The manufacturing market in Australia is mature, saturated and declining. Running a successful business in these market conditions is incredibly challenging, forcing business owners to critically evaluate every facet of their operations to ensure the business’ future viability. By Annaliese Kloé, Managing Director of Headland Machinery.

In an industry that’s constantly throwing a curveball at you, it’s often hard to think strategically when all you want to do is survive. In today’s society, surviving doesn’t always mean to continue with your same business processes, it means, being smart, being innovative, not being afraid to change and look at new technology that can help shape your business in the future.

Five years ago Headland Machinery was growing. Despite our growth, we found that we weren’t seeing a big impact to our bottom line due to our inefficient IT systems and duplicated processes. We knew that we needed to streamline our business by investing in new systems that would enable us to simplify our systems into one solution, take control through real time information and enable growth by gaining access into new channels, markets and opportunities. We needed to ensure our business was agile and able to respond quickly to changing market conditions.

Invest in technology for the future

Sometimes in an unstable environment, business owners are hesitant to invest in new technology – our clients say all the time that they don’t know what each month will bring. But that is exactly the time to decide whether you want your business to be around in the long term. If you continue with old technology (whether machinery or software) and if you continue doing things the same way, then your business will not survive in the future. The choice is whether to go down slowly, resigning to the fact you will eventually need to close your shop, or adapt and grow in line with the changing market.

If you want to have a successful business, you need to look at the new players in the market and the new requirements for the customers in the market. Then you need to invest in technology that services the needs of those customers and consider different industries or verticals.

It’s not easy, trust me. When you are passionate about the industry you service, sometimes you just need to re-analyse the situation you are in and ask yourself:

  • Is your business lacking efficiency, with manual or duplicated processes?
  • Do you have internal costs or products that aren’t providing a positive return?
  • Are your IT systems outdated, on premise and/or disparate?

If your answer to any of these questions is yes, then it is time to look at new ways to improve your business and steer it in the right direction. Look at areas of the business that are costing you the most money without delivering value – duplicated processes, high levels of admin, IT costs and lack of visibility over staff, inventory and the business as a whole.

You need to invest in technology that gives you a competitive advantage and that can be fully automated and flexible. A lot of our customers are investing in automated technology, whether it is automated machining centres or big storage systems, to make the whole operation more efficient. Those companies are able to compete internationally because they have managed to take a lot of the labour components out of the business. Innovative, flexible technology is important.

Currently we are seeing our market consolidate. You have to be nimble and flexible because manufacturing is dramatically changing. It’s not the same as it was even three years ago, and you need technology to be able to give you cost effectiveness and that nimbleness in the market.

Adaptation and diversification

I believe that you need to look at doing things differently. Be open to change. The industry has changed so much over the years that certain industry sectors that you were targeting are losing stability. Now is the time to diversify your business in order to keep ahead.

You need to ensure that your team is adaptable. Your internal team must be able to adapt to a changing market and you need to hire people that are forward-thinking and innovative. You have to be prepared to change what you are doing and to think “out of the box”.

The automotive market is no longer here for a lot of people, so what are they going to do? That’s the question: what other work are they going to find? How are they going to utilise their skills? Where is the opportunity in the market for them? They need to be looking at different sorts of technology, different sorts of contracts or different ways to do things to capture new work and build a business in a new way.

This could even mean looking at your competitors as partners. With the realisation that Australia is a small player in a large market, how do we capture that share of the market globally and help each other out in Australia? You could look at working together to capture bigger deals and work, so you can develop a partnership together.

Headland’s story

Five years ago, even though our business was growing, it became obvious that our internal systems were causing inefficiency – we were running four different systems, none of which were integrated. When running multiple disparate systems, we found that we were forever double-handling information because our systems couldn’t talk to each other.

We decided that implementing a software solution that could give us visibility over our whole business was critical to the future success of the business. We searched around for a system that would cater for the needs of our business, and in the end we chose to implement NetSuite as it was an end-to-end solution that gave us the visibility we needed.

NetSuite is the world’s number-one cloud-based enterprise resource planning (ERP) and finance solution. This system allowed us to save over $320k in our first year after implementation – and that’s off the bottom line cost of the business, which is significant. This cost saving was achieved because we were able to streamline our business, achieve financial transparency, and increase staff productivity and efficiency.

Although implementing a new in-house system benefited the business, we knew that other strategies also needed to be adopted. We looked at the market and the requirements of the market, and secured new agencies to cater for the changes in the industry.

One of our new supplier partnerships is Goratu, which has produced quality milling and lathe machinery since 1954. Suited mainly for the heavy industries, our new partnership with Goratu will help us tap into an industry sector we couldn’t reach in the past.

We also gained a partnership with Kasto, makers of sawing and automated storage systems. We believed that storage will become more important for customers in the future – we realised that sooner rather than later, businesses won’t have people to continually do manual processes because it’s too expensive.

Since implementing NetSuite into the company, we have seen that there’s a need for an end-to-end solution for manufacturers around Australia. We created a sister company called Klugo that is another diversification to our business. We implement NetSuite into customers that want to be flexible and adaptable, and get the cost savings of having one system without having to worry about managing IT – this is where NetSuite excels.

We have also developed our own Field Service application NextService, built on the NetSuite platform. This has now enabled us to sell this product locally and internationally in the USA.

When you are in a declining market, the only way you can win is by protecting your existing customers and penetrating into your competitor’s base. This is really difficult to do and it’s marginal, so you really have to think differently and build other revenue streams in either different industries or complementary industries, or different product lines or complementary product lines in order to keep growing. In a declining market your whole business will decline if you don’t change.

That’s the key, if you don’t change you won’t survive, especially in a market that’s weakening and contracting. The businesses that are doing well are the ones investing in new technology. It takes foresight, dedication and hard work but the rewards are there.

If you are facing any of these challenges and would like to have a chat, please contact me. I am happy to share our experiences, help you question your business and its ability to thrive in this market.