Requirements are clearly defined
Someone once said to Trevor Smith that printers were a bit like plumbers – they take ages to quote, never do the work on time, and then charge more than they said.
Which made him determined that Amberley Labels, where he had led a management buy-out and become managing director, would be the antithesis of that observation. But as with many SMEs, the company didn’t have any formal measurement of performance. When that was put in place, he was disappointed to discover that only 84% of deliveries were on time even though he knew the industry norm was 70%.
The company introduced a KPI to cover that, and removed the acronym ASAP from appearing on any production or delivery docket. The new approach included identifying the specific date the customer really required the product and scheduling the work accordingly. And the company ascertained precisely the lead time for materials before agreeing a delivery date. The result is that people began to take a pride in achieving clearly defined requirements, explains Smith. Today, over 99% of deliveries are on time.
“Of course we can produce something immediately in an emergency, but we can’t run our own plant efficiently if that is the basis for all of the work we do,” he explains. “If a client needs something the equivalent of yesterday, the value is in our ability to jump, not that we simply do it as a matter of course.”
The perfect customer, he says, is one which owns its own brand and manufactures in house, because they are more likely to provide more accurate and less onerous lead times. “I find it stimulating to work with brand owners. It is fascinating to see how a brand can make the difference between a business which is the market leader and one which is struggling to compete. For us, it is not just the label per se, but everything surrounding it.”A former production engineer who maintained a real interest in machinery and workflow, Smith was studio manager at Amberley Labels when the chance came to do the MBO. “Naively I thought we would acquire the company and then, because all business plans have an exit strategy, we would all leave together in the same way that we had all bought the company together. What I didn’t factor in was the age difference of the owner directors, and their individual expectations. And from experience, I know now that from day one, the team has to include a sales professional.”
After a subsequent restructuring, Smith is now the sole owner and shareholder. But he was less than amused to discover that when it was announced that the buy-out directors were leaving, even though it was a planned retirement, the company’s credit rating dropped as a consequence, regardless of the fact that its cash position had never been better. At the same time, a large client which was going through a difficult fourteen months before subsequently going bust had a better credit rating.
At the time, the management team was also adjusted so its competences better reflected customer requirements. Explains Smith: We recruited our sales and marketing manager from a technical support role, because the customer wants to see someone who knows how to help them solve their problems.”
To develop the company’s overall capability, he first brought in an external consultant to interview each of the managers. “I wanted to build a better team than the one we had, which isn’t in any way a reflection on the ability of the existing team. The point I am making is that sometimes change has to happen, otherwise the company can’t really move forward,” he explains.
“When we did the management buy out, we all committed to invest in management training. At the time, we knew we were good at operating a label company, but that isn’t the same as being able to run an actual business. Otherwise what we would have done essentially is to have bought our jobs.” Smith went on to gain his MBA. Every three weeks, a classroom-based morning training session was held at the company to address issues such as time management, low level strategy planning. “I think it might come as a surprise to many companies just how many ideas their people have, the potential that comes out of this kind of process,” says Smith.
Five years ago Amberley Labels brought in mentors and a training program to up-skill their sixty or so staff. Smiths rationale is that it enabled people to have the ability and confidence to take more responsibility and to be more disposed to do something instead of waiting to be instructed.
Which is absolutely necessary if a company is to move forward, because otherwise, says Smith, the managing director in a small business will tend to spend an increasing amount of time on operations. “Everyone needs external input to challenge assumptions and the less than satisfactory conclusions which can result from taking them as read. At the end of the day, it means everyone is better equipped, and a company needs a management team with aspirations,” he says.
“Also I didn’t want to have to spend every minute of every day thinking about the business. That meant I needed people around me who I could trust to do the job. I have formed the team and lead the team, and the aim has to be that the company is not dependent on its owner. When I came back from holiday, I had jotted down eighteen points for me to action, but fifteen of them were only to ask for an up-date on specific things while I had been away, not that I was required to do something about them.
“My role now is to make sure the business stays on an even keel. Having a management team in place with the right skills means I have more time to explore opportunities, to be an ambassador for the business, rather than the first person the customer wants to talk to. The biggest constraint for a company is the ability of the managing director to devote time to thinking about the future.
“Having that time means that a company has more options. My aspiration for the business can be another management buyout rather than a trade sale.”
There are some 300 label printers in the UK, and while Smith wouldn’t describe it as a growth sector, he says it isn’t declining either. Tight lead times mean that there isn’t a lot of overseas competition. But not surprisingly, technology is likely to have the most significant of impacts. Direct to package printing will happen, says Smith. “It’s quite primitive at the moment, but that won’t be the case in the future.”
And that will result in further change for Amberley Labels, and a re-affirmation of the need for its managing director to have the time to look ahead. And to effect change, Smith says you need to have a strong internal belief in what you’re doing and not be cowed by others. He speaks from experience. “We had the chance to set up a manufacturing plant in China on the back of a very big client, and we should have had the confidence to make it happen,” he says ruefully. “
My dad said there’s only one person who really knows your capability, and that’s you. You need to convince yourself. You need self belief if you are going to succeed, especially when times are tough. And you need it to give people the belief in the company.”