Let's look at a hypothetical case of automotive manufacturers and their suppliers of subassemblies. In the past, manufacturers designed and engineered the desired part or subassembly, then ask suppliers for bids on producing the part. The manufacturer did all the engineering, and suppliers only submitted financial information, or how much they would charge the automobile manufacturer to fabricate the part.
But in today's economy, automobile manufacturing staffs are lean, and engineering departments have been trimmed. It is increasingly common for manufacturers to request that suppliers interested in providing products submit proposed engineering solutions as well as financial terms.
The supplier must take care to protect the competitive bid and the intellectual property represented in the proposed engineering solution. For instance, one supplier may spend $50,000 in engineering fees to solve the problem, then estimate an additional $100,000 of time and resources to manufacture the parts, making the total bid $150,000.
However, instead of bidding the actual cost of the job, the supplier only bids $125,000, expecting to recoup the remaining development costs on the next contract. In another instance, the supplier bids the actual cost of $150,000, but loses to a second supplier who may have spent less money engineering a less effective solution to the problem.
Unfortunately, it's common practice for automotive manufacturers to take a design created by one supplier and ask another to fabricate it. The motivation is obvious: the manufacturer obtains the best-engineered solution at a cheaper manufacturing cost. It receives a superior engineering solution, yet fails to compensate the supplier for its work.
How can this be avoided? One way is for suppliers to file inexpensive provisional patent applications before providing quotes to manufacturers. The quote should bear the notice "patent pending."
The automobile manufacturer is then on notice that, should it prefer the engineering solution of a particular supplier, it is not permitted to seek a lesser manufacturing cost and must pay the price quoted.
The Web sites of many businesses are not achieving all the goals originally set forth, and a common problem is simply the design -- both from a technical and aesthetic standpoint.
"For a small or medium-sized business, it's about content, content, content," says Jeffrey Rohrs, senior digital marketing strategist at Optiem. "You have to make sure you are providing very specific information about the products and services you offer, and do it in such a way that is search engine friendly. You want to organize your site so it's targeting concepts, keywords and product names that will draw people to the site."
Search engines remain the No. 1 way sites are found. Half of all people looking to make an online purchase start with a search engine.
To attract customers, keep your content current. And to let people know about site updates, offer an e-mail subscription list. E-mails can update customers on new product information or offer tips and advice.
"E-mail is a retention tool," says Rohrs. "If you are launching a site and have a loyal clientele, and you think they want to hear about updates, then integrate a simple registration form. The permission-based e-mails are very powerful, and smaller businesses can take great advantage of that."
Site design should focus on a clean appearance with no broken links.
"Don't do everything on your home page," says Rohrs. "Too many sites have way too much on the main page. Users need a chance to orient themselves. You don't walk into Walmart and see all the products at once.
"If you've got pop-ups flying around and 24 levels of primary navigation, you are shooting yourself in the foot."
A site should have a site map, contact information and a search function.
"Don't think you are done when you launch a Web site," says Rohrs. "Your job has just begun. You have to treat it like it's one of your stores and put effort into it along with a bottom line commitment that lasts for the rest of the life of the company." How to reach: Optiem, (216) 615-9100
A repair shop replaced the dead battery, but then we discovered the alternator wasn't working up to snuff. It wasn't bad, but the mechanic noticed fluctuations in the alternator's energy wave when he put in a new battery. Having the repair shop replace it, when neither they nor we were sure it had to be replaced, would have been expensive, so Bob suggested we give it a whirl.
We purchased an alternator, then set out to install it. Predictably, we failed. But not because we didn't possess the skills to accomplish the job; in fact, everything almost went smoothly. We failed because the replacement part didn't quite fit into the rigid casing in the engine body, and we lacked the proper tools to get the job done.
In business, the same tenet holds true. Great leaders may understand exactly how to lead their companies successfully, but if they don't have the right tools in place to help them accomplish their goals, they're doomed to fail.
Sometimes the missing tool is people. If your company doesn't have the right people in the right jobs, your personnel resources are misplaced. Other times, the tool that's lacking is technology. If your sales department can't electronically talk to the accounting department or warehouse, it's difficult, if not impossible, to determine whether you have a specific product available or if your customers are up-to-date in their billings.
You can have all the smart ideas in the world and be the best paper technician ever, but it is only how you're able to put those ideas into practice that truly matters when the green light is on.
In my case, Bob called a friend who owned a repair shop and agreed to install the part at a low cost. His friend had the tools to make the part fit and succeeded with little effort. If you have the right tools in place, you can too.
Winds of change
You may have noticed that Connie Swenson no longer appears as editor of SBN Akron/Canton. That's because in December, she was promoted to editor of SBN Online (www.sbnonline.com).
In her new role, she is responsible for managing the content for SBN Online's three city Web sites -- Cleveland, Columbus and Pittsburgh. In her stead, SBN Executive Editor Dustin S. Klein will oversee SBN Akron/Canton.
