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October 2008

    10 Quick Ways to Generrate Cash Now

    Liquidity is critical to run a business. If you answer "yes" to any of the questions below, you have identified an opportunity to improve your cash flow.

    1. Are you still paying taxes on your utility bill? File for a refund for taxes on energy used in the manufacturing process, retroactive for three years.

    2. Have you been investing in new products, new (or Lean) processes? You may be eligible for federal R&D tax credits for expenses (including labor) retroactively for three years.

    3. Do you use water in your industrial processes and are you paying use charges? File for a refund.

    4. Do you need to buy machinery? State grants are available to help pay for the cost.

    5. Are you Lean yet? Now is the time to go Lean (and green) and significantly slash inventory, reduce waste and speed up order to ship time, resulting in faster cash flow.

    6. Do you have outstanding receivables? Collect them ASAP. Consider offering incentives for earlier payment.

    7. Do you have excess space? Consider subletting some of it. MoveSmart/Stay Lean can show you how to use your space effectively and free up some of it for sublet.

    8. Are you still using old-fashioned lighting? A quick lighting audit will show you how to move to less expensive/better solutions; there are also funding incentives to help offset the purchase of new lighting.

    9. Do you work, in an Empire, Enterprise or SBA Hub Zone? These zones offer financial benefits. Call the zone administrator in your area to take full advantage of ALL zone benefits.

    10. Equipment depreciating? The new federal tax incentive law (bailout) provides manufacturers escalated depreciation terms. Learn how to apply them to create more cash.

    For information, email Sharanda Didier or call her at 212-442-2990

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    In Good Times or Bad, Lean Makes $ense

    Lean Manufacturing (Lean) is a proven way to reduce costs and improve cash flow by decreasing inefficiencies on the shop floor and shrinking the time it takes to go from initial order to final shipment. But Lean is much more than that. Lean is a best practice or a way of thinking about how a company operates and its principles can be applied to many aspects of running a business: front office, finance, sales, operations and R&D. A Lean company instills in its employees the mindset of continuous improvement—whether of products, processes, employee morale or customer satisfaction—to achieve competitive advantage.

    Lean principles are different from older "economies of scale" models of production and might seem difficult or counter-intuitive to incorporate. However, Lean production techniques have been quantified and measured against other methods for many years and continue to be proven superior. On average* a company that implements Lean can count on the following easily observable and measurable improvements, which are often linked to increased cash flow and profitability:

    • Lead times are reduced by 85 to 90%
    • Product cost are reduced by 15 to 30%
    • On-time delivery performance are increased by 60 to 99%
    • Scrap and rework are reduced by 80% or more

    Lean Tools
    Some of Lean’s basic principles and tools are described below:

    Value Stream Mapping (VSM): is a tool to diagram the flow of materials and information through an organizational process and the cost of each step in terms of time and money. VSM shows the current flow and uses it to create a future flow that streamlines processes, cuts lead times, and reduces costs.

    5S System: Five "S" stands for 1) Sort, 2) Set In Order, 3) Shine, 4) Standardize, and 5) Sustain. When these principles are applied to product and service flows, the result is a cleaner, safer and more organized workplace, cost reductions, better uses of space and happier employees.

    Setup Reduction: This method dramatically reduces or eliminates changeover time. The result is an improved capacity to meet customer demand for high quality products, delivered on time, and without excess WIP or finished goods inventory.

    Total Productive Maintenance: Everyone participates in this process to ensure that your equipment is always reliable and productive. TPM improves safety, quality, delivery, capacity, cost and creativity, and also decreases equipment down time.

    Pull/Kanban Techniques: A production technique that helps to control inventory and resources by relating production to actual consumption rather than forecasted demand. This improves lead time and cash flow.

    Cellular/Flow Manufacturing: A way to maximize value while minimizing waste by balancing manual and machine operations through the most efficient use of resources. This reduces time spent waiting or moving between operations, reducing the need for space, inventory and supervision resulting in lower costs.

    Keys to Successful Implementation
    Lean is a journey. It takes time, training and patience to realize the full impact, but Lean is well worth the effort. Executives who have succeeded agree that top management must fully support the Lean movement by making sure departments work together to achieve a culture of continuous improvement. This means training employees to apply Lean principles consistently and supporting Lean through a system that rewards its adoption.

