Case study - Tough Trailers Tough Trailers (formerly Tough Steel) was founded in 2000 as an architectural metal fabricator specialising in specialty aluminium and stainless-steel fabricating. Tough Trailers diversified into trailer manufacturing in the spring of 2007. Initially, they manufactured small box utility trailers as an opportunity to use available manufacturing capacity during slow business cycles in the architectural metal business. By 2010, the trailer division had grown so much that Tough Trailers made the decision to become a full-time trailer manufacturer. Tough Trailers produces standard box trailers and is now diversifying into customised trailers to the customer's specification. It prides itself in the quality of its work and materials as well as in its unique customisation features. They have sales offices in Sydney, Melbourne and Brisbane. Each office has a show area for the display of standard box trailers. The manufacturing takes place in Newcastle (NSW). Trailers can be shipped using contract hauliers from the factory direct to the customer's site or are available for pickup directly by the customer from the factory or sales offices. The head office is also in Newcastle on the same site as the factory. Since Tough Trailers started, it has grown steadily. In the last two years, sales have taken off and increased by 40% each year. It now has a turnover of $10M and around 1500 customers. Tough Trailers has a very healthy level of retained profits and is eager to expand into new areas Tough Trailers customers range from the home handyman to horse owners, trade persons, serious off-roaders and a variety of motor sports people (bike, boat and karts etc.). Customers' orders range from the standard small box trailer for $1,000 to utility trailers and customised trailers. Utility trailers include off-road trailers, car or bike carriers, and horse floats. These can range in price from $1,300 to over $10,000 for the deluxe horse float. Customised trailers have become more popular recently, particularly with trades persons and motor sports people. Prices can range from $3,000 up to $9,500 depending on the customisation required. The company internal systems and computer systems have worked well in the past, but with the increase in sales, Tough Trailers has realised that they may not be able to cope with continued expansion, especially into some of the new areas that they hope to exploit. In particular, the following problems have been experienced: The company internal systems and computer systems have worked well in the past, but with the increase in sales, Tough Trailers has realised that they may not be able to cope with continued expansion, especially into some of the new areas that they hope to exploit. In particular, the following problems have been experienced: Customers want to be able to see more examples of the types of customised trailers that can be produced. The sales catalogues are very basic, and the sales offices can only hold a limited number of demonstration items. With the benefit of hindsight, it would have been a good idea to photograph each customised trailer for inclusion in a more comprehensive brochure. The Designer/Estimator liaises with Manufacturing to obtain quotes for the customised trailers and is having trouble getting this information within a reasonable time. While they're finding it valuable to be able to provide their clients with an unlimited design scope, the time taken to get a quote from Manufacturing is losing them business. [SM-01] PROJECT VERSION 1.00 [STUDENT].DOCX 4 OFFICIAL Solutions Modelling Project Some of the major changes in direction that arose from the strategic plan include the following: 1. A determined push into the customised trailer market to provide solutions for people who want some individualisation of their trailers. This will be achieved to some extent by producing a range of modular components that can be manufactured in higher volumes rather than individually customised. 2. To expand their sales outlets through the opening of dealerships. The possibility of franchising sales outlets has also been considered and this is likely to be pursued Solutions Modelling Project Some of the major changes in direction that arose from the strategic plan include the following: 1. A determined push into the customised trailer market to provide solutions for people who want some individualisation of their trailers. This will be achieved to some extent by producing a range of modular components that can be manufactured in higher volumes rather than individually customised. 2. To expand their sales outlets through the opening of dealerships. The possibility of franchising sales outlets has also been considered and this is likely to be pursued later. 3. To create a website that's likely to be initially used to provide information about standard and customised trailers, and eventually to sell directly to customers through online ordering. The website should integrate with their current systems for payments. At this stage, Tough Trailers have decided that developing the website is beyond their experience and expertise and that IT Innovo will provide this service. However, they're keen to ensure the website could easily be updated with new content without expert involvement. They have a budget of $60,000 for the website, which can be completed in two stages and unspecified amount for operational and support cost. It is up to you to recommend and negotiate a reasonable amount. 1. Vision To provide customised trailer solutions to customers where quality and looks go together 2. Mission 3. Core Values 4. SWOT Analysis 1. To provide Quality - Service - Customisation all-in-one solution: Customers are different and so are their needs; we manufacture customer specific designed trailers Exceptional customer service backed by best-in-industry after sales service and warranty 2. A happy and healthy work environment and culture 3. Continuous improvement Commitment and Reliability Consistency with Efficiency Creativity and Innovation Respect and honesty Perseverance Strengths: Unlimited trailer designing, efficient workforce, vendor support, loyal following, high professional standards Weaknesses: Communication, aging ICT infrastructure, training programs, inadequate information for salesmen, keeping up with demand (lack of) Opportunities: Market growth, efficient manufacturing practices, franchising and dealerships, improved loyalty programs (for customer retention) Threats: Competition, poor communication (internal and external), currency fluctuation/s, legislative changes 1. Customer goals based on Service, Satisfaction and Retention principle 5. Objectives 2. Internal/Operational goals based on increase in production / manufacturing capacity to meet and Goals 6. Action Plans demand, training to keep the staff up to date with industry standards, legislative requirements and technology 3. Financial goals based on maintaining a 30% increase in growth over the next two years Action Plans Table next page 1. 7. Long-Term 2. Goals 3. Double sales in 5 years and grow revenue (retained profits) by 15% per year in 5 years through the effective use of business website Increase in online sales to 50% (half) of total sales in 5 years Franchising and dealership options are explored, and decisions made as per business requirements 4. Maintaining production / manufacturing capacity to meet the market demands 5. Exploration of diversification options Goal Objective Customer service, satisfaction and retention 6. Action Plans Table Actions / Activities Welcoming environment Professional service standards Sales Consultants and Designers / Estimators having sound background knowledge of the products and available options Post-sales follow-up practice Status Ongoing Efficient and effective conflict resolution with "Customer comes first" attitude Ongoing customer feedback on product and service Product launch updates and incentives for customer retention Ongoing training, workshops and seminars Internal/Operational Increasing the productivity of existing manufacturing units by efficient use of workforce Adding staff to meet market needs Gradually moving from fixed line metal fabrication to modular component development Upgrading the existing ICT infrastructure for improved efficiency and consistent business practices across all sites Developing a business website and moving towards online sales environment Ongoing training and development programs for all six sections to ensure compliance, industry standards, legislative requirements and technology advancements are covered Ongoing / future Internal/Operational Gradually moving from fixed line metal fabrication to modular component development Upgrading the existing ICT infrastructure for improved efficiency and consistent business practices across all sites Developing a business website and moving towards online sales environment Ongoing training and development programs for all six sections to ensure compliance, industry standards, legislative requirements and technology advancements are covered Revenue growth to be achieved through ongoing float-shows with incentives like buy now pay later, discounts, gift vouchers and other sales techniques Ongoing / future Financial Maintain profitability with a budget allocation of 50% for business reinvestment for product development Maintain revenue growth to 30% over the next 2 years Ensure retained profits are maintained to a minimum of 20% per annum Ongoing Increase in business through online sales using the business website Franchising and dealership options being considered, discussed and finalised Probable contract with a financial institution for preferred loan provider Long-Term introduced and implemented One-window sales and maintenance operations to be Developing an efficient workforce through proper recruitment and induction procedures with ongoing training, incentives for employee retention Ongoing and future prospects in consideration