Specialty chemical company Catomance Technologies Limited had been manufacturing in Hertfordshire for over 60 years when managing director Mike Woods undertook a benchmarking exercise. The results led directly to Catomance outsourcing the bulk of its production and refocusing on R&D and marketing. The outcomes were lower costs, higher profits, and better all round decision-making.
What I did
Get advice
“Six years ago, the company was facing financial pressure from heavy overheads and low profits. The management team all had ideas about what could be done, but we needed something more concrete to guide us. I got interested in benchmarking after a discussion with an associate who’d been through the process.
“We got guidance and support from Business Link, who put us on their Benchmark Index program. The program helps small companies improve competitiveness and profitability by comparing performance with similar companies. What you end up with is a very detailed analysis of your company’s current business position. A Business Link consultant took us through the whole process providing expert advice at every stage.”
Gather information
“By answering the questions raised by the Benchmark Index process, we identified which areas of the business we wanted to compare. The list included profitability, financial management, customer satisfaction, innovation, supplier management and capital investment amongst others. We used a questionnaire to gather information internally and externally from customers and suppliers.
“We decided which companies to compare against. Other chemical manufacturers were an obvious choice, but we also benchmarked against several food processing companies. That may sound strange, but the business model of combining ingredients in a production process to create a finished product was actually very similar to our own.”
Take action
“When we’d completed the information gathering and comparisons, Business Link helped us to independently analyze the data. It was immediately obvious that some things needed to change. For example, we compared very well on innovation, R&D and customer satisfaction, but badly on managing suppliers and capital investment. The areas of weakness centered on our manufacturing operation.
“We looked at ways of improving the production process, but the capital investment needed was huge. So we decided to outsource production for all but a handful of products. This cut overheads and capital spending dramatically. We could then concentrate resources on what we were good at, which is creating innovative solutions for our customers and marketing them effectively.
“Outsourcing also resulted in more accurate profit analysis that led to us change our product mix. Decision-making was also improved because we no longer had the pressure of idle production lines to fill.
“Benchmarking was the catalyst for major cultural and operational change. There was some resistance internally, but having the benchmarking results made it easier to manage the change and convince people of the benefits.”
What I’d do differently
Do it sooner
“We should have implemented benchmarking as soon as the financial pressures became apparent. There was a bit of fence sitting in the early days.”
MIKE’S TOP TIPS
1. “Don’t wait until your business is suffering before conducting a benchmarking exercise.”
2. “Investigate the Business Link Benchmark Index on the Benchmark Index website.”
3. “Avoid navel-gazing when you get your benchmarking results back – use them to drive change.”
SELAMAT BERUSAHA, BERINOVASI, BERIMPROVISASI DAN SALAM SUKSES BUAT KITA SEMUA.
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