Selling Excess Manufacturing Capacity

Selling Excess Manufacturing Capacity

I receive many pitches every day. Many just don’t fit my interests. How could I pass up this one? “Just as Airbnb helps millions of people around the world instantly find a great place to stay for the night. What if car makers could use a similar model to easily order and manufacture lightweight 3D printed parts?”

So, I bit. And wound up with an interview with CEO of Xponential Works/Vice Chairman of Techniplas Prime Avi Reichental. His LinkedIn bio includes “parallel entrepreneur, board director, futurist, venturist, inventor, philanthropist”. He’s a busy guy. Wonder how he found time to chat with me.

In short, what is a supplier to do when it needs extra capacity but its capital assets are expensive—as in a large injection molding machine? On the other hand, what if you are a small supplier and have trouble landing consistent, long-term contracts leaving you with excess capacity?

Using digital technologies for communication, design, production, and quality, the two companies can link. The larger company with long-term contracts and capacity needs forges an agreement to “rent” the machines of the smaller company.

Geography becomes a second benefit. OEMs like having suppliers close to the plant. The Tier 1 has the flexibility to find a partner within desired range of the customer’s plant and use digital technology to send drawings, production orders, and other required documentation to the new remote plant.

As Reichental explained, “We have factories, associates, platforms, quality management systems, and brand recognition. Our problem is how to become agile and deliver on-time plus expanding our sales. We’re in a capital intensive industry. The answer was to extend to a group of smaller companies who don’t have the systems required by the OEMs but they have assets. We have created the equivalent of one additional factory per year by adding partnerships with these smaller companies shipping the equivalent of 1,000 tractor-trailers of product per month. Plus we now have the advantage of localizing production to the customer.”

Not stopping with injection molding, Reichental and his team have extensive additive manufacturing (3D printing) expertise. He adds, “Now we are layering additive/3D printing capabilities. Now there can be one-click to request, upload, get instant quote, through the cloud, process the order, get the manufacturing design, delivered physically by approved supplier with approved supply chain.”

Techniplas Prime has introduced a new approach to its e-manufacturing that is enabling the production of 40 million parts per year for BMW, Daimler, Ford, and other top auto manufacturers, or the equivalent of 1,000 truckloads of car parts per month, without the need to open a single new factory.

Five years in operation, it has revenues above $80 million out of parent company’s $500 million and is the fastest growing segment of the company. They proved it out internally before going out to 3rd parties. OEMs want to work with fewer suppliers. Techniplas Prime serves as aggregator for many suppliers so that OEM only needs to interact with it.

XponentialWorks is a venture investment, corporate advisory and product development company, specializing in artificial intelligence, digital manufacturing, 3D printing, robotics, and the digital transformation of traditional businesses. As a curator of leaders in Industry 4.0, the firm has built a unique ecosystem that unites the forces of early-stage companies with the experience and deep market knowledge of mature companies. XponentialWorks invests in and mentors the growth and success of promising early stage companies and acts as an edge organization for the benefit of larger, mid-market companies undertaking digital transformation.

Reichental concludes, “In the end, business innovation is more important than technology innovation.”

How To Read a Book

How To Read a Book

Just to keep you on your toes, I occasionally throw in a post on personal growth or productivity. Listening to a recent Tim Ferris’s podcast, reference was made to a book a read a long time ago. It brought back memories.

How To Read a Book is a book by Mortimer J. Adler. It was required reading for incoming freshmen at the University of Dayton when I was a high school senior. Dad bought the books for me at that time. He wanted me to go to UD. I chose arch-rival (at the time) University of Cincinnati because of the co-op program. That was a mistake, but live and learn. I remember there were three books on the list. I don’t remember the other two. This one was worth reading.

Mortimer J. Adler was a philosophy professor. He was notable for editing a set of books called The Great Books of the Western World. I bought that set with my second paycheck after college and still have it. The first paycheck went toward a good guitar–once again, that’s another story.

Adler was also the foil of Robert Pirsig at the University of Chicago in Zen and the Art of Motorcycle Maintenance.

Oh, how to read a book? (This is a good thinking skill.)

You will not want to do his entire methodology for every book. But if you pick a few books a year with some meat to them (and I hope you do), try this.

Every good writer has an outline. How do you figure out her outline? Check the Table of Contents.

Then scan the book. Look, for example, at the first and last paragraphs of each chapter. You will then have an idea of where the author is taking you.

As you read, write your version of the outline including important points to remember. I also tend to stop occasionally and recheck the TOC to get a sense of where I am, where I’ve been, and where I’m going.

Think of the argument the author is making and whether it is sound or has some gaps of logic.

Think about the book when you finish.

I believe the thinking part is the important part. It allows you to digest the information and consider the validity of the argument.

Oh, yes, and I’ve read almost all of the Great Books set. Some several times.

Flexibility In Changing Circumstances

Flexibility In Changing Circumstances

Heraclitus lived even before Socrates in Ancient Greece. He perceived that everything changes. “You cannot set foot in the same river twice.”

