OSL Cutting Technologies, a manufacturer and importer of magnetic drilling machines and cutting tools has been an Oracle NetSuite customer for some time. In the last couple of years, it has progressed from modernizing systems and processes to establishing a services-based delivery model purposefully designed to keep it competitive and acquisitive. To that end, OSL is using core ERP, marketing and CRM along with stock. How's it working out?
OSL is based in Attercliffe, an industrial suburb of Sheffield England, that was once one of the most important steel towns in the UK but which was decimated by a combination of recessions in the 1970s and 80s coupled to overseas competition. It was against that backdrop that The Full Monty was filmed. And it was in that general context of surviving then thriving that I spoke with Mat Grey, group managing director OSL. Grey explained how OSL's strategic vision is articulated.
We build our business model with core competencies like product development, manufacturing, distribution, financial control and underpinning that for me is the principle of systems and culture because each of them impacts our core competencies and each touches all aspects of our business. So to make that work, I have to be close to both systems and IT.
Grey says that OSL has a dedicated systems team "which is always in my calendar" while HR is devoted to delivering on the company's culture. This is supported by strong leadership focused communication around what can be achieved by the systems while at the same time ensuring continuous improvement in the workplace environment.
Grey says that the traditional 'steel town' environment of disconnected and siloed operations provided an opportunity to bring a fresh approach that would allow OSL to not only become more efficient but allow for the development of an acquisition strategy to absorb older style businesses. I asked how this translates into benchmark measures against peers:
We've done three acquisitions all of which were losing money and have driven them up to 16% EBIT. We have a long way to go but with a target of 20% by 2020.
Talking about the impact on sales teams, Grey says that as the business environment has changed towards a service-based model, the traditional elephant hunting A-lister sales types have changed.
Our sales people go in with what is almost a consultancy approach that is designed to build a true partnership model with our customers. That's only possible because we have data to support conversations around topics like 'here's how your distribution channel works, here's how your end-user base works, here's how we want to approach the market with you in tandem and here are some of the ways we can improve your logistics and on-time delivery, and here's a website you can log into so you can see where your orders are, where you can see your purchasing habits with recommendations about what products you should probably buy.'
That is far removed from what you'd consider a manufacturer does on a day to day basis but the approach is proving successful:
A salesman's worst nightmare is to sell something then find it's not on the shelf so we now have forecasts that they need to feed into so we can better plan and coordinate how we will deliver for customers. The salespeople love this because it provides certainty and it's helped us bring a culture of service into the company across the whle organization. The side effect is that with the 30 something coming through, they want data - it's an often asked question in recruitment - where will I find the data that helps support my personal development? Unless I have good answers for that backed up by systems, strategy and a platform from which to give the data then I'm not competitive.
From the employees' perspective, access to data is allowing them to do a better job such that their career development accelerates. But where does the external data come from that enriches what OSL already knows? Here, the company starts with understanding buying trend patterns and then engaging with customers to discover how their trading patterns are evolving. In addition, OSL regularly visits the operational end-user sites of its key partners to discover how products are being used. This, in turn, is fed back to key partners as part of the service offering.
As the system evolved, the idea is that information gleaned from end-users, along with marketing campaign feedback becomes part of a virtuous cycle of information gathering that helps to feed OSL's distribution channel in the most efficient and effective manner possible. For example:
We're now looking at ways of making our distributors more competitive by plugging them into our carrier network so they can take advantage of our purchasing power.
Grey said that in order to reach this state, the firm has consolidated seven systems in the last four years and has an ongoing consolidation program coupled to in-house development. OSL's own development is supplemented with functionality that NetSuite develops for the company, but it retains the intellectual property.
I always like to ask customers about the activities that build towards success. Grey offers this:
If you want the kind of model we use then you've got to have the appetite for change management because there will be so much change and so you have to build governance and teams around that. If on the other hand you want steady incremental growth then I'd want to be very clear about the value proposition and what it's going to look like. I'd need to understand every process and map that. Finally I'd want to understand what the change and those systems are going to deliver.
None of this is easy and Grey agreed that acceptance of pain as a motivator for change is central to moving forward but it has to be done in a manner that doesn't become unbearable.
We've got this wrong in the past but have learned from the experience. You have to know your own and your team's limits so that you don't place an undue burden on them. But at the same time this is about recruitment and development. Having people who want to develop is a good indicator that they can absorb change.
It is unusual for me to speak with someone who has a top to bottom understanding of how technology enables both change and growth. It can be argued that as a medium sized UK company, it is relatively easy for OSL to operate an environment of internal disruption and achieve good outcomes. I'd argue that's a fallacy and especially in businesses that have a service orientation because inevitably we're talking about how individuals respond to changing circumstances. It is all too easy for change to end up as chaos. So the lessons Grey explained, and especially around governance coupled with the intelligent use of technology to build out the business model resonate well.