Authored by Alistair Stewart, MMEC Senior Business Advisor

In singer/songwriter Bob Dylan’s “Idiot Wind,” he hints at meeting a fortune teller who warns of possible danger ahead.  We don’t have a crystal ball or trusted fortune teller for our economy, but we are increasingly detecting signals of an economic slowdown. Some clients are already experiencing a softening of demand. What goes up must come down, and the current economic recovery is much longer-lived than the post-WWII average. Here are nine actionable suggestions for small to medium sized manufacturers. It’s a non-exhaustive list, and some items overlap.

  • Explore more recession-resistant markets, niches, and supply chains with needs that align best with your capabilities. Consumer staples and alcoholic beverages have been prior good bets. Also consider renewable energy, health-and-senior care products, and security/defense/law enforcement products. Identify and explore others, and consider pivoting away from anything that’s more discretionary, indulgent, and recession-prone. Pivots may be harder to execute and may take longer depending on your brand or market promise.
  • Assess the health and recession-resistance of critical suppliers and key customers. Consider having conversations with them about their projections and plans, and how to more effectively collaborate in a downturn.
  • Build a very prudent operating reserve and make sure you are in full and open conversation with your bank. Manufacturing-focused banks should be able to provide economic forecasts, financial health checks, and related advice.
  • Develop your workforce plan and know in advance what triggers will initiate what actions, such as going to a 32-hour work week. Don’t hesitate or delay when a triggering event or performance occurs.
  • Have an open book policy for business health. There should be no surprises for your workforce if a downturn reaches a level of severity that would require layoffs.
  • If you’re ISO certified, make sure your risk management practices are solid, and not merely a check-the-box exercise. if you aren’t ISO compliant or certified, consider adopting ISO-based risk management. It is just good business.
  • Evaluate capital investments utilizing the latest market inputs, rather than prior assumptions about demand, interest rates, etc.
  • Review your three-to-five-year plans and make sure you have updated and integrated (i) financial, (ii) sales and marketing, and (iii) operational strategies, scenarios, assumptions, and projections that reflect your current perception of the future. Be sure to execute your updated plans and keep updating them.
  • Remember that a downturn is too good of an opportunity to miss and monitor your competitors for talent, customer, facility, equipment, and business acquisition opportunities.

Thank you to Dave Allard and Tom Walker for your contributions, and to Bob Dylan for his lyrics from “Idiot Wind.”

Authored by Alistair Stewart, MMEC Senior Business Advisor

Owner motives matter most when it comes to business transitions. Clarifying liquidity and legacy motives and needs, and developing and executing a plan to satisfy them, is essential for owners wishing to successfully transition out of their businesses under circumstances and at a time of their own choosing. Unfortunately, owners’ chances of success are modest. Surveys conducted by the Exit Planning Institute (EPI), PricewaterhouseCoopers, the Alliance of Mergers and Acquisitions Advisors, and the Family Firm Institute have determined that, nationally, transition success rates tend to be in the range of 20%-30%. Recent EPI surveys indicate that 75% of business owners surveyed one year after the sale transaction “deeply regret” their decision. What must Montana’s business owners do to be in the successful few?

Owners often have the majority (as much as 8o% or more) of their personal net worth locked up in their businesses. Additionally, it is not uncommon that a business contributes significantly to the self-definition of the owner(s), particularly in smaller, more rural communities. As they face the next act of their lives, owners must consider the financial ramifications.

Owners, you may want to ask yourselves these questions:

  • Do I really know what my business is worth today?
  • Do I have a plan to replace my lost personal income after I sell my business?
  • Have I started the often difficult conversations with minority owners, future generations, my employees, or other key stakeholders?
  • Do I fully understand the universe of options that are available to me?
  • Do I know how to optimize the transaction outcomes?
  • Am I ready for the next act of my life?
  • Have I thought through the consequences for my employees and my community?

Another economic slowdown is not unlikely in the foreseeable future. As SVA Value Accelerators quite rightly say, “Transition-Ready Businesses Are More Valuable,” and I believe that to be true irrespective of market conditions. Transition readiness is “just good business.”

So, where should an owner start? We believe that a very important early step is to determine the value of the business. An objective and actionable assessment of transferrable business value provides insights to help owners and their businesses become more transition ready. We’re not referring to a Fair Market Valuation, which tends to be most useful when lawyers are involved, but rather an Operational Value Assessment that measures the current and potential value of the business, identifies risks to value, and what will close the value gap. Addressing the risks to value, planning to close the value gap, and executing the plan with discipline, is the $500/hr “on the business” work that successful business owners will do, supplanting the $50/hr “in the business” work that may have been their historic default. If earning $500/hr doesn’t motivate a small business owner in Montana, what will?

Start your path to a successful Transition

 

(Article written by Mike O’Donnell and published in the CIRAS Newswire, a publication of MMEC’s sister organization in Iowa; updated and re-printed with permission.)

At this very moment, the future of American manufacturing is being written at fourteen specially linked institutes fueled by over $2.1 billion from the U.S. government, research universities, and hundreds of American companies.