The author of November's cover story was misidentified. The writer's name is Victoria Reynolds.
Hallrich Inc. CEO Tony Szambecki understands the value of giving back to the communities where his 86 Pizza Hut franchises are located.
Since 1968, the company has contributed time, money and product to thousands of community service projects. Its earliest contributions were in the form of local Little League sponsorships. Today, Hallrich donates at least $300,000 a year in product giveaways to the Book It! children's literacy program, just one of many programs it supports and sponsors.
A 1999 Pillar Award honoree, Hallrich encourages its 2,000-plus employees to participate in philanthropic efforts and honors those who do at an awards banquet. Last year, Szambecki and Carol Magazzeni, Hallrich's director of marketing and public relations, were themselves honored by the International Pizza Hut Franchise Holders' Association.
Since 2000, Hallrich has co-sponsored a book drive to support KidsFair, an annual event held by the Jewish Community Center of Akron to combat illiteracy. In both 2000 and 2001, the drive collected more than 5,000 books.
This year, Hallrich designated its 17 Summit County Pizza Hut locations as drop-off points for donated books and promised an all-school pizza party for the school that donated the most books. The winner donated 3,500 books, and Hallrich delivered lunch for the school's 800 students.
Main Street Gourmet
Steven Marks, co-CEO of Main Street Gourmet, has built Muffins for Mammograms, the Akron-based company's partnership with Akron General Health System's Women's Health and Cancer Center, into a nationally recognized program that has raised more than $100,000 for mammograms since its inception 10 years ago.
Marks says he and other senior managers believe Main Street Gourmet has a duty to give back to the community. Consequently, this 2000 Pillar Award honoree prides itself for its contributions to charitable, civic and community-related activities.
The company is a continuous donor of food to the Akron Canton Food Bank, which feeds the hungry. Main Street Gourmet's co-CEO, Harvey Nelson, has served as president of that organization since 1997.
Since 1995, Main Street Gourmet has supported the Weaver School Workshop at its corporate and production facilities. The school works with the mentally challenged. Several students are employed by Main Street Gourmet, which has been recognized by the Board of Mental Retardation and Development Disabilities for its support of people with disabilities.
In The B.F.Goodrich Company v. Commercial Union Ins. Co., et al., a case Brouse McDowell handled for the policyholder, the court made it clear that the duty to notify excess carriers can arise much later than the duty to notify primary carriers of the same claim.
The court observed, "The holder of a primary insurance policy typically has the duty to notify its insurer as soon as it realizes that it is liable ... " Contrastingly, "An insured's duty to notify its excess insurance carrier ... is not triggered until the insured has reason to believe that its ... liability will exhaust its coverage under its primary policies."
For a policyholder to have a notice obligation under an excess policy, therefore, the court noted, "It must have knowledge not only of potential liability but it must also have reason to believe that the extent of its liability will exceed the coverage limits of its primary insurance policy."
Although these principles generally are understood by insurance professionals and often find support in the express language of excess policies, before the Goodrich decision, there was little consideration of this issue by Ohio courts. The decision, however, squarely addressed the issue and significantly limited the ability of excess insurers to raise successfully "late" notice defenses.
In addition, the court reaffirmed that the "late" notice issue is typically one for the jury. It held that the trial court erred in granting summary judgment to the excess insurers in the face of evidence from the policyholder that notice was timely as to such insurers.
Particularly in regard to large claims such as the environmental claims at issue in Goodrich, insurers have incentive to raise as many issues as they can. "Late" notice may be raised with little or no justification under the law, which can be quite complex in regard to such matters.
As the Goodrich case demonstrates, courts sometimes take a very different view than do insurers.
Policyholders and their brokers, therefore, can be well served to seek the advice of experienced coverage counsel on such matters.
Brouse McDowell provides experienced counsel to policyholders, insurance agents and brokers on all aspects of insurance claims, insurance coverage disputes and insurance recovery. For additional information, contact Paul Rose in Akron at (330) 535-5711 or email@example.com
I refer to this fear of choosing as "double-mindedness." Everyone is looking for a guarantee. So many things are uncertain that people are afraid to make a choice.
In business, we need leaders who are not afraid to make decisions and live with the consequences -- good or bad. I'm not suggesting people make bad decisions, but rather that leaders need to lead. Too many people try to have everything by straddling the fence.
Here are five suggestions for making the best decision possible the next time a choice needs to be made.
1. Surround yourself with good people. Wisdom comes from an abundance of counselors. Don't look for people who will tell you what you want to hear. Look for people who care about you and the best interests of your company, and who will give you honest answers no matter how much you might not like it.
2. Gather as much information as soon as you can. This will help you make the best decision possible.
3. Use prayer. Whenever making a decision, I feel it is important to pray and include God. The prayer may not get answered the way you want, but at least you included him in your decision-making process.
