In 1991, the federal government changed its procedures for reimbursement to medical equipment dealers from a purchase to rental program. Previously, sales of product to Medicare recipients had been reimbursed to the dealers approximately 60 days after sale. With the change, reimbursements increased by 50% over the original sale amount, but were made in payments to the dealer over a two-year period.

Many of the medical equipment dealers were not able to carry additional debt load to finance purchases over the two-year period and were unable to pay for, or even purchase, additional equipment from manufacturers.

Established a new company, Professional Securities, that set up two-year lease purchases on new equipment sales. Because dealers were being reimbursed 50% more than the sales price to their customers, set up leases at extremely high interest rates, over 19% on average. After two payments were made, leases were sold to a third party at a discount, relieving Professional Securities of any risk of default by the customer.

After deducting all expenses associated with Professional Securities, an additional 5% margin on the original sales price was realized. Cash flow improved for Smith & Davis with sales in accounts receivable dropping from 126 days to 37 days after one year.

The results exceeded expectations with the additional benefit of increasing sales to dealers previously on hold because of past-due balances.

Four months before accepting employment at Smith & Davis, the company had just completed a conversion to MAPICS software. The financial reporting package delivered reports that were accurate, but it was obvious that they were being ignored by departmental management, as they were both cumbersome and difficult to understand. Budgets were either nonexistent or ignored. Asked by President to look into the situation and see what changes could be made.

MIS department was faced with a nearly six-month backlog of work on projects that were behind due to their involvement with the MAPICS conversion. Any requested changes would be taken in order after the backlog was eliminated.

Set up a meeting with each department head to get input on what information they needed and how they wanted it presented to them. Researched several different financial reporting software packages to see if any of them could meet all the requirements needed. Chose a Peachtree general ledger package that at the time cost less than $500. Designed reports in the formats requested and set up a duplicate chart of accounts as to what was on MAPICS.

Once templates had been set up on Peachtree, it took a clerk 30 minutes to key the MAPICS generated trial balance into Peachtree. Within 30 days after the president’s request was made, all department heads received the reports they asked for and the attention paid to achieving budgeted numbers increased dramatically.

The reports, while requiring extra time to produce each month, became the main topic of discussion at management meetings held the week after month-end closings. Each manager was held accountable for meeting targeted budget numbers and they were able to take quick action to correct problems when they occurred. The format of reports impressed new owners when the company was bought in 1987 and similar reports were set up for the new parent company.

Company was paying extremely high premiums for workers’ compensation insurance due to a 2.2 premium modifier. Measures such as requesting historical data on potential employees had no immediate effect on the modifier. Modifiers were set based on three-year averages and insurance companies offered little assistance in finding ways to reduce claims.

With the help of an experienced insurance agent, helped establish The Apparel Manufactures of Missouri, a self-insured pool of 25 apparel-related companies in Missouri.

By setting strict requirements for outside safety inspections and initiating recommendations made, setting up active safety committees and developing safety manuals, the pool was able to offer lower rates and take companies’ actions into accord when setting up discounts to the established modifiers. In addition, the pool set up aggressive investigation into all claims filed and reduced cost to the pool by over 50% on a typical claim by returning employees to their jobs in a light-duty capacity as quickly as possible.

The program successfully lowered the company’s workers’ compensation premiums from $186K to $48K over a three-year period.

One product line for Semco, the housings for air handling equipment, was produced by a subcontracted manufacturer. While the housings represented a small portion of the price of a typical bid, they were a critical component. Semco was informed by its subcontractor that although their production had been at nearly full capacity with its work for Semco, they were not doing well financially and would have to increase prices by nearly 30% to go forward.

This was during the late ‘70s when inflation was running double-digit numbers and any increase passed along by the subcontractor could not be absorbed by Semco, fighting soaring steel prices that in many instances could not be passed on to the customer in its other lines.

Spent two weeks at the subcontractor’s facility going through financial statements, product pricing structure, and associated costs. During this period, was also required to perform time and material-usage studies.