It’s known as the National Network of Manufacturing Innovation (NNMI) – or, following a rebranding campaign launched in 2016, as “Manufacturing USA.” If you aren’t familiar with it, you should begin educating yourself as soon as possible. Because your ability to compete could change dramatically, depending on the work taking place there and how quickly you’re willing and/or able to embrace it.

Manufacturing USA is a network of public-private partnerships designed to combine resources and expertise so that technology moves rapidly from research to real solutions. This is happening mostly through “project calls,” where member-driven groups identify key needs in a given technology area and decide which projects to fund. The goal is simple: do something real, and do it fast.

All fourteen institutes are designed to let everybody get involved—from the biggest corporations to the smallest companies. You can become a member of some institutes for as little as $500/year, giving you access to technology roadmaps, input into long-term direction of technologies, and in some cases, the ability to be involved in pilot projects.

MMEC has a simple request: look at Manufacturing USA, decide what part of it is most relevant to your business, and engage right now.

Why this matters

Change is coming, and Montanans need to embrace it if they don’t want to be left behind.

Perhaps the most important part of Manufacturing USA for Montana companies is the Digital Manufacturing and Design Innovation Institute (DMDII) in Chicago. It also is the most difficult to explain. While other institutes focus on particular technology areas, such as composites or flexible hybrid electronics, the DMDII focuses on a cross-cutting suite of technologies that enable the “digital thread.” There are three “thrust areas” in the DMDII: Advanced Analysis, Intelligent Machines, and Advanced Manufacturing Enterprise.

The main theme connecting it all is a desire to make information flow more easily inside and between industrial businesses—much as Facebook, Amazon, and Uber have helped consumers discover new ways to find and share what they want.

In the DMDII’s case, more than 260 partners have come together—including companies such as GE, Microsoft, and Siemens, as well as leading universities, government agencies, start-ups, and nonprofit and community groups. Their joint goal is to rapidly move these connecting technologies from research to industry. Early results indicate that the pace of change is about to accelerate.

For companies, however, change will not come as easily as deciding to shop at Amazon instead of driving to a store. Would-be digital manufacturers will have to master the basics before they leap into “Industry 4.0.” Want to optimize your supply chain? You’ll need a real-time accurate ERP system. Want to apply intelligent machining tools to optimize design? Your entire business (and your suppliers) better have 3D CAD models that reflect what is being built today.

Of course, there will be interim steps along the way during which companies with “digital maturity” will be able to see real value from technologies as they absorb them. For example, research conducted by CIRAS, MMEC’s counterpart MEP center in Iowa, shows that 3D CAD and Advanced Engineering Tools maturity correlates with reduced worries about labor costs, and their experience shows that manufacturers receive ROI when implementing most other digital tools. The DMDII has developed an assessment to help manufacturers understand how ready they are and what comes next.

If you need another reason to embrace digitally integrated manufacturing, consider this: your customers will soon require it… Given the potential benefits, the machinery, transportation, and aerospace industries are at the front of the digital manufacturing push, and getting results requires a supply chain able to play at the same digital level as the OEMs. At this point, it’s not clear what anything will look like. But it is likely that the digital maturity assessment from the DMDII will be a key factor in what those OEMs expect. (Contact MMEC if you’re interested in learning more about the assessments.)

The shift to digital manufacturing also will create many localized opportunities. Digital tools will allow your company to better link design, manufacturing, and supply chain operations, potentially creating significant new efficiencies. Companies on the front of this wave stand to gain significant market share.

Those who aren’t may get left behind.

Montana’s manufacturers must work together and embrace new tools and innovations to realize growth opportunities, improve the quality of life of Montanans through higher paying jobs, and start to define the future of manufacturing for ourselves.

For more information about DMDII, the digital maturity assessments, or any of the other Manufacturing USA institutes, contact MMEC at [email protected] or 406-994-3812, or talk to your local Business Advisor.

Article written by Marshall Swearingen with MSU Communications

Read full article here

Article written by Marshall Swearingen with MSU Communications

Read full article here

By Dave Allard, MMEC Business Advisor

TDMI is a Manufacturing Extension Partnership (MEP) service that provides a structured, comprehensive approach for technologically focused market analysis and information.

Unlike traditional market research, TDMI focuses on the technical and market viability of business assets. Using a structured combination of advanced office research and direct interviews, TDMI studies can provide analysis of many critical elements used to make well informed business decisions.

Among the areas of intelligence provided by TDMI studies are:

  • Identification and quantification of market trends and needs, value chains, the competitive landscape and potential partners
  • End user requirements and needs along with the Client's ability to fulfill them
  • Discussion and analysis of best options for establishing and meeting goals
  • Identifying critical gaps that may be encounter such as regulatory compliance, competitive challenges or intellectual property issues

While Technology does figure prominently in both the name and process, a comprehensive and well executed TDMI study requires actual discussions with actual humans. Sitting down at a computer and entering a query on the search subject into a search engine is only the tip of the iceberg.

Knowing elements of the study that are critical to the end user is paramount. Understanding the process or processes, core technologies, competing technologies, market trends and market opportunities are only a few of the key elements of a thorough TDMI study.

Close communication with the Client during primary and secondary research is important. Often times, the Client's initial focus when commissioning the study will encounter slight course corrections due to discoveries, both negative and positive, illuminated during the initial phases of research.