Indeed, we see in our lives constant change. The kids grow. Jobs change. We must learn to adapt and, in this sense, go with the flow.

On the other hand, seen from a different perspective, say from 30,000 feet in an airplane, the river is where it has been more or less for millennia.

How do you maintain flexibility is a word that continually changes.

I’ve changed employers nine times in my career. And even while with one employer saw many changes. This is probably not unique.

But, I’ve had the opportunity to experience many organizations, styles, management practices. It certainly informs my coaching ability.

One must cultivate awareness, an open mind, willingness to learn something new every day.

We can wish that things never change.

Kind of like that 1964 Bacharach/David song made popular by Dusty Springfield

Cause wishin’ and hopin’ and thinkin’ and prayin’ 
Plannin’ and dreamin’ his kisses will start 
That won’t get you into his heart 

The best plan is to take action realizing that there are things we cannot change, but we can make the best of where we are.

[I bet you never thought I could go from Heraclitus to Dusty Springfield in one blog post. ;-)]

Selling Excess Manufacturing Capacity

Dell Revamps Manufacturing on Agile ERP

This manufacturing story was an odd press release. It came about the time of Dell Technologies’ annual user conference Dell Technologies World. But it has no relationship to that event. It deals with implementing Lean with an MES, but doesn’t really mention the supplier who sent the release.

Dell has sold and manufactured based on Configure to Order since its beginnings. But we all know that CTO while holding prices down contains a unique set of challenges. As a part of its high-volume, high- variability, configure-to-order manufacturing model, the company established its eight manufacturing facilities completely differently. Each factory relied on different processes to produce the same products.

By 2010, it was a new world of higher competition and lower prices and this disparity added considerable IT challenges to the business. Each factory, for instance, had a unique IT footprint, with as many as 600 physical servers per facility. And across facilities, operations relied on more than 70 highly customized applications to guide each unit on its path through the factory and out the door to the customer.

Around this time, the global PC market was shifting towards standard product configurations instead of the traditional CTO model. To maintain competitive in a challenging market, Dell needed to transform its manufacturing operations, simplify its infrastructure and re-engineer its manufacturing processes from end to end.

Matt Griffiths, Executive Director of Manufacturing IT for Dell, says, “While the CTO model still worked for our enterprise and large customers, consumers were looking for a simpler product portfolio. We had to ask ourselves how we would react to that shift and drive the efficiencies of a simpler product portfolio into our factories and supply chains, so we could realize the cost savings and benefits of doing that change.”

A New Vision for Manufacturing

The first step in Dell’s business transformation was manufacturing simplification. Dell re-engineered its manufacturing processes based on lean principles, including just-in-time delivery of components from hundreds of suppliers. The new manufacturing model also required Dell to rationalize its technology infrastructure and ultimately rearchitect nearly all systems based on the new, simplified processes.

To support this transformation, Dell implemented Microsoft Dynamics AX. Leadership understood that a Microsoft Dynamics solution would enable them to standardize business processes around industry best practices and a single, global business model. The solution would also enable Dell to maintain maximum flexibility within each facility, allowing the company to respond quickly to changing market conditions. To further ensure flexibility, the company adopted a hub-and-spoke model, setting up each factory as an individual manufacturing business, with financials rolling up to the financial systems in place at Dell’s headquarters.

While flexibility at the plant level was important to Dell, the company opted to use much of the Microsoft Dynamics AX functionality out-of-the-box to allow for a rapid deployment. Griffiths says, “We were able to roll out Microsoft Dynamics AX to seven of our eight facilities over the last three years and we are now completing the final rollout in Poland.”

Griffiths notes that while the initial deployment took six months to complete, subsequent implementations were faster; the following deployment took only four months, and the three most recent deployments were performed simultaneously.

System Overview

Microsoft Dynamics now acts as Dell’s core Manufacturing Execution System (MES), while allowing the company to streamline operations using lean principles and industry best practices.

The MES uses the Lean, Production, Inventory, Quality, and Trade modules built into Microsoft Dynamics to manage more than one million transactions each day and all of Dell’s factory operations.

“We use Microsoft Dynamics end-to-end. It handles everything from raw materials coming in the front door, to kitting and material handling, all the way to our burn process through to shipping out the back door to our customers”, Griffiths says.

Allowing for a seamless connection and alignment with the company’s outsourced manufacturing network, Microsoft Dynamics AX also connects to Dell’s other enterprise applications using open, flexible communication methods.


Implementing Microsoft Dynamics helped Dell dramatically simplify its IT infrastructure and realign its manufacturing processes based on lean principles—all while maintaining the flexibility the company needs to quickly retool its facilities to meet consumer demand for new or different products. With the new MES in place, Dell has realized considerable IT cost savings, while increasing efficiency and boosting agility.

