Friday, August 28, 2015

Succession Planning Strategies: What You Need to Know

In the next seven years, the U.S. Census Bureau is calling for a significant population change in the 55 and older segment. What does this mean? Business leaders and executives are committed to remaining in business longer. Because of an inability to envision leaving their business, older leaders delay conversations regarding succession planning.

Don’t Leave Your Company Vulnerable
Now, more than ever before, it is important for an organization to plan for the future. With no succession plan in place, the continuation of the business is threatened. Successors, which would typically be found in the 45-54 age range, are dwindling. If a leader or key executive resigns or becomes incapacitated without having a plan in place, the search for a replacement could cause:

  • internal strife
  • loss of product and process knowledge
  • customer dissatisfaction
  • decrease in employee morale

Ultimately, due to lack of planning, profitability and the future success of the business could be affected. Denial is not a business’ ally. Owners, leaders, and executives WILL exit their role at some time or another. Business survival during this transition depends on the level of preparedness.

Planning for the Future
Today, owners of family and closely held businesses must navigate through one of the toughest and most critical challenges they will face – planning for succession. Of the 22,800,000 family owned businesses in the United States today, roughly 28% have a succession strategy.

In Michigan, there are more than 200,000 family owned businesses which have no formal plan to carry on the owner’s mission and vision after they leave their business. In addition, only 35% of family owned businesses successfully make the transition to a second generation, resulting in many Michigan jobs becoming at risk. Other potential consequences could include:

  • reduced performance
  • increased employee turnover
  • loss of market share
  • irreparable reputational damage
  • negative impact on employee morale

The development of a solid strategic and succession strategy is a critical part to ensuring that family owned businesses thrive and jobs stay in Michigan. Whether looking to sell the business or pass it on to the next generation, the successful execution of transition strategies helps business owners ensure growth, strengthens Michigan’s economy, and helps business owners gain the return on their lifetime investment. Are you ready?

MMTC can help minimize the vulnerability an organization faces when a key leader leaves – whether planned or not. To learn more about MMTC’s Succession Planning Solutions, call 888.414.6682 or email

Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at

Friday, August 21, 2015

Supply Chain Optimization: The Financial Impact

supply chain optimization: the financial impact
Supply chain optimization contributes to the success of any manufacturer. Imagine how much of your business relies on the successful management of the process! The importance of this business function is often overlooked by many small business owners, but proper supply chain management helps alleviate a myriad of problems and contributes to the overall success of your organization. 

Supply chain management controls goods from the point of origin to the point of consumption. This process manages the movement and storage of raw materials to work-in-progress to the finished product. Proper management of this process can have amazing results, while poor management can be devastating to the viability of your business.

The Benefits of Supply Chain Optimization
Among the many advantages of effective supply chain management is helping your financial viability. A leading cause of small business failure is the growth of the business outpacing its financing.  Proper supply chain management helps alleviate this possibility by controlling inventory levels and maintaining customer satisfaction by eliminating missed sales opportunities.

Working capital financing is another story, and inventory management plays a crucial part. Inventory management is critical to the survival of the enterprise. Unfortunately, the purchasing of inventory is often done by the “seat of the pants” and carries two particular risks:

1.     Delays in fulfilling orders due to under-ordering
2.     Tying up working capital due to over-ordering

Working Capital and Manufacturers
A small manufacturer that can reduce the cash conversion cycle will be able to minimize its financial risk. A common way small businesses fund working capital is through asset-based financing provided by banks. This financing uses the assets of the business as collateral for the outstanding loan. The trick is different assets have different collateral financing values. Accounts receivable have the highest value, while inventory and equipment have the lowest. In a typical asset-based financing formula, a bank may finance up to 70% of the value of accounts receivable, and 50% of the value of inventory and equipment value. 

Some inventory items, such as work in progress and branded supplies (i.e. boxes imprinted with the name of the company) are often assigned no collateral value. Efficient supply chain management reduces the need for inventory and reduces missed sales because of stock outs.