Overall, MMEC and our customers are finding TDMI to be a flexible, cost effective alternative to traditional market or technology reporting techniques.  More information is available on the national Manufacturing Extension Partnership (MEP) website, and to discover how TDMI could be put to work for you, contact MMEC.

By Alistair Stewart, MMEC Senior Business Advisor

To succeed in their chosen markets, firms and supply chains must continuously strengthen their competitive advantage. Manufacturers in micropolitan economies must also improve their collaborative advantage. This means finding common ground, and crossing real and imaginary boundaries to tackle common or complex problems, or to take advantage of opportunities. For example, failure to collaborate and overcome workforce challenges will continue to increase competition for scarce talent.
Another: a region’s small machine shops, collaboratively offering larger collective capacity to OEM’s, will win more. Improving a region’s real and expressed collaborative advantage enables participants to better prosper. The journey starts here, now. 

Contact MMEC to find out more and join your manufacturing peers and allies in Bozeman, Missoula or Billings to start realizing collaborative advantage in your business today.

By Bill Nicholson and Alistair Stewart, MMEC Senior Business Advisors

There are three basic strategies a company can take to grow their business:  raising product / service prices, selling more new and existing products / services at a profit, and reducing your cost by eliminating wasteful activities or tasks.  But what are wasteful activities?  Before we answer that, let’s talk for a moment about Lean, and what it is. 

Lean is based on the lessons and learnings from the Toyota Production System developed by the Toyota Group from Japan (1).  Lean is a tool set, a management system, and a philosophy that can change the way we organize and manage our operations… no matter what they are.  Lean can be applied to any process, whether it is manufacturing (2), administrative processes, healthcare (3), engineering (4), financials, government, education or your home.  Lean in its most basic definition… is the identification and elimination of wasteful activities. 

Learning about Lean, and putting basic Lean tools to good use is the first phase of a Lean transformation.  Most companies get stuck at this point; few progress to adopting Lean as a management system, and even fewer incorporate it into their company’s philosophy.  Why is that? It all starts at the top: without sustained executive management commitment, and leadership by example, use of the tools will decline.  Unremarkable performance (or worse) and eroded competitive advantage will surely follow.

Now let’s get back to the question on what is waste or a wasteful activity as related to Lean.  Waste is defined as… anything that does not add value to your product or service.   Under the Lean concept, if something meets ANY of the following criteria, it is considered to be waste:

-          does not change the information or product (fit, form or function)

-          is not done right the first time

-          the customer does not care about it or is not willing to pay for it (5)

According to Kiyoshi Suzaki, author of The New Manufacturing Challenge (6), there are seven areas where waste can be eliminated; overproduction, wait time, transportation, over-processing, inventory, motion, and product defects.

Over the most recent 20 years, Lean has been morphed or tweaked to best fit the challenges at hand.  For example, Boeing use 10 types of waste (or used to, not sure anymore):  CLOSED MITT (7).  I’ve heard of TIM WOOD or DOT WIMP, and the one we use at MMEC is DOWN TIME (Defects, Overproduction, Waiting, Non-utilized talent, Transportation, Inventory, Motion, and Excessive Processing).  We like the acronym DOWN TIME as it makes it easy to remember, and the eight different types of waste in your system can and will create down time in your operation.   In the long run, it really doesn’t matter what you use or call it because they all mean the same thing.

Below we’ve outlined the eight types of waste in DOWN TIME, a brief explanation, examples and/or Red Flags(8) to look for.

-----------------------------------------------------------

1. Defects

Of the eight wastes, defects are perhaps the most obvious and self-explanatory.  A defect does not meet the customers’ requirements in some fashion.  It will require rework, or in some cases a complete restart of the product if it can’t be reworked.   In either case, it will cost you the time and materials you invested into the product or service.

  • Examples / Red Flags:
    • Manufacturing:  product fabricated / assembled wrong, high scrap rate, wrong engineering, bad work instructions or customer requirements
    • Office:  data entry error, incorrect information shared, missing information
    • Healthcare (3):  wrong medicine, wrong dose, surgical cart missing an item

2. Overproduction

Producing goods or services over and above the amount required by customers. This is the worst waste of all because it causes many of the other wastes and hides problems in the system that should be improved.

  • Examples / Red Flags:  
    • Manufacturing:  extra inventory caused by long setup times, imbalanced work flow, overproduction causes excess handling, using unneeded space
    • Office:  reports no one reads, entering repetitive information on multiple documents
    • Healthcare:  unnecessary diagnostic procedures, producing medications not used

3. Waiting

Idle time with materials, people, or machines.  If you walk through an operation and see you any of the three waiting with nothing being done, something is broken or needs improved.  All three when sitting idle are costing you money in one form or another.

  • Examples / Red Flags:
    • Manufacturing:  operators watching machines run, machines waiting for operator or materials, materials sitting idle on floor waiting to be run, operators waiting for the correct information
    • Office:  waiting for approvals or signatures, printer or computer issues, ineffective meetings
    • Healthcare:  employees waiting for patient, information, or work to do

4. Non-utilized talent

The waste of not using people’s mental, creative, and physical abilities for the betterment of the company.  Companies always want the best people on their staff, but often fail to put them in the right positions.  To use a sports analogy, we all want to have the best team on the bus.  But how often do we ask the next question, do we have the right players in the right seats on the bus?  Imagine if every operator had an interest or passion for what they were doing!  The job was more than just a job!  Think of the potential engagement we could create within the workforce.