Discovered that the subcontractor, in setting pricing structure, had taken an average of costs across the entire product line to arrive at an average square-foot price for the housings. In doing so, they had overpriced what was deemed a simple housing, one having few cutouts or corners, and under-priced complicated housings, having an abundance of cutouts or corners. In turn, Semco was awarded bids on projects with complicated housings at a much higher rate than those with simple housings. Changing the subcontractor’s method of pricing to start using a base cost for plain panels and then add for cutouts and corners lowered the price to Semco on simple housings and raised prices on complicated housings.

The subcontractor saw sales and margins increase to the point where additional capacity was needed. Semco began receiving bid awards on more projects with simple housings, resulting in sales of housing units increasing by 60% and margins by 135% over the next two years.

Falcon Products was incurring inventory shrinkage of 10% in its wire shelving product line relating to the wire used for the grid work.

The shrinkage did not carry over into the other major raw material used in the shelving, the metal channel. Reviews of standard costs and bills of material for different types of shelves showed no obvious errors, all calculations appearing correct. As any scrap material was sold to metal recyclers, any unusual scrap being generated would have shown up in those numbers, which was not the case.

Wire, when purchased, was subject to a tolerance of + or - .005”. Instituted a program in receiving department that all wire shipments would be checked for a predetermined sample size with a micrometer for diameter variations from standard.

The sampling showed that two suppliers were shipping product that, while it was within specification, consistently ran at +.004” to +.005” with no wire received at less than +.002”. Instituted negotiations with that supplier and three others to establish new tolerances of +.000” and -.005” that would have to be met if they wanted to be considered as a supplier going forward. Two of the suppliers agreed to meet our demands at the then current price per pound. Falcon went from 10% shrinkage to a 3% gain on future inventories.

The new program was a success even though one of the suppliers that had been supplying wire heavy to gauge lost Falcon’s account by refusing to meet demands.

Cohn Athletic was facing a shortage in skilled labor in its sewing operations in St. Louis. When personnel had to be replaced, long periods for training new personnel resulted in poor efficiencies and quality during the first year of employment. In addition, high overhead associated with building rent of $108K per year contributed to operating margins of 22% of sales.

The building that the company rented was owned, under a separate corporation, by the owners of Cohn and the owners also felt strong allegiance to many of the long-term employees.

Cohn also maintained a small backup operation in St. James, MO, in a portion of a building owned by the City of St. James. Negotiated a long-term lease with the city that allowed Cohn to move its entire operation to that facility. Improvements were made to the facility in St. Louis and it was listed with a commercial real estate specialist. Jobs were offered to selected existing long-term employees at the new facility.

The St. James location offered an abundance of skilled sewing personnel, as several sewing operations had moved out of the area to offshore locations during the 1990s. The lease with the City of St. James reduced monthly rent expense to $600. The building in St. Louis sold in three months with a net profit to the owners of $350K. The training time needed for full production for new employees dropped to two months. Operating margins increased to 32% of sales. The two employees with the most seniority relocated to St. James while the remaining employees received severance pay and were assisted in their search for new jobs.

The move was successful in allowing Cohn to stay competitive in the marketplace and also brought new ideas into the production process from new employees with experience in the industry.

Company relocated operations from St. Louis, MO, to St. James, MO. The supervisor of Screen Printing was promoted to Plant Manager and relocated to St. James as directed by ownership. It became apparent shortly thereafter that he was lacking in the areas of scheduling and managing personnel. Quality, productivity, and meeting shipping deadlines were all in a sharp decline. Offers of assistance and suggestions for ways to improve were ignored.

The new Plant Manager had worked for either the company or the owners of the company in other operations for over 20 years (starting at age 16 after dropping out of school). The owners had seen him perform well in lesser positions and had great loyalty to him. Efforts to address the problems with ownership were unsuccessful, as the Plant Manager had convinced them that the only problems were due to others' interference with him.

Believing that irreconcilable stalemate existed that could do serious harm to the company, convinced ownership to seek advice from a third party. Through a program offered by The Mid-America Trade Assistance Center designed to help companies hurt by imports, engaged an outside consultant, at 1/3 the normal price, to evaluate the operation and suggest ways to improve productivity.

