www.tocpractice.

com

37th TOCPA International Conference

8 March 2018, UK

A tale of two companies

Mark Stemberger + Goldratt UK
 The presenter: Mark
Stemberger
•Introduced TOC right from the start with UK
consultants (www.goldratt.co.uk )
•MBI in Agis Technologies, February 2017;
•Acquisition of Unitplast, May 2008
•Introduced TOC in Tomplast in Q1, 2008 with
UK consultants (www.levee-group.com)
•MBI in Tomplast, July 2007 to February 2014
with a foreign private equity partner
CEO/COO in Agis from February 2017
•Prior to MBI ventures, Mark worked as project (www.agis-technologies.com)
manager and consultant in LBI/LBO acquisitions CEO in Tomplast from July 2007 to February
2014 (www.tomplast.si)
(manufacturing, distribution);
B.Sc. Electrical engineering
•he focused on company transformations devising
(University of Ljubljana, Slovenia)
and implementing growth strategies, managed ERP
implementations and led strategic, IT and MBA
organizational changes. (Clemson University, South Carolina)
M.Sc. in IS and decision making
(University of Ljubljana, Slovenia)
Tomplast / Unitplast

• Tomplast (in 2015) consists of two companies with two production sites in
Slovenia, Tomplast (Mirna) and Unitplast (Semič)
• Tomplast is a highly specialised development and system supplier of
thermoplastic components
• Current industries served (2015): automotive, building & industrial
equipment, electric tools & electronics, furniture, caravan industries,
medical equipment
• The customer base comprises renowned blue-chip, global (OEM and large
Tier 1) companies in above-mentioned industries
Geographical location
 Objectives to T/U acquisition

• Grow the company (beyond the market

growth) – initial ideas to grow it by approx.
50% during our tenure
• Sustain profitability
• Sell the company in 4 to 7 years for a high
multiple
 What we thought had to be changed

• Strategy was not articulated and the organization was just

“floating”, not pursuing any specific direction
• Operations were (very) good, but had to be upgraded and
“injected” with the TOC solutions to provide a “build”
cornerstone
• Project management was there but provided no (decisive)
competitive advantage (“capitalize” cornerstone)
• Sales (2007-2008) were solid and stable but undiversified
and focused in just one geographic region (Germany)
• Industry (2007-2008) portfolio was too concentrated on
automotive and furniture industry (not a pressing matter?)
 But we were in for a surprise…

• The Great Recession (2008/2009) hit us hard and

exposed our structural and strategic problems…

• All the strategic flaws surfaced with astonishing

speed and caught us off-guard…
– mature sales portfolio
– high concentration of a few large customers
– no sales in place!
– no DCE developed (apart from excellent delivery*)
 Sales pipeline in 2013

EOP
Woco; 4,6

Dometic Mirna; 2,4

Cimos; 0,2

Revoz 1,4

Metabo & Sanyo; 1,9

Plastoform

Adria Mobil; 0,5

Bosch Security; 0,3

Robert Bosch; 0,1

-4,0 -2,0 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0
2020 2018 2016 2014

➢ At the end of 2007, Tomplast had a high concentration of sales with only 4 major
international clients; there were no new clients in the pipeline, there was no strategic sales
team, no sales methodology in place nor a sales process established.
➢ Top 4 customers represented 80% of total sales in Tomplast in 2007 and 84% of gross margin.
➢ Most of the large projects from the biggest clients were close to the peak of sales growth or
already in maturity phase. EOP (End Of Production) for most projects between 2014 to 2016.
 And the sales went south…

• Mature clients had

mature projects and
these went through
their natural life cycle…
• Large clients with large
volumes inevitably
slowed down and the
company was not
prepared with new
projects to have them
replaced accordingly.
The impact was
significant.
 Unitplast Pipeline

➢ At the end of 2007 Unitplast had only two large clients. The caravan client’s sales were
established, mature projects with no upgrades in sight. The furniture client introduced a
new mass product in 2006, another one in 2007, both in early stages of growth.
➢ Furniture client accounted for most of the growth in Unitplast (and Tomplast group) in 2008
until the end of 2010, when it reached its peak, over € 22 million in sales. Furniture client
required 52 week availability per year and well over 95% delivery on-time with top quality.
 The (real) problem with T/U case

• Very few customers

• Giving us decreasing sales

• Direction of the solution:

– build reliable operations machine
– build capabilities to deliver quickly the projects
– sell those capabilities to:
• more clients
• in more industries
• in more geographical regions
 Tomplast strategy 2010 - 2015Butroadmap
where is the
to
implementation?

➢ Tomplast strategy is based on 3 competitive cornerstones: availability, reliability and quick response.
➢ Tomplast is positioned on the market as a system supplier and a development supplier.
➢ Tomplast’ strengths lie within its technical prowess and its people;
➢ Tomplast’s future lies within sales diversification (industry, region) and sales growth!
➢ Detailed strategy plan is revealed in a “Strategy and Tactics Tree “ (S&T tree)
 Through S&T tree (2010) we solidified
operations..