40% Reduction of IT Costs of Goods Sold

Through the implementation of Microsoft Dynamics AX and adoption of lean manufacturing principles, Dell decreased manufacturing IT costs of goods sold by approximately 40%. This savings equates to about $50M, which is an estimated 6-month payback on its Dynamics investment—a timeframe in which the company was also able to fully recover its factory throughout efficiency.

75% Reduction of IT Footprint and Downtime

In conjunction with its Dynamics implementation, Dell retired almost 2,000 physical servers and 75 custom- developed applications for an overall reduction of its IT footprint by about 75%.

At the same time, this highly simplified environment has seen vast improvements in uptime. Griffiths says, “In 2008, we saw downtime of about 2% of man capacity. Now, our most mature factory is at about 0.5% in downtime. That’s a 75% reduction.”

Streamline Manufacturing to Remain Competitive

With an MES in place, Dell was able to standardize its manufacturing processes across its global manufacturing facilities. While enabling the company to implement lean principles, this change has also helped the company to remain a leader of customized products, manufactured just in time.

With all of these processes now happening on a single system, Dell can fulfill customer orders in a much timelier fashion, while maintaining complete visibility and control over its manufacturing operations.

More importantly, this new manufacturing environment has enabled Dell to adapt to a new way of doing business. Griffiths says, “As the manufacturing industry evolved and shifted away from each unit being completely different, we changed our business processes to take advantage of that. Microsoft Dynamics, with its Lean module, was fundamental in helping us to do that.”

Drive Agility

Griffiths goes on to say, “Now as new products or processes are being introduced into our facilities, we only have to develop them once and roll them out across all locations. Before Microsoft Dynamics, we had to literally develop our processes seven different times. Today, our development teams are significantly streamlined. We can reuse our testing across factories, and any defects we find we can fix once and apply across the whole business in one big swoop.”

This story was sent to me by a company called MCA Connect. I was intrigued by the story and wrote with a number of questions to follow up. I have not heard another word. But I like the idea of using software to supplement, not subvert, Lean.

Too Many Decisions

Too Many Decisions

For decades, the most popular magazine in America was devoted to helping people decide what to watch on TV from among three choices (TV Guide).

How do you decide today? There are too many shows, yet not enough quality. And the quality is spread among too many carriers.

I am upset at the sudden large increase from Spectrum for TV service. I’d like to cut the cord. How many subscriptions will I need to replace it? Will the cost of Netflix plus Amazon Prime plus a new Disney streaming channel plus many more in the end cost more than cable?

Seth Godin calls it cognitive overload in this blog post.

Try shopping at the local “super” grocery store. I’d like to buy a box of cereal. Not so simple.

We have the same thing in evaluating manufacturing technology. Even with industry consolidation on the one hand, we’re faced with IT companies coming in with very powerful edge devices and ever new organizations and consortia. Choosing the wrong TV platform is one thing; choosing the wrong process automation partner carries far worse ramifications.

From Seth—

Here’s my list, in order, of what drives behavior in the modern, privileged world:

  • Fear
  • Cognitive load (and the desire for habit and ease)
  • Greed (fueled by fear)
  • Curiosity
  • Generosity/connection

The five are in an eternal dance, with capitalist agents regularly using behavioral economics to push us to trade one for the other. We’re never satisfied, of course, which is why our culture isn’t stable. We regularly build systems to create habits that lower the cognitive load, but then, curiosity amplified by greed and fear kick in and the whole cycle starts again.

That is where practices such as meditation and breathing come to our rescue. We slow down, focus, breathe, meditate. Slow down Seth’s eternal dance until we can handle it.

Playbook from a Trillion Dollar Coach

Playbook from a Trillion Dollar Coach

There is an equally critical factor for success in companies: Teams that act as communities, integrating interests and putting aside differences to be individually and collectively obsessed with what’s good for the company. Research shows that when people feel like they are part of a supportive community at work, they are more engaged with their jobs and more productive.

Thus begins the book that you should read next. Trillion Dollar Coach: The Playbook from Silicon Valley’s Bill Campbell, by Eric Schmidt, Jonathan Rosenberg, and Alan Eagle. (The three authors were senior leaders at Google / Alphabet–and coached by Bill.)

Bill Campbell’s journey took him from head football coach at Columbia University, to the top sales and marketing job at Apple, to CEO of a couple of technology companies (Intuit and GO). Then he became a coach. He coached Steve Jobs at Apple. The three leaders and then many more at Google. And more than 80 other Silicon Valley CEOs and leaders. And his middle school football team that he coached at the same time.

He was most likely the most influential and respected man in Silicon Valley.

And his values and teaching are appropriate to all of us no matter the organization we’re with.

For example, he let everyone know his blocked time for coaching his football team of 13- and 14-year-olds. He wouldn’t answer his phone if you tried calling. One person, though, would ignore the time and call. Bill would pull his phone out of his pocket and look at the caller ID. The kids around him would look, also. They would see the name Steve Jobs, and then see Bill decline the call. They all knew that when Bill was with them, he was with them.

Read this book–and put the principles into practice in your life. You may not be building the next Google. But you can be the determining influence in someone’s life.