  • Examples / Red Flags:
    • Manufacturing:  experienced purchasing agent on production floor when Purchasing needs help, poor hiring practices, low pay – high turnover, low or no investment in training
    • Office:  minimal training, inadequate business tools, limited authority for basic tasks
    • Healthcare:  Employee burnout, employees stop giving suggestions

5. Transportation

Any movement of information, parts and materials in excess is considered wasteful.

  • Examples / Red Flags:
    • Manufacturing:  incoming material stored in a warehouse, double or triple handling, long distance between operations, use of temporary storage locations, poor plant floor layout, operator retrieving own supplies or standards
    • Office:  multiple hand-offs or approvals, moving product in and out of storage, office supplies in other building or floor
    • Healthcare:  supplies not at point of use in ED, patients moving from building to building to get cancer treatment

6. Inventory

More information, raw material, or finished product on hand than needed.  Obsolete material mixed in with good product.  Typically caused by Overproduction.  Excess inventory usually hides other problems such as long set-up times, lack of cross training, no preventative maintenance program, or other problems.  (MiconLean…)  Inventory is product that is there due to some inefficiency or uncertainty. And most important of all, it is not doing anything but taking up your working capital and space (5).

  • Examples / Red Flags:
    • Manufacturing:  low inventory turns (annual cost of sales/average inventory), large batches of parts waiting in the queue, large amounts of obsolete inventory, materials purchased in large amounts to take advantage of price breaks, long setup times on equipment can drive inventory levels, excess amount of supplies at workstation. 
    • Office:  batch processing transactions & reports, obsolete files, or office equipment, making more copies of a document just in case, email in-box.
    • Healthcare:  Expired supplies that must be disposed of, such as out -of-date medications

7. Motion

Motion refers to an operator's movement that is not adding value.  The waste of motion occurs when people must do a lot of walking or moving from one area to another to complete their job and is usually a sign of poor workplace organization.

  • Examples / Red Flags:
    • Manufacturing:  excess time moving around, operators looking for or going to get tools or items needed for production.
    • Office:  employees not working to a standard method, excessive handoffs, searching for files on a computer
    • Healthcare:  lab employees walking miles per day due to poor layout, searching for missing supplies, equipment, or medications

8. Excessive-processing

Effort that adds no value from the internal or external customer’s viewpoint.  Excessive processing the customer didn’t ask for and aren’t willing to pay for.  It's usually made necessary because of errors or inefficient understanding of the customer’s requirements.

  • Examples / Red Flags:
    • Manufacturing:  additional labor required to remove a burr or file and finish a surface, extra in-plant packaging is needed to keep a product clean during processing, taking the time to go beyond the customer’s requirements because of the perceived value
    • Office:  re-entering data, constant project interruptions, converting formats, unused or unnecessary information collected
    • Healthcare: entering data into a computer system that is never seen, entering data into a system that isn’t liked to another system, excessive warnings in an ERM system

Getting Started (8)

Elimination of these wastes in the operation does not require large capital investments, but it does require discipline, commitment, and change.  By working to eliminate waste, a company can choose to employ the principles of lean throughout their operation.  In many types of operations, this means changing from a traditional "batch and queue" environment to one of small batches or even continuous flow.

One of the first things to look at is the flow of materials.  Determine where the flow stops and why. While top management has the responsibility of determining the overall "big picture" of how the floor will operate, all employees should understand the concepts used to make changes and why they were used.  Employees on the floor are valuable resources for input on improvements at the work area level: parts flow, ergonomic issues, process improvement.  This is particularly true when it comes to the basic principles of just-in-time and cellular manufacturing.  Just-in-time means getting your customers "what they want, in the amount needed, when they need it." This applies to co-workers down the line, as well as to external customers.  Instead of thinking of it in terms of strictly just-in-time delivery, expand your thinking to just in time manufacturing or "make one, move one."

Forming manufacturing cells, which group together the machines that make a family of similar parts, is a good way to begin to accomplish moving to one-piece flow production.  In addition to offering opportunities for employees to work and cross-train on different operations, running production in manufacturing cells will lower inventory levels, decrease lead times, and improve quality.  A common mistake manufacturers make is simply moving operations closer together without regard to synchronizing the operations.  Inventory between operations is still allowed to build up, and any benefits of one-piece flow production are lost.  Even though operations are closer in proximity to one another, they still function as "isolated islands."

For some operations, such as stamping, where one-piece flow is not practical, manufacturers should consider a "pull" system with some type of visual signal to control production upstream.  A common used rule is that batch size is directly proportional to lead time, so cutting the batch size in half will decrease the lead time by half.  Reducing batch sizes is one of the least expensive changes you can make, and it yields significant, visible benefits.  