The amount of working capital needed for inventory is therefore reduced while the amount of financing available from accounts receivable is maximized. Supply chain management maximizes the amount of asset-based financing through techniques such as “just in time” inventory management and economic order quantities.

Key requirements of supply chain management include enterprise resource planning software and the proper procedures surrounding the use of the system. The corporate culture itself may need to be changed to ensure the discipline needed to make supply chain management effective. Implementation can often seem daunting. Do not let the complexities of installing supply chain management system bog down your business and prevent your company’s success!

Supply Chain Consulting Services
MMTC’s Supply Chain Optimization Program focuses on increasing alignment, visibility, and collaboration, resulting in reduced costs, increased quality and delivery, a trained workforce, and compliant processes. For more information about available supply chain consulting services, call MMTC at 888.414.6682.

Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at

Friday, August 14, 2015

ISO 9001: Two Important Changes Coming to a QMS System Near You

ISO 9001 is the world’s most utilized management system standard, and currently, all eyes are on its
revision. The anticipated release date later this year of the revised version, ISO 9001:2015, has many companies asking how the revision will affect them. Specifically, what are the key changes required for existing ISO 9001-compliant quality management systems to achieve compliance with the revised standard? Michigan Manufacturing Technology Center (MMTC) has some of the answers. Follow along below for two changes you should expect to see in the upcoming, revised standard.

No More Management Representative?
The Management Representative has been a mainstay with ISO 9001 since its inception in 1987. Since then, it has created frustration and even confusion amongst some smaller companies who tried to select a member of management to fulfill the role. Since many of these small companies often have only one person in management, an artificial management position was created on the organizational chart to check a box and meet the standard.

Well, good, bad or indifferent, ISO 9001:2015 will be eliminating the Management Representative position. LET'S BE CLEAR: ISO 9001:2015 will only be eliminating the position, not the responsibilities. Just as it is outlined in the current version of ISO 14001, there is an option of having more than one management representative with ISO 9001:2015. The following is an excerpt from the Final Draft International Standard (FDIS):

“Top management shall assign the responsibility and authority for:
a) ensuring that the quality management system conforms to the requirements of this International Standard;
b) ensuring that the processes are delivering their intended outputs;
c) reporting on the performance of the quality management system and on opportunities for improvement (see 10.1), in particular to top management;
d) ensuring the promotion of customer focus throughout the organization;
e) ensuring that the integrity of the quality management system is maintained when changes to the quality management system are planned and implemented.”

The removal of a mandated management representative greatly increases the flexibility for smaller organizations. As a manufacturer, start thinking about how you will meet the modified requirements. Share your opinions and ideas with us in the comments of this blog!

No More Documents?
While one of the largest ISO 9001:2015 change for most people will be the new structure (going from eight to 10 clauses), another significant change is the removal of any mandatory procedures or documents. So, for those who thought the system was paperwork heavy before, you will now be able to justify less documentation – at least to an extent.

Before you start rejoicing in a less paper and process filled world, you need to understand the meaning of a new term in the ISO 9001:2015: Documented Information. While there are no documented procedures mandated by the new standard, it does state that various items shall be maintained as “documented information”.

For instance, the quality policy:

“…shall be maintained as documented information”. 

Another portion states,

“The organization’s quality management system shall include: 

  • Documented information required by this International Standard; 
  • Documented information determined by the organization as being necessary for the effectiveness of the quality management system.”

The intention of the standard is to focus on the organization and process, not just a documented system. Yet, documentation is still required where needed. Don’t throw away your current documentation until you review it against the new ISO requirements. During transition, you will be able to streamline your system, but documented procedures, work instructions, forms and records may still be needed. With ISO 9001:2015 you will have the flexibility as an organization to determine which ones you do and don’t need.

ISO 9001:2015 is on the minds of many Michigan manufacturers. Stay on top of ISO 9001:2015 by joining MMTC quality experts at the 2015 Proud to Manufacture in Michigan Conference September 23-24. Hear more information about to what to expect with the revised standard in the months to come.

Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at