New competitive edge:

1. Availability: SDBR
2. Reliability
3. Quick response CCPM

Reducing
Hassle

➢ “Reducing Hassle” is a necessary, but not sufficient component of the strategy (“green curve”).
➢ In case od T/U: SDBR + BM = No Hassle and CCPM = Early (and reliable) project delivery
➢ “No Hassle” => BUILD
➢ Early (and reliable) project delivery => CAPITALISE
Red Curve, Green Curve
 Sales growth (in S&T tree)

Sales
Growth

➢ In order to capitalise on the “green curve”, one must simultaneously develop also “red curve”).
➢ Operations are easy to do! Obvious, imminent, everybody does it. But, operational achievements are
easy to copy, to emulate, can be transferred (unless thy are part of an organisation and tightly linked,
integrated processes across business functions and along the value chain)
➢ Sales are: DIFFICULT, UNPREDICTABLE, (often) IRRATIONAL, very SLOW…
 Sales, development and
ramp-up cycle
Sales cycle
initiated Sales cycle
completed;
business won

sales cycle (6 to 12 months) Development cycle often overlaps

with industrialization cycle where
modifications on the tools are done
during the actual serial production

development & industrialization cycle

(6 to 18 months)

Often sales cycle can be

completed only with heavy and Ramp-up and & industrialization cycle
early involvement of (6 to 24 months)
engineering department

Often technological department must be

involved with the development cycle in Sales cycles proved to be anywhere
order to support and help the final
development stages
in between 18 months up to 3 years
and even more before they started
to generate decent (planned) cash
 The roadmap to “the sales
machine”
Internal (sales) workshops,
discovering UDEs, creating
CRT, building clouds, finding Mixed sales and
the optimal solutions for
engineering teams Sales process
conflicts, upgrading S&T tree

SalesForce + ERP + Sales

internal solutions organization

Sales platform

Sales
methodology

Consolidated
cloud

Current reality
tree Upgrade to the S&T tree - New strategy map
Sales process
 Results: portfolio
restructuring delivered

➢ Through tedious and systematic work in sales and development, Tomplast group managed to
decrease its dependency on furniture sector and at the same time achieved its goal of
repositioning in the market (development and systems supplier) as well as diversified sales per
region, per industry, within industry and consolidated its position within large industrial groups.
 Results: sales growth
delivered
SOP EOP Decoma; 1,5 Dometic Semič; 0,3
Revoz (X44) Ikea (Tobias); 2,8
0,9 Hella S. (Ford); 0,5
Dometic Mirna Dometic Semič; 0,3
(Heky); 0,8
BSH; 0,2
Adria Mobil; 0,4 Dometic Mirna; 2
Eurostyle (T75); 0,3
Woco Plastoform Ikea (Dave); 4,3
(Bauprogram, Magna (T75); 0,1
Nexans); 0,9
Woco -
cable joint;
Revoz 2,6
(X65): 0,3
Metabo (other); 0,4 Metabo
(Akku cases); 0,7
Cimos
Revoz (X65); 0,3 (P 308)
Hartman Exact; 0,2
MPT Hella S.
Accessa Metabo (Peugeot); 0,2
Dometic
Siegen
Woco Hobart
Magna Seating
Adria Mobil (SFTP); 0,1
Invacare; 0,2 Hella A.
Magna E-car Webasto; 0,1 Grammer;
Woco 0,3
Hella S. (Mercedes); 0,1 Westfalia;
(Porsche, VW, Smart); 1 Valmet Decoma; 0,4
0,2 Dometic Semič
Blum; 1 (Heky, locker); 5.3
BSH
ZF; 0,6
Dometic
Hella S. (Nissan, Semič
VW S); 0,6
Rehau; Girsberger Bosch Security; 0,3
0,7 Revoz (Edison); 6,9
Vitra ; 0,8 Dometic Mirna
(other); 1,3 Magna Steyr; 0,2

Robert Bosch; 0,1

Sapa; 0,1

-4,0 -2,0 0,0 2,0 4,0 6,0 8,0 10,0 12,0

2016 2014 2013 2020 2017 2015 2014 2013

➢ In the 30 month period (since 2011), the Tomplast group managed to secure many new projects
which started to replace dying projects and introduce new customers in new sales regions and new
industries.
➢ Many newly won projects were test or hard development projects, where Tomplast had to prove its
worth and its sales claims. Many new clients offered huge sales potential in case of successful test.
 Results: projects delivered

➢ Through application of CCPM, Tomplast manages more development projects and finishes them more on-time (and on
specification) as in the past.
➢ Tomplast group engineering team managed in 2013 over 200 concurrent projects (without compromising project budget, time
or scope!), compared with 30 projects in 2011 (or up to 15 projects in 2007).
 Major obstacles on the road

