Product Development Business Health Audit

by Randy Speed, © 2009

Listed below are questions that a CEO or plant manager of a product development company should be asking, and obviously, should know the answers to. If you are ready to gain valuable insight into the health of your company, then take the audit.

List or highlight the items your company should be doing or should improve on. Open your eyes to the possibilities that your company could achieve and develop an improvement plan. Your business improvement plan should have clear objectives and a timeline.

Now, get ready and let’s begin the journey of improving your business’s health.

PRODUCT DEFINITION:

“You can’t build what hasn’t been designed.”

Is there a full set of drawings for every product model?
Do every part and every subassembly being manufactured have a drawing?
Are there drawing standards?
Are finishes and tolerances specified?
Are manufacturing methods specified on the drawings?
How do Mfr and Engineering work together?
What filing and archival system is being used?
Are critical computer files getting backed up every day?
If place burned down, could we recover our product definition?
Are drawings easy to find? By Whom? PDF format?

PRODUCT DESIGN:

“Every ounce of weight must have a purpose, no more and no less.”

Why is a part shaped the way it is?
Are all parts designed for minimum weight, and minimum cost?
Are we using the benefits of Solid Modeling?
Why is a certain material being used for each part?
Do we try to reuse common sections (minimize specials)?
How much does each part cost?
Does our product get tested (is it over-designed)?
Does every part have a reason for being on the product?
Does every feature have a reason for being on a part?
What is the weakest area in the design?
What unique features do we offer?
What unique features can we offer?

FACTORY:

“If you have to stop and think or wait on something, you are costing the company money.”

What are reasons for factory down time?
What are bottlenecks in mfr process (Theory of constraints)?
How many hours does it take to manufacture your product?
How many hours does each step take?
Are we measuring number of hours?
How does material flow through the factory?
Does every task have an authorization (work order)?
Are we utilizing automation? Where can we?
How is shop area being utilized?
What processes do we outsource? Why?
Is the best, most efficient, process being used for a given mfr step?
What can be done to improve efficiency for each step?
Are Lean Manufacturing principles being used?
What areas of safety need to be addressed?
What areas of facilities need addressing?
How is inventory controlled?
What are the shop cleaning procedures?
What are the tool maintenance procedures?
How are shop tools managed (shadow boxes)?
Is scrap material being recycled?

SUPPLY CHAIN:

“Just in time manufacturing requires a reliable supply of material.”

Who is responsible for ordering material?
What measure (when) causes material to be ordered?
Is inventory managed for minimum shelf time?
Who are our suppliers?
Why do we use a certain supplier?
Who pays for shipping?
Have we competitively bid every part, every material?
What are lead times for each supplier?
Are we ever waiting on material?

SALES:

“The company is only as strong as its sales staff allows it to be.”

Are our sales staff order takers or sales people?
What do we do to train our sales staff?
Do we provide tours for our resellers?
Who are our dealers?
Why do they sell our product?
How do we pick up new dealers?
What geographic areas are we in?
What geographic areas are we not in?
Do we use direct mail?
Do we use direct sales?
Should we use direct sales to sell to dealers rather than to end customers?
Where in the country is our product more necessary?
What shows can we participate in each year?
What is our competition doing that we are not?

MARKETING:

“You don’t have a great product until you let people know that you do.”

What marketing collateral do we have (catalog, brochures)?
What is our slogan?
How do we compare to the competition?
Why do customers buy our product?
Why do customers buy the competition’s products?
What are we known for in the industry?
How do we help dealers with marketing?
Are we using billboards?
Are we using magazines?
What dealer incentive programs have we tried?
What dealer incentive programs work best?
How can the web site be leveraged more effectively (add a menu system)?
What gim-me’s do we have (caps, shirts, mugs, pens, floor mats)?

CUSTOMERS:

“To give your customers what they want, you have to know what they want.”

Who are our customers?
Where are they geographically located?
Have they been sorted according to revenue?
Our goal should be for customers to buy more often, and to spend more per transaction.
Do we do a phone follow up 1 month after the sale?
Do we then change the sales experience based on recent purchaser’s input?
Why do people buy from us?
What do they like?
What do they dislike?
Have they been asked to respond to a customer satisfaction survey?

MARKET POSITION:

“Where do you want to be and when do you want to get there?”

How much money is spent each year in on purchase of products like ours?
What is our annual company revenue?
What is our percentage market share?
What market share do we want to have (reasonable)?
When can we get there?
What is the company’s rate of growth (we are growing – right)?
Is our rate of growth at least the same as the GDP growth rate?
What markets are we in?
What markets are we not in? Why?
Who are our competitors?
Where are they geographically located?

ORGANIZATION:

“A great place to work. Employees are our greatest asset.”

How does organization break down (sales, engineering, mfrg, materials, overhead)
What is each person’s job?
Does each person have a job title and a job description?
Do they have the proper training?
What do people like about their job?
What do people dislike about their job?
Are the pay rates for every position competitive?
How do we know? What is the going rate for a given position?
Are there regular company meetings?
Are managers “in the loop” on what is being expected of them?
How are employees rewarded for performance?
How does the Employment Stock Ownership Plan work?

FINANCIALS:

“Run the business, not the other way around.”

Are we currently in the black/red?
What is the company debt?
What are the company’s total assets?
Is real estate and building owned by the company?
What is our revenue forecast for the next quarter, for the next year?
What is the “cost” of building our product (break down every penny)?
What measures affect cost (hours, materials)?
Which costs are fixed, and which costs vary from month to month?
What is our historic sales data (good to graph it)?
What does a typical sales year look like (peaks, slumps)?
What type of Liability insurance does the company have?
What type of Property insurance does the company have?
Has insurance been shopped in the last 3 years?
What is the history of liability claims and amounts (% won, % lost)?
What lessons can be learned from past ownership experiences?

SUMMARY

Now that you have completed the business health audit, do you see any areas for improvement? Did you find some areas that you would like to improve on? If so, then take the time to write out a plan, and place a timeline to achieve certain objectives.

What do you want your business to look like in 5 years, 10 years? The future is in your hands. Good luck and happy engineering!