But, where should you start? The best way is to implement changes in one area at a time so you can learn and improve as you go.  Find an internal champion who understands lean thinking or bring in a consultant.  Involve your workforce, from the direct work group to the executives.  Keep it simple and inexpensive until you have some successes.  Some of the most powerful tools to help with implementing lean include simple visual controls, you don't need to invest in expensive software or other bells and whistles.

A common mistake that is made is to put off implementing Lean when times are good and demand is high.  When in all reality, this is the best time to implement Lean as it will have the largest impacts to the organization.  The longer you wait the more resources (materials, machines, man-power) will be wasted due to inefficiencies within your systems.  The time to implement lean is when you have the resources, both financial and manpower to make the necessary changes towards Operational Excellence.  Don’t wait until times are tough as you won’t have the means to make the necessary changes.

Consider operators in the Bakken Shale Formation.  When the play took off in 2007, many operators entered; the 2014 price collapse subsequently forced many out.  As of this writing, a small handful of larger operators remain, of which Hess is notably productive and profitable in today’s low oil price market.  Why? As a direct result of the company’s adoption of Lean during the go-go boom years.  Be like Hess (9).

We all want assurances that change will increase productivity and profits.  By eliminating waste, lean can increase your productivity and your profitability, but it takes time and commitment to put together a good lean system.  Customers are demanding products and services at the price they want, just-in-time, and of the highest possible quality.  Lean can help you exceed their expectations.

 

Reference

1 About TMMK - History. (n.d.). Retrieved August 21, 2017, from http://toyotaky.com/history.asp

2 Dennis, P. (2016). Lean production simplified: a plain-language guide to the world’s most powerful production system (2nd ed.). New York: Productivity Press.

3 Graban, M. (2017). Lean hospitals: improving quality, patient safety, and employee engagement (3rd ed.). Boca Raton: Taylor & Francis.

4 Mascitelli, R. (2011). Mastering lean product development: a practical, event-driven process for maximizing speed, profits, and quality. Northridge, CA: Technology Perspectives.

5 The 8 Wastes under Lean. (n.d.). Retrieved August 21, 2017, from http://www.miconleansixsigma.com/8-wastes.html, Author: Mittal Consultants and Enterprises Co. Ltd. 

6 Suzaki, K. (2012). The new manufacturing challenge: techniques for continuous improvement. New York, NY: <> Free Press. 

7 The Types of Waste. (n.d.). Retrieved August 21, 2017, from http://theleanthinker.com/common-searches/the-types-of-waste/ 

8 Red Flags of Manufacturing. (1997).  Michigan Manufacturing Technology Center's ManufactLINE newsletter

9 Energy, J. P. (2017, January 24). Leading With Lean: Hess Increases Efficiency, Lowers Costs. Retrieved August 22, 2017, from http://www.epmag.com/leading-lean-hess-increases-efficiency-lowers-costs-836636

By Shane Cantrell, MMEC Business Advisor

Technology is changing the world at a rapid pace, from the phones and computers we use daily to robotics and other new manufacturing methods. Staying competitive requires implementing technology and automation within your business, which is easier said than done. Reforming your technology can be intimidating, since the more sophisticated technology becomes, the more complex it is to understand and operate. The financial aspects of implementing technology can also be challenging, from ROI calculation to capital financing.

At the recent Innovate Montana Symposium, MMEC partnered with: Chris Orms of GTUIT, Trae Buchert of Key Technologies, and Chuck Wambeke of Industrial Automation Consulting to listen to the concerns of business people and discuss potential ways of addressing the challenges of introducing these new complexities. Together they addressed 5 key questions.

Where is the Puck Going?

In other words, what does our future look like with the implementation of technology and automation?  In what could be deemed a happy coincidence, technology adoption is overlapping with a large percentage of the traditional workforce retiring, without the necessary numbers of younger skilled workers available to backfill their positions. 

Robotics used in the manufacturing process are not the only type of new technology affecting manufacturers.  Automation is providing productivity and efficiency gains in all aspects of business, including marketing and sales, customer service, financial operations and management, shipping and supply chain, and on and on.  Different types of technology must be integrated to provide the best outcomes and allow our companies to keep up with the competition.

What should MT businesses do to prepare to participate in the IIoT?  How does and will technology affect manufacturers who choose to be early adopters?

Before we put time and money into implementing new systems, we should spend time understanding what it is that we’re really trying to accomplish, and how the technology we’re considering will get us there.  We’ve all heard the phrase “big data,” referring to the large amounts of information which can be generated by new higher-tech systems.  Technology is making all sorts of data available at the touch of a button, but what should we really be collecting, and what do we do with it?  Planning is crucial to avoiding disappointment in outcomes.

It is important to be knowledgeable about the technology you’re considering before signing on the dotted line.  “Doing your homework” on new technology implementation includes not only gaining a thorough understanding of the new product or system, but also consideration of training needs, learning curves of those who will be interacting with it, new or different inputs that may be necessary, implications for your supply chain (both incoming and outgoing), etc.  One really needs to understand what the end goal is.  What do you want the “Future State” of your process or organization to look like?  If you (the end-user) do not understand how you want the new system to function, then the implementation of technology and automation could result in a very disappointing outcome.