At the top of a list of several recommendations made and instituted was the recommendation to replace the current Plant Manager, noting that he was a loyal and hard-working employee who lacked the necessary skills to run a plant effectively. The company hired an individual who had previously served in a similar position for a competitor and transferred the current Plant Manager back to Screen Printing with no loss of pay. Productivity rapidly improved along with overall morale of the workforce.

From an operational viewpoint, the move was an unqualified success. Efficiencies reached all-time highs, quality improved dramatically, and shipments were going out ahead of schedule. The only negative outcome was that the long-term employee became disgruntled with his demotion back to Screen Printing and left the company less than one year later.

Cohn Athletic was a regional supplier of practice football uniforms that it manufactured and sold to local schools. It achieved additional market exposure after its purchase by the owners of Johnny Mac’s Sporting Goods in 1991, with instant access to the TAG buying group serving many of the leading sporting goods dealers nationally, as the President of Johnny Mac’s was also a board member of TAG. Sales peaked in 1997 and then rapidly declined due to competition from imported practice wear sold at drastically reduced prices.

The owner’s affiliation with TAG made him reluctant to go outside of the TAG buying group for additional customer base. An examination of the market, including discussions with members of the TAG buying group, showed two major weaknesses in the competition. While practice gear and basic game uniforms were stocked domestically, custom uniforms required long lead times and hindered late season purchases. Additionally, over 90 % of the youth market, ages 12 and under, was only being offered plain stock garments.

Produced an entirely new line of custom uniforms offering unlimited options that Cohn could produce domestically with 4-week lead times. In addition, Cohn carried over the entire line in youth sizing.

New custom line of adult uniforms increased from 20% to 70% of Cohn’s total football line. The sales of youth-size uniforms more than doubled. The increase in custom sales offset declining sales in stock product. Increase in youth sales offset declining sales in the school market that resulted from tightened budgets after 9/11. Both moves were successful.

Smith & Davis plant workers were incurring reportable injuries that required medical attention on the average of one per every 3,200 manhours worked. In addition, injuries were concentrated in a group of 20 employees out of a total workforce of 360.

By law, any injury requiring medical attention or resulting in lost work days had to be reported. In addition, the workforce was represented by a union and on-the-job injury was not grounds for termination.

Smith & Davis had instituted a policy of pre-employment drug screens for all employees three years prior, when the last union contract was negotiated. It also had a clause in the contract that substantiated evidence of any employee reporting to work under the influence of a non-prescribed drug or use of a non-prescribed drug during working hours was grounds for immediate dismissal. When the new contract was negotiated nine months after beginning of tenure with the company, had an additional stipulation regarding drugs and screening written into the contract. Any injury reportable under Workers’ Compensation would require a drug screen test be performed as well. Results showing positive as to drug use would be grounds for immediate termination and the employee would waive any rights to collect benefits from Workers’ Comp.

After three employees were terminated for positive test results within one month of the contract ratification, all members of the group of 20, claims dropped from one per 3,200 manhours to one every 72,000 manhours worked. The policy continued with similar results; personally instituted a similar policy at another employer with similar results.

After changing purchasing of fabric from supporting in-house warehousing in dye lot (3,000 yd.) to a modified JIT type of delivery, it became obvious that Cohn’s current order entry system, which did not allow for bills of material, would not support this type of delivery schedule.

Company owners also owned a large retail operation that was operating a type of software designed not only for retail but also for their specific market, sporting goods. Cohn was required to use the same software due to consolidation of the companies’ financial results. Additionally, they did not want to any additional software.

Using Excel spreadsheets, set up a stand-alone system into which each day’s orders were entered by product part number and color. This, in turn, generated the material requirements to manufacture merchandise allowing Cohn to order only the material needed.

Material shortages were reduced by 95%. By ordering on a modified JIT basis, reduced inventory of in-house fabric by $500K.

The reduction in inventory generated additional working capital that could be used to expand Cohn’s production capacity. It also allowed Cohn to continue to deliver custom product to customers with the shortest lead times in the industry.