    ITAC now offers a free overview of Lean with an interactive demonstration that we can deliver for free at your location. We are always available to conduct free assessments at your facility and to help you benchmark your progress against established best practices. In additon, ITAC offers a very low cost full-day workshop at our offices in lower Manhattan (Lean 101). This workshop teaches participants about Lean through hands-on participation in simulation exercises that demonstrate Lean principles. Our next Lean 101 is scheduled for October 23, 2008. To register for this low-cost full day class, please navigate to October 23rd on our electronic calendar and follow the simple registration instructions.

    For more information about any of our Lean programs or services, please contact Sharanda Didier at 212-442-2990

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    *Determined by independent third-party surveys and reported to the Department of Commerce’s NIST/Manufacturing Extension Partnership.

     

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    NYC Council Funds Move Smart 4

    Thanks to a $300,000 grant from the New York City Council (Chair, Christine Quinn), the MoveSmart/Stay Lean program has been funded for its fourth straight year. The program pays for relocation and/or reconfiguration planning for NYC manufacturing companies (even those thinking of moving into the city from out of town) faced with a move due to unforeseen circumstances, such as a lost lease, increased costs or the need to expand due to growth. Thus far, the program has helped some companies reorganize their space and avoid a move altogether, while others have been able to dramatically reduce costs and/or increase capacity by incorporating Lean manufacturing principles and better layouts into current or planned operations.

    The NYC Council sponsors this program so that manufacturers can remain in New York City and support the local economy with jobs for New Yorkers. Since its inception in 2006, the MoveSmart/StayLean program has benefited over 55 companies employing 2,640 workers. One company moved to NYC from elsewhere, bringing approximately 40 new jobs into Brooklyn. Six others improved their space utilization by approximately 31,600 sq ft or about 5,000 sq. ft. each. At an average cost of $12 per sq ft for industrial space, this amounts to an overall savings of $379,200 in real estate costs alone or roughly $63,200 per company per year.

    How can you take advantage of the program?
    The MoveSmart/StayLean program is wholly administererd by ITAC. Applicants must qualify by providing initial benchmark information and agreeing to be surveyed by an independent third party at the project’s conclusion in order to determine outcomes. The deadline for applications is March 15, 2009. Companies are approved on a first come, first served basis.To obtain an application, email Sharanda Didier or call her at 212-442-2990.

     

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    ExporTech: Enter Foreign Markets Quickly

    ITAC announces ExporTech, a new program to accelerate growth or expansion in foreign markets because growth opportunities for manufacturers are increasingly international due to:

    • The dollar’s declining value
    • Billions of new consumers emerging in high-growth global economies
    • Fierce domestic competition

    For these reasons and more, global markets are becoming both more attractive and critical to a company’s future. In response, CEOs and executives of small and mid-size manufacturing firms must accelerate their entry or expansion in international markets and ExporTech was specifically created to help. Designed to put top managers and export experts together over a period of months, the program offers something substantially unique and is based on compelling new research on the strategic choices of successful exporters. Leveraging this information, ExporTech helps participating companies to create and execute successful export plans.

    While there are many excellent resources geared towards the operational issues of exporting, ExporTech’s focus is different. It focuses on strategic issues and CEO-level management challenges, such as:

    • The commitment and mindset necessary to achieve rapid international growth
    • Best practices employed by successful exporters in such areas as planning, management and partner selection
    • The strategic advantages that drive export success

    Participants will have direct access to experts in the field, as well as to companies that are currently succeeding at growing globally. In addition, they will have an opportunity to network with local executives who are facing similar problems, as well as with professionals from regional MEP Centers and the US Export Assistance Center. The program is best suited to CEOs and upper management in manufacturing companies that wish to enter global markets or currently have some international sales, but want to export more systematically and/or make make more strategic choices to accelerate their growth.

    For information, email Sharanda Didier or call her at 212-442-2990.

     

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    Need R&D Help? Two Tech Programs Offer Assistance

    Through a partnership with Cornell University ITAC is able to offer NYC firms acess to the Cornell Center for Material Research (CCMR) to help companies identify and take advantage of technology-related assistance opportunities. If you need to characterize, understand, identify, select, and/or develop materials used in your business, the center’s experienced staff will work with you to locate appropriate CCMR faculty who will help you with a wide range of problem-solving and development needs. Using their state-of-the-art facility, they can assist with the development and differentiation of products vastly improving their value. Small NYS businesses can also receive up to $5000 in matching NYSTAR funding to help pay for faculty.

