Issue Jan Feb 16
Seventy-two years after it was founded, Milton Industries is undergoing an exciting transformation, President Greg Carlson says. “We’ve got a lot happening,” he notes. “It’s very exciting.”
In fact, it’s difficult to identify a segment of the company that is not changing. From systems to staff, facilities to philosophy, the Chicago-based company is undergoing some significant alterations. “Basically, everything has been changed,” Carlson says.
Milton Industries manufacturers pneumatic parts for more than 1,000 customers in the automotive, heavy duty, industrial, farm and agriculture, and government sectors. Much of its government business is with the military. But changes were introduced in 2012 when the company, which was founded in 1943, was acquired by private investors.
Change Brings Challenges
Initially, the changes brought adjustments that took time to get acquainted with. “Milton was a family run, cash-cow-oriented business,” Carlson recalls. “Based on the cash-optimization focus, the owners ran it very effectively to deliver their desired results, which did not include growth.”
Today, however, growth is one of the company’s primary goals and employees are responding well. “We’ve got a major emphasis on growth,” Carlson says. “We’re all about growing the business and doing it profitably while also increasing overall working capital efficiencies. As such, we’ve established new sales and marketing capabilities and resources along with new product development to complement and expand upon the very strong heritage of the Milton brand. Operationally, inventory management with Just in Time (JIT), high-velocity turns orientation is very much new to the team. The team has responded well, and we’re working both internally and externally with our vendors to achieve our aggressive change requirements and key performance indicators.”
The company is pursuing growth initiatives in a variety of ways. First, it recently launched a new website designed to be more user friendly. The site also is aimed at capturing younger consumers who are accustomed to doing business online, Carlson says. “If you’re 35 or over,” he says, “you know the brand.” Whether they’re new or long-time customers, however, they will appreciate the new site’s user-friendly design, he says.
The website is organized by the company’s five business segments for easier navigation. It also includes drawings and pictures of parts and provides the heritage and legacy of its brands, Carlson says. “It’s a huge step forward,” he says.
The company hired additional channel managers so that each market segment it serves will be represented. “This has been part of our growth plan,” Carlson says.
The installation of an enterprise resource planning system shortly after the acquisition also was part of the strategy, he says. “Many manufacturing processes and procedures were changed,” Carlson adds.
Milton Industries also is renovating its facility, located on the northwest side of Chicago. The building was constructed in the 1940s, and the company acquired it in 1973. Design plans call for the building to have a “new, urban Chicago loft feel” that features an open floor plan, Carlson says. “Now, it’s kind of a mouse maze,” he says. He adds that the open design is expected to have a positive effect on employee productivity, as there will be more opportunities to network and share ideas.
“It’s an overall better environment,” Carlson says. Employees can talk with more people. It’s more vibrant and robust.” The $300,000 renovation is scheduled for completion by the end of 2015.
In addition to a facility makeover, the company in 2014 underwent a complete packaging improvement change while retaining the Milton Industries’ logo. The new packaging look allows for more retail selling and has consistent packaging sizes based on a modular design, Carlson explains.
The purchase of new equipment also has been a key part of Milton Industries’ transformation. The company in 2015 invested $700,000 in automation equipment and plans to make a similar investment in 2016, he says. The new, faster equipment is critical for the company as it takes on new customers, such as aftermarket auto supply stores. “We have a new breed of customer with high expectations including high fill rates,” Carlson says. “The need and opportunity within our core product category for couplers is to increase our capacity and turnaround and meet increasing growth and demand,” Carlson says.
“The automated coupler machine will approximately triple our capacity, reduce labor costs and enable much greater production efficiencies,” Carlson explains. “We’re investing approximately $700,000, and look forward to it going into production by May 1.”
Shifting client demands are a primary driver behind Milton Industries’ decision to upgrade equipment and grow the company. “Historically, Milton has worked with a decentralized base of customers in multiple industry segments,” Carlson says. “Our channels include auto aftermarket, industrial, heavy duty, farm and agriculture, hardware and government, with a strong military application business. Within each channel, market consolidation is occurring at an increased rate. The big are getting bigger, and independent dealers are being acquired or banding together in tighter cooperative arrangements to compete. In working with major retailers and their backend operations, service expectations are high, and they’ll whack you with fines if you’re not meeting their required measures. And, of course, the Internet is playing an increasing role in selling and marketing to end-users.”
Milton Industries recognizes the importance of e-commerce as well. “We believe e-commerce is increasing at a faster rate than some in the traditional space understand,” Carlson says. “It’s destabilizing for many. But, if you’re open to the new realities, learn, grow your knowledge, adjust and accelerate into new opportunities, it can be great. This is what we’re doing at the ‘new’ Milton. Our new website is just the beginning of changes we’re making in our online, go-to-market initiatives. These new dynamics affect demand, how you go about your sales and operations planning, warehousing and logistics.”
Supply Chain Collaboration
Additionally, the company is working diligently to maintain an effective supply chain, which is made up of many small Chicago companies. “We have to work collaboratively with our vendors and stay in sync with them,” Carlson says.
For example, the company’s machine screw partners are privately held, small businesses that have worked with Milton Industries for many years. “In some ways, they know us better than we know ourselves,” Carlson says. “It’s important to properly align our parts production effectively with the vendor base where they have particular equipment configurations.”
He adds that interaction with supply chain partners occurs “weekly and sometimes daily depending on the volume and velocity of turns required.”
“Interestingly, each vendor has a particular rhythm and behavioral set,” Carlson notes. “Our younger buyer planners are sensitive to the these dynamics and come to appreciate them rather than get frustrated. They work toward enhanced teamwork to meet our customers’ increasingly high expectations while driving for greater turns that result in hitting our aggressive working capital targets.”
Perhaps no development is more important to Milton Industries’ future than the growth of its core values, Carlson says. Employees are told to follow the phrase “if I were the customer” in everything they do. The company also places a strong emphasis on team concepts. “We really do like to create a team environment,” Carlson says. He adds that the company uses on-the-job learning opportunities when they present themselves, such as when a mistake is made or a better way to perform a task is identified.
Employees are open to the feedback. “The sooner you put an issue on the table, the sooner it gets solved,” he says. Company and department performance also is discussed during daily meetings that include a review of key performance indicators, he says. The meetings offer opportunities to reflect on the previous day and plan for the upcoming day and beyond, he says.
“We truly have a great team made up of teammates and cross-functional work groups that are working to drive real change within our business,” Carlson says. “You cannot imagine just how much change has occurred from three years ago and how it continues today. When you have great people who work together, communicate openly, are willing to put it on the table and work through tough issues, while still pulling with and for each other, you can achieve great things.”