer Olympics.

Companies interlock

Although hard to see initially, the company's diverse products give it supply and work synergies, leaders said.

For example, McLaughlin International - the maker of leather and vinyl holsters for law enforcement - will build the seats for the Hurricane Motorsports car kits. Also, Scranton will use scrap metal from building New Way garbage trucks in the roadster frames.

Another common theme among the companies: Several were distressed when Scranton bought them.

For example, Bowie Manufacturing, the maker of veterinary mobile clinics in Lake City, had been closed three months when Scranton purchased it. The company rehired 11 workers in 2007 and has built employment to nearly 40.

The McLaughlins said they believed the companies could perform well with Scranton's lean manufacturing approach, aggressive marketing and worker initiative.

Mike McLaughlin, who joined the company in 1991, said Scranton adopted lean philosophies to help it find ways to accommodate rapid growth a few years ago. Manufacturers use lean to speed production, reduce waste and cut costs, and better use existing space.

But, he said, the lean approach also helps Scranton better survive the recession, which has flattened the company's sales.

Efficient methods

Walking around the Scranton plant's 160,000 square feet, the company president pointed to use of lean methods.

A large frame used in production can rotate a 17,000-pound-plus garbage body so welders easily can work on them, he said.

It all unites - reducing worker strain and injury, cutting multiple patterns from one iron piece, placing tight controls on supply inventories.

"It just makes the plant a better place to work," Mike McLaughlin said.

Lean manufacturing also helps keep workers passionate about making the operations and the products better, the McLaughlins said.

That's crucial, because father and son believe Scranton's workers - with operations also in Lake City and Atlantic - make all the difference with clients.

"They'll talk with a worker for 20 minutes about production," said Mike McLaughlin. "Clients can see workers love their job and take pride in their work."

The company also is able to react quickly to client requests for changes, something they said is more difficult for large garbage truck competitors, such as Heil and McNeilus.

"That gives us an edge," John McLaughlin said. "We can kick an idea around, and in a couple of days implement it."

Plenty of research

Scranton is willing to take risks. It has invested a year of research and development and $1 million to produce a line of automated garbage trucks. The McLaughlins said early interest for the equipment - prototypes are being tested now - is strong.

"We think we have a real winner," said Mike McLaughlin, who estimated the new products will add $10 million to 15 million in the next three years to the company's sales. Production is being scaled up, with plans to launch in the first quarter of 2010.

The company plans to kick off sales in early 2010 of its Hurricane Motorsports kit cars, a niche product with a loyal following.

Car enthusiasts can spend $18,500 to $31,000 on the kit car, depending on how much work they want. Altogether, a car can cost as much as $90,000 after installing an engine, transmission and other equipment.

"It's an expensive hobby," John McLaughlin said.

Optimistic future

Looking ahead, the McLaughlins said they plan to keep looking for new ideas and products.

They're weighing joint partnerships in India and possibly Egypt. They expect expanded production of their automated garbage trucks.

The chief executive said his son told him when he started at the company that he wanted to produce more than 1,000 garbage trucks a year. At the time, the company was making 40 annually.

"I thought he was crazy, but he did it," John McLaughlin said. "There's a spirit and drive to grow the company."

Source: DesMoinesRegister.com (www.desmoinesregister.com)

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How Well Do You Know Your Customers? [top]⇑

By Amy Radishofski, Features Editor, Manufacturing.net

The majority of companies are scrambling for sales in 2009, but leads are drying up and consumers are shying away from purchases until the economy stabilizes. When consumers start spending again, what will they buy? Do you even know what your customers buy now?

If you don't have any new leads or customers coming in, you're forced to take a closer look at the customers you already have. You may think your marketing and pricing policies are working, but you should review and evaluate them. It's a whole new business world out there, and doing the same old thing isn't going to be enough.

Since companies have been through a recession like nothing they have seen before, they can't continue on with business as usual, says Jamie Rapperport, Founder and Executive Vice President of Marketing and Business Development for Vendavo. Companies may have been forced to make changes during the recession, and now they must make changes during the recovery.

"Take a look at your current policies and behaviors and see if you need to change them," Rapperport said. "Maybe it would be more profitable not to bundle some products and services. Maybe you should take a look at your discount guidelines. You may be discounting too much, or not realizing some value-added services you provide. A small adjustment can provide a big payoff."

Consider applying upward pricing pressure. You could raise prices in some areas, reduce discounts, or reduce bundled services. Companies can also benefit from finding areas where they can recover some of the costs to serve.

Instead of extending a particular service across the entire customer base, try to limit its usage. Take a look at using express freight without cost to the consumer, for instance. Are there areas where you can absorb the cost, or are there areas where the consumer should pick up the tab?

Not sure which option is best for you? Rapperport says you should segment your customer base and use the results to determine which method(s) you should use.

When evaluating your customer base, think about customer behavior. What products are they buying? How profitable are they? Which are your top customers that you want to maintain a long-term relationship with? Which customers are good, but should increase their product portfolio?

"Using fine grain segmentation can tell you how valuable your customers are," Rapperport said. "Separate customers by looking at areas like how broad of a portfolio they have, and the cost to serve them, which includes cost of freight, tech supports, etc."

Rapperport suggests deciding on a strategy for each tier of customers. For example, you may have the following breakdown of customers:

• A Customers -- These are the most profitable customers that you want to preserve and protect for the long run
• B Customers -- Customers in this group are still profitable, but you don't get as much revenue as you do for A customers.
• C Customers -- These customers are a high volume, but a low profit group
• D Customers -- Customers in this group are both low volume and low profit

"Track results using key performance indicators and dashboards. Identify the different types of customers you have in your particular business," advises Rapperport. "If you have a lot of B customers, you should see if there is a way to bring up revenue or volume. And even though sales are hard to come by, those in the D group are adding little value to your operations, and you could consider cutting them and reallocating resources."

However you segment and strategize, remember that any changes you make should be done as early as possible during the economic recovery. Doing so will put you in a better position once consumers start increasing spending again. You also must get management and sales on the same page.

"To implement any new sales strategies, companies need to directly address their sales force," Rapperport notes. "You need to focus on training and changing their behavior. You may need to make them aware of a new discount policy, for example."

You may have made it through the worst recession in decades, but you still must actively work to position your company for growth. The economy won't turnaround overnight, and the same can be said about your operations.

"Getting through the recession is just half the battle," Rapperport adds. "You need to be aggressive during the recovery and segment your customer base. Knowing where you're gaining and losing money now can help you stay ahead of your competitors."

Vendavo provides price management and optimization software for business-to-business companies worldwide. For more information, visit http://www.vendavo.com/company.html.

Source: Manufacturing.net (www.manufacturing.net)

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