    For information, email Sharanda Didier or call her at 212-442-2990.

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    The Greeness of Lean

    Far from being a fad, green is becoming as important to businesses as it is to consumers. For manufacturers, green is quickly becoming the next best practice and is now considered by many as necessary as Lean manufacturing. It is wonderful to learn how Lean processes can applied in ways that decrease a company’s environmental footprint and like Lean, green is rapidly proving to increase efficiency and profits. More than ever before, green companies are now asking their suppliers to comply with green principles in order to maintain a viable working relationship and ensure the greeness of end products. So, It’s important for small manufacturers to understand how going green supports business success and what being green actually means.

    What Makes a Manufacturer Green?
    It’s no longer enough for a company to claim that it’s green. Savvy consumers now want a company to demonstrate its current level of sustainability as well as its future commitment to the environment. So it’s important to know how companies are measured and judged. In truth, green is a way of life that is measured along a continuum, but a few simple questions will help understand where your company might fall along the spectrum:

    • Does your company have a recycing program?
    • Does your company try to eliminate obvious causes of waste?
    • Are products and processes routinely tested for chemical emissions levels or toxicity?
    • How green are other companies in your supply chain?

    Initiating a recycling program is a relatively simple first step on the green journey and one which can lead your company to start identifying and eliminating obvious causes of waste. If you are not already routinely testing products and processes for chemical emission rates and toxicity levels, many private companies can help you to do this. Testing helps a company to determine where it falls on the green continuum with respect to its own products and processes and can help to inform decisions about what is acceptable. You may want to begin replacing products or processes that are less than ideal with those that are better for the environment and this, in turn, will lead to refining green practices that you now expect from members of your supply chain.

    On the far side of the spectrum, some companies want to be 100% green by achieving a zero-emissions policy. This entails using only recyclable materials and eliminating the production of any waste that goes into the landfill. Although this might seem impossible to achieve, some companies have actually accomplished it. To learn more about environmental standards and practices that relate to trade, see the Commission for Environmental Cooperation (CEC).

    Supporting a Company Culture of Green
    As with Lean, green is a process of continuous improvement that requires a strong and visible commitment from top management. Even the most determined employees will need training and plenty of encouragement to stay the course. Incentive programs are likely to encourage those who are reluctant when they see special rewards or recognition going to co-workers who achieve lean and green goals. Rewards are appropriate because going green has become an important marketing tool that is sure to impact the bottom line by both reducing costs and an increasing the value of your products.

    And finally, never forget that Lean manufacturing can be used to support green manufacturing and vice versa. As industry continues to raise the bar on environmentally sound practices and manufacturers follow suit, overall progress with green and Lean will be inevitable.

    For information, email Sharanda Didier or call her at 212-442-2990

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    Avoiding Layoffs

    Shared Work is a voluntary program from the NYS Department of Labor that provides employers facing a temporary decline in business with an alternative to layoffs. Rather than laying off a percentage of the work force to cut costs, an employer can reduce the hours and wages of all or a particular group of employees. The employees whose hours and wages are reduced can receive partial unemployment insurance benefits to supplement their lost wages. For example, an employee earning $400 per week might receive an unemployment benefit rate of $200, if totally unemployed. Under the Shared Work Program, if his wages and hours are reduced 20%, he would receive $320 per week in wages from his employer (20% of $400 equals an $80 reduction), and $40 in Shared Work Benefits (20% of $200). In other words, the employee would receive a total of $360.00 in wages and Shared Work benefits for each week of the plan.

    The Shared Work Program helps employers avoid some of the burdens that accompany a layoff. If employees are retained during a temporary slowdown, employers can quickly gear up when business conditions improve. Employers are then spared the expense of recruiting, hiring, and training new employees, and employees are spared the hardships of full unemployment. For more information about this program, please see the full article on Shared Work at the NYS Department of Labor Website.

    For information, email Sharanda Didier or call her at 212-442-2990

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    Forging New Partnerships: How to Thrive in Today’s Global Value Chain

    We are pleased to include the Executive Summary of this important report produced by RSM McGladrey and The Manufacturing Institute. Future issues of ITACNews will feature additional sections.

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National Institute of Science and TechnologyNew York State Foundation for Science, Technology and Innovation

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