We must also consider the human element.  In most cases, as Trae Buchertemphasizes, people still buy from people.  Technology must be user-friendly, and expectations must be clearly communicated.  Adequate support of new technology is also crucial to successful implementation and achievement of desired outcomes.

What technology disruptions do you see your respective technology domains bringing to your customers markets? What could the implications be for MT organizations?

As Chris Orms mentioned, we need to consider “what you are doing to your business.  It is crucial to have the ability to be more adaptive in everchanging market conditions.  The importance of doing business in different ways cannot be overemphasized.  Sometimes, we as humans can be the biggest technology disruption.

The other looming issue is the skilled workforce consideration that is all too common among manufacturers in Montana.  It is very challenging to find people that are willing to work.  Technology and automation are key tools that can be used to address these concerns.  Another potential technology disruption is how to re-purpose people and re-train them with the necessary skill set to incorporate new technology and automated processes.  The implications can be very detrimental to small to medium sized manufacturers that have not proactively planned to address the new skills necessary and training accordingly.

Chuck Wambeke also emphasized the importance of a properly designed Human-Machine-Interface (HMI).  Industrial Automation Consulting has engineers that carefully configure the HMI based on the application at hand.  The HMI needs to consider ease-of-use and design for the specific functionality needed.  A poorly designed HMI can often negatively affect how effective technology and automation is implemented and integrated into their existing systems.  Did we mention planning again?

We’ve seen great economic gains in Bozeman recently due to the rollout of the Bozeman Fiber Network. Have you seen other micropolitan regions strengthen their competitive advantage through technology adoptions?

Trae Buchert shared about how successful central Washington state has been in Grant county with their fiber optic program.  The Daily Dot publication had this to say about this small community: “Ephrata is a sleepy farming town nestled squarely in the middle of Washington state, about halfway between Seattle on the coast and Spokane near the Idaho border. While Ephrata is the biggest city in Grant County, there’s little chance anyone would mistake it for Silicon Valley. Yet, underneath Ephrata’s unassumingly rural exterior, the area plays host to massive data centers for Internet giants like Microsoft, Yahoo, and Intuit.  Why would the titans of the tech world choose to house their most valuable resource in an isolated little town of approximately 7,000 people? Simple: This particular little town has the fastest Internet in the nation.”

This case study is a textbook example showing the importance of employing technology to attract new businesses and capture incredible economic gains that would never have been possible without it.  Grant county in Washington state chose to invest in high technology to achieve a significant competitive advantage over most communities in our nation.  What would it look like to do something similar in our Montana region?

Where do you see technology advances being the most beneficially impactful?

The food industry, according to Trae Buchert, is seeing incredible impacts in product recovery and efficiency gains.  State-of-the-art technology has been employed to sort food products using vision cameras, lasers, and specially designed sorting conveyors to reduce waste and use them for another product type.  The result has been astounding in increasing product recovery, dramatically improving efficiency, and overtime labor savings.  This technology is not limited to the food industry alone.  Other applications can be easily translated to: mining, lumber, recycling, tobacco, and ammunition manufacturing.

Chris Orms shared about the technology advancements being used in the oil and gas industry by GTUIT through the employment of managing and monitoring equipment in the field (high value in technology).  Using technology, GTUIT can now manage and monitor equipment remotely without even needing to be on-site.

 

Overall, it is clear that we have a lot to learn about how to effectively introduce and implement successful technology and automation systems in our organizations.  Technology in its very essence is very dynamic, so it makes it very challenging to keep up to speed.  The best place to start is to ask questions and then proactively plan to include the use of technology and automation in your situation.  Resources are available, and MMEC is here to help you walk your technology journey.  If you are interested in further exploring technology, robots, and automation, please consider attending the upcoming workshop on September 12-13,2017 in Bozeman, MT.  

With the Wannacry ransomware attack fresh in everyone's memory, and scary stories and statistics in the news constantly, there's no need to harp about the odds and potentially devastating effects of a cyber assault on your small business. The evidence is overwhelming that taking steps to protect your organization and employees must be a priority. For those in the Department of Defense supply chain, the deadline is also fast approaching to have your cybersecurity program, mandated by recent revisions to the DFARS, in place.


In December 2016, the National Institute of Standards and Technology (NIST) published a revision to its Special Publication 800-171, which outlines 14 areas of security against cyber threats. The publication details requirements for protecting the confidentiality of Controlled Unclassified Information (CUI) in nonfederal systems and organizations. DOD contractors must be in compliance with these requirements by no later than December 31st of this year.


For those not in the DOD supply chain, the NIST publication is also useful in developing any organization's cybersecurity strategy. In addition to the Special Publication, NIST has also developed a voluntary Framework, which is scalable for any size organization and intended to help guide businesses and other organizations through implementation of security measures in gradual steps.


As with most things in our information-dense environment, a plethora of information about cybersecurity is available at our fingertips, but figuring out what's most important and undertaking the task of planning and implementing changes in the best manner for your business can be challenging. MMEC is one of many resources in Montana who can help. A great opportunity to learn more will be the Cybersecurity session at the Innovate Montana Symposium on July 12-13 (if you're not already registered, you should!).