• Mostly internal:
– classic organisational inertia (resistance against change)
– “pride (and prejudice)” (“we were the best (in 2006)”)
– (inverse) confirmation bias
– status quo and “prudence” (“against premature and too extensive
change”)
– incomplete and late buy-in (in spite of S&T tree being presented (and
accepted!))
– PE short term focus and thinking to “milk” the company…
 Agis Technologies
A brief HISTORY OVERVIEW
1948
beginning of metal processing
1970
in Ptuj, Slovenia
start of the production
of brake elements
1948
production of bus bodies and
vehicle equipment
(locks, mirrors, shades,
small interior equipment,
various consoles, fuel tanks,
exhaust pipes, tachometers, seats…).
1953
2017
1989
Agis Zavore was sold on
“DO AGIS” broke into several
01.02.2017 to a
smaller independent companies;
private strategic investor
one of the spin-offs became
and got new management
“AGIS Zavore d.o.o.”
2017
Agis Zavore obtained
merger between ISO 9001
“Tovarna avtoopreme Ptuj” 1997
and
Agis Zavore obtained
“Tovarna gumijevih in
ISO 14001
kovinskih izdelkov, servisi – SIGMA”
2000
merged into a holding
of companies “DO AGIS”
Agis Zavore obtained
1976
ISO/TS 16949
The company had a falling trend in sales since (for a part of production portfolio)
2010 and was a clear restructuring case! 2015
The new investor saved the company from
bankruptcy and brought in new mgmt team.
Current production portfolio

CLUTCH SERVO
HYDRAULIC valves

PNEUMATIC valves
 Tomplast/Unitplast vs. Agis Technologies

Tomplast/Unitplast Agis Technologies

starting position: ( 2007 ) ( 2016 )
sales: 11 million EUR 4,4 million EUR
manpower: 80 employees 115 employees
EBITDA: 3,6 million EUR 310 k EUR
No. of customers: 4 (approx. 80% of sales) 4 (approx. 80% of sales)
manuf. sites: 1 factory 1 factory
end position: ( 2015 )
sales: 42 million EUR
manpower: 320 employees
EBITDA: 5,4 million EUR
No. of customers: very dispersed
manuf. sites: 2 factories
 Tomplast/Unitplast vs. Agis Technologies

Tomplast/Unitplast Agis Technologies

time-frame 2007 - 2014/2015 2017 - ongoing restructuring
industry plastics - injection moulding metal processing - brakes for industrial vehicles
place Slovenia / Europe Slovenia / Europe
reason for restructuring succession bankruptcy
restructuring venture M&A project w/PE partners M&A project
need for restructuring: ( 1= lowest; 10 = highest)
legal 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
financial 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
strategic 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
operations 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
projects 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
marketing 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
sales 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
 The (real) problem with Agis case

• Very few customers

• Giving us decreasing sales

• Direction of the solution:

– build reliable operations machine
– build capabilities to deliver quickly the projects
– sell those capabilities to:
• more clients
• in more industries
• in more geographical regions
 3-prong strategy for Agis
Next to the brakes, we can
produce also Aluminium
parts (i.e. housings) that we
cast, machine, surface treat
and also assemble
3-prong strategy
Agis diversifies from just
“aftermarket” to other
industrial services and Brake systems Casted, Tooling
solutions indifferent and solutions machined,
industries based on assembled and
company capabilities: tested complete design and
construction
1. brake systems for sub-assemblies
OEMs and
aftermarket pre-series and first parts tested
2. other complete aftermarket pilot series (EMPB and PPAP)
sub-assemblies
3. tooling products
and services modifications and
serial production serial production maintenance/
Improper positioning led servicing
to a decline od Agis!
 DCE strategy for Agis
Technologies

New positioning on the

market (based on
company capabilities):

1. systems supplier

2. development
supplier
0 incidents
3. preferred supplier
S&T tree for Agis
Technologies (3.)
 What TOC (and other) solutions did
we use to achieve the breakthrough?

operations projects sales

BM BM CCPM CCPM TP
SDBR SDBR T accounting T accounting UDE tree
T accounting T accounting Clouds
5-steps buy-in
4-views buy-in

S&T tree S&T tree S&T tree S&T tree S&T tree S&T tree

T/U Agis T/U Agis T/U Agis

TOC books (The Goal, It’s not luck, Critical Chain, Throughput accounting, The Choice)
TOC workshops, consulting visits on site, videoconferencing, sales visits…
Lots of common sense and “assertiveness” to break through the barriers…
TOC books (The Goal, It’s not luck, Critical Chain, Throughput accounting, The Choice)
 Conclusions

Tomplast/Unitplast Agis Technologies

Aluminium die casting

industry Injection moulding
and machining

reason for succession challenge

bankruptcy
restructuring (+PE partner goals)

time frame 2007 - 2014 2017 -> open end

principles and
TOC tools + Lean TOC tools +Lean
methods
fix operations fix operations
objective fix projects fix projects
sell improved capabilities sell improved capabilities
strategy
S&T tree S&T tree
implementation