One thing is certain, and that's the need to act sooner rather than later to ensure that your company is as protected as it can be. An analogy that hits home to us in Montana could be made: it's like running from the bear – your odds are better at the front of the pack than bringing up the rear!


DOD Contractor Resources:
• Defense Cybersecurity Requirements for Small Businesses
• Cybersecurity: What Small Businesses Need to Know

Additional resources available on the MMEC website.

David Allard

MMEC Business Advisor

Intellectual Property, or IP can be defined as a product of the human mind or intellect; including ideas, inventions, expressions, methods, processes, unique names or chemical formulas which have potential commercial value and can be expressed in tangible form. The United States Patent and Trade Office (USPTO) has the duties of governing IP in the USA.

By the above definition, IP could be as straight forward as the secret ingredient in your Perfect Bloody Mary.   IP can also be more complex, such as a highly engineered, Rare Earth bearing Nano-structured catalyst that is integral to the production of some esoteric and valuable wonder material.    
IP not only refers to patents, but also to Trade Secrets, Copyrights and Trademarks, as well as affording certain rights to the owners or inventors of distinct company names or packaging designs.

Patents, perhaps the most commonly known area of IP, are divided into three categories:

  • Utility Patents – Ideas and inventions such as new drugs (Viagra), mechanical devices (better mousetrap), manufacturing methods (anodizing), etc.  In 2015, the USPTO received 589,410 Utility Patent Applications, resulting in 298,407 awarded patents.
  • Design Patents – Used to protect ornamental objects, unique designs etc. – such as a USB charger shaped like a conventional telephone.  Determining if something should be covered by a design patent or a utility patent can be tricky, but there are a few simple tests that can help.
  • Plant Patent – Applies to asexually reproducible plants (grafts and cuttings).  New plants, both asexually produced and produced via pollination can also be potentially protected by a Utility Patent. 

It is important to remember that IP rights are offensive in nature, not defensive. Having a patent issued by the USPTO does not afford the owner automatic protection from infringement.  Rather, it grants the owner certain rights to exclusivity and potentially affords them a framework for offensive legal recourse.  The USPTO is not responsible for making sure no one else is using your patented ideas; that responsibility falls to the patent owner.  Rather, the USPTO role is to keep others from patenting ideas or inventions that too closely resemble patents already granted, also known as “Prior Art.”
Any inventor, entrepreneur or business entity developing or using IP should be familiar with the basic concepts and terminology used to describe IP.  In particular, understand the importance of confidentiality; do not disclose an idea or innovation publicly if the intent is to patent it or treat it as a trade secret.  Prior to discussing or disclosing un-protected IP, be sure to have an executed NDA (Non-Disclosure Agreement) in place.   

There are several good IP reference books readily available.  Over the years, Patent It Yourself(D. Presseman; 2014) has become a common reference tool used by many inventors and the like.  It provides a thorough, comprehensive and straightforward resource to guide users from idea to marketed invention.  For those looking to gain an understanding of how IP is used at the highest levels, the book Triumph of Genius (R. K. Fierstein; 2015 ) provides an in-depth account of the landmark IP suit brought by Edwin K. Land and Polaroid against Kodak

- Dave Allard MMEC

Claude Smith

MMEC Business Advisor

The most important aspect of starting a food manufacturing operation is Food Safety. Nothing will be more important to you and your business than never having a customer become sick, or injured, or worse from consuming your product. Food Safety in the food manufacturing world is overseen by the FDA, State and Local authorities, and many times large distributors of your product. Generally this oversight will consist of on-site audits. An auditor will walk through your operation from start to finish and will conduct a paperwork review of your production records.

Over the years, Food Safety in the US has become formalized and standardized in an effort to provide the best possible safeguards for you and your customers. The FDA has mandated Good Manufacturing Practices to be followed by every food manufacturing facility. These practices are published in the Code of Federal Regulations (CFR117) and provide guidance in cleaning ability, sanitation, and cleanliness of processing areas and prevention of microbial and chemical contamination.

A good Food Safety Program in your facility can be broadly thought of in two ways:

  • First: Reduce the chance for any hazardous material to become introduced into your product stream. Control them at the source. This requires a variety of programs, called Prerequisite Programs, which you should have in place. Your employees should be trained in them, and they should be followed. In addition, you should be checking frequently to ensure that they are being followed. Think of them as your SOP’s, or Standard Operating Procedures. In other words: what things do you do, how you do those things, when you do those things, where you do those things, who does those things, and how do you know those things were done. 
  • Second: If a failure occurs in one of your Prerequisite Programs and a critical hazard should become introduced into your product that could cause harm to a customer, how will you detect, and remove it before you ship the affected product? Or better yet, how will your business design a system that doesn’t allow this to happen in the first place.

This is the purpose of a Hazard Plan, better known as a HACCP Plan. HACCP stands for Hazard Analysis and Critical Control Point. These plans have been mandated by the FDA for certain high-risk foods like juices and canned foods, although many other manufacturers follow a HACCP Plan because it is good business to not harm your customers, and because many retailers, wholesalers, and distributors require a HACCP Plan regardless of the product you make.

 

The two efforts mentioned above work best together. Relying only on your HACCP Plan while utilizing weak Prerequisite Programs is a recipe for disaster. For example, relying on a vision system to inspect finished product works best if the incoming load of hazards is infrequent. If chemically tainted product, broken glass, insects, etc. are being detected by the vision system, then the Prerequisite Programs upstream are in need of an overhaul. The possibility exists that some of these issues may pass through the vision system due to faulty maintenance, operator error, or any number of other reasons.

Prerequisite Programs can be varied depending on the facility and processes involved. The 12 most commonly found are: Facilities (clean, well laid-out, secure, weather proof), Suppliers, Sanitation, Pest Control, Employee Training, Specifications, Production Equipment, Personal Hygiene, Chemical Control, Warehousing and Shipping, Traceability and Recall.

You should have procedures or policies in writing for each of these, detailing what and how your company handles the areas of operation. Some may be brief, while others may require a set of written procedures that require step by step procedures and training. Signed off check sheets are important to serve as records of your sanitation activities. All Prerequisite Programs should list on the front page who is in charge and their job title, where the actual program manual or documents are located, who has revision authority, how often the program is reviewed, and which personnel are trained in the program.

Generally speaking, think of a hospital. We expect there should be no dirty dressings or bandages on the floor, utensils and equipment should be properly stowed, doctors wearing proper clothing, hand washing available, etc. That image in your mind is what your operation should be like. After all, you’re making people’s FOOD.

 -Claude Smith

Alistair Stewart
MMEC Senior Business Advisor

The very first baby boomers turned 65 in 2011; 10,000 turn 65 every day. Baby boomers own 63% of the private businesses in U.S., and 80-90% of their wealth is tied up in their businesses, where it is highly illiquid. Here in Montana, many of those businesses have been managed as a source of cashflow to support lifestyle; rather fewer owners have viewed their businesses as a source of wealth beyond income.

A recent Exit Planning Institute survey confirms that 76% of baby boomers who own businesses plan to transition over the next 10 years, and 48% plan to do so in the next 5 years. Alarmingly, the survey found that 12 months after selling, 3 out of 4 business owners surveyed “profoundly regretted” the decision, and 75% of private businesses put on the market don’t sell. A very common reason for ‘no sale’ is the gap between value expectations of the seller, and the price that potential buyers are willing to pay. Fully half of all business exits were not voluntary, but resulted from death, disability, divorce, disagreement, or distress.

Owners wishing to leave on terms and at a time of their choosing should focus on exit planning well in advance; I’ve heard it said many times that owners who don’t sufficiently plan for a successful exit are busy preparing for an unsuccessful one. So what’s an owner to do? In my experience, owners ‘lean in’ when asked a fundamental question “Do you know what your business is worth?” That difficult, triggering question gets to the heart of an essential, early step in exit planning; correlating owners’ “life-after-business” plans with their personal financial plans and the value of their biggest and most illiquid asset, their business. That eye-opening data frequently jumpstarts serious exit planning endeavors, about which, more next time....

Jenni West
MMEC Associate Director
One of my dad’s favorite sayings when I was growing up was, “Better safe than sorry.”  That old adage really rings true when it comes to protecting your business from cyber and other information security threats.  Considering the devastating potential consequences of suffering a security breach, and the exponential rise in cyber attacks among small manufacturers and businesses in general, making the time to implement some basic security protocols such as the ones mentioned below could have a significant ROI for your business.
  1. Train your employees on how to protect sensitive information.  This includes everything from installing new applications on company computers to use of social media to how to handle tax and other important information and even handling email phishing and spam.
  2. Update, update, update.  Always ensure your applications are up to date – checking your settings to make sure automatic updates are allowed is a good way to do this.
  3. Install, update and run antivirus and malware protection regularly.  Make sure to keep your subscriptions up to date, and periodically check to see if an upgrade to your application is warranted.
  4. Require everyone (including yourself) to use strong passwords, and consider two-step authentication whenever possible.  Don’t store passwords where they could be easily stolen or hacked (such as in Notes or a similar app on your smart phone).  A good rule of thumb is to use a minimum of 12 characters, including upper and lower case letters, numbers and symbols.  Passwords driving you crazy?  There are a number of password manager apps available now, as well.  Here’s a link to a recent review article in PC Mag: http://www.pcmag.com/article2/0,2817,2407168,00.asp.
  5. Install a Firewall
  6. Secure your network Wifi with a strong password (always change the factory-set password right away!), and set it so that it doesn’t broadcast the SSID.
  7. Ensure everyone has their own individual accounts and passwords, and control administrative/full-access privileges.
  8. Ensure your email provider offers adequate filters, and engage security settings in web browsers to keep employees from accessing malware-infected websites.
  9. Backup, backup, backup your data.  Run regular backups and always keep important information in more than one location.  Cloud-based storage services often provide backup of your data, in addition to allowing access from anywhere with internet.
  10. Control physical security of laptops and other sensitive information.  Know where important and sensitive information is stored and who has access, and keep it secure.  Don’t leave your laptop on your car's back seat, or open and logged in where anyone could access it.
For more information and guidance on how to protect yourself and your business, check out the new free NIST Cybersecurity Framework and Small Business Information Security: The Fundamentals available for download on our website.