4. Follow your gut instinct. This comes from experience, based on trial and error. As you learn from your mistakes, you will hone your instincts. When there doesn't seem to be logical information to base your reasoning on, let your instincts show you the way.
5. Follow the leader. Sometimes the best way to make a decision is to see what already works and improve upon it. Don't be afraid to copy someone who is doing something successfully.
Double-mindedness is choosing to be indecisive -- the worst choice of all. When there are tough choices to make, you can't have it both ways.
Get off the fence and lead.
After the burst of the Internet bubble, the conventional wisdom was that things would never be the same. Analysts and investors became cynical about all dot-coms, and traditional companies were leery of e-commerce providers.
This would have been enough to dissuade most entrepreneurs from starting a new economy business, but less than eight months after the April crash, a local start-up decided to merge two industries -- e-commerce and automotive -- deeply affected by the economic downturn.
"Although OEConnection was in some ways like a dot-com, we began much more conservatively than a lot of those start-ups did, in that we planned to do very specific things with the Internet vs. trying to radically change the world via the Web," says Mike Reilly, director of products and marketing for OEConnection, a Richfield-based e-commerce automotive parts supplier. "Our mission was to be an online venture with parts cataloging, and to develop new technologies and products for CD-ROM and the Internet."
The big difference between OEConnection and some previous new economy companies was its financial partners -- DaimlerChrysler, Ford Motor Co., General Motors and ProQuest Co. With backers like that, it wasn't difficult to shift into gear, says Reilly.
Known as the Big Three, Chrysler, Ford and GM have been involved with the company since the beginning. That made finding other clients much easier.
"In talking to prospective customers, I liked to say, 'You might have heard of some of our partners,'" Reilly says. "That certainly brought a lot of credibility to what we do."
OEConnection played off the synergy with those partners. For example, as a technology partner, ProQuest, formerly Bell & Howell, provided electronic publishing services to support the supplier software.
To bolster the business, housed in ProQuest's Richfield facility, all the founding partners equally help guide OEConnection's strategy and operations through a board of directors.
Its automaker partners agreed to provide liaisons and help the start-up coordinate sales and marketing with the network of automotive dealerships and field operation groups.
In exchange, each of the automotive partners has a 25 percent interest in the company, which is run by a team of six executives that includes Chuck Rotuno as president and CEO.
Another glaring difference between OEConnection and other online start-ups is the experience of its main players.
"These are professionals who left 'real jobs' to come do this, so we're not a team who got a great idea one day to do some neat whiz-bang thing in a garage," says Rotuno. "It's a team that can run this business for today and beyond, and that's vital as we go forward."
Under the hood
OEConnection has been so successful due in part to the supply and demand of the automotive parts market. Auto dealers are the only authorized distributors of original equipment (OE) parts, and each year, body and collision shops purchase approximately $8 billion worth of those wholesale parts from dealerships.
In the beginning, OEConnection focused setting up operations and developing its first product to take to market. It used extensive customer surveys, focus groups and field-testing to develop technology to meet specific needs and work within the existing environments of the target market.
OEConnection has succeeded in capturing a healthy portion of that market, and Reilly says the growth has been exhilarating.
"The first year, our growth was slow and steady," he says, "but after that, it really took off, almost like a rocket ship."
Dealers also buy between $8 billion to $10 billion worth of original equipment parts from other dealerships, to meet repair needs and serve other wholesale customers.
"With that in mind, we have designed products to address two of the larger purchasing segments from the dealership standpoint," says Rotuno.
The first OEConnection product, CollisionLink, was released in May 2001. The software is designed to be used by collision shops to facilitate ordering parts online.
To date, about 1,300 CollisionLink users (380 dealers and 920 collision shops) have signed on. While there is no charge to collision shops to use the service, dealers pay a $495 activation fee and a $299 monthly fee.
"In terms of CollisionLink, there really isn't anyone out there trying to do exactly what we're doing, in that we're purely focused on streamlining the OE parts-ordering process for both our customers," Rotuno says. "That focus, and the backing of our partners, is clearly our differentiator."
In February of this year, OEConnection released its second product, D2DLink, an online parts-sourcing management tool. The technology lets dealerships rapidly locate parts at other dealerships,and more effectively manage the dealer-to-dealer sales transaction.
After Ford introduced D2DLink to its dealers across the country, OEConnection went from 500 to 4,500 customers in just 60 days. According to Rotuno, the primary advantage of the software is a daily updated inventory database that dealers use to find and order parts online from other dealers nationwide.
GM followed suit, rolling out D2DLink to its dealer population.
"We expect that, by the end of this year, that will bring about 4,000 GM dealers on board, in addition to Ford's dealers," Reilly says.
Other automakers are also participating -- among them, Dodge, Jeep, Lincoln, Mercury, Pontiac, Cadillac, Buick, Chevrolet, Oldsmobile, Hyundai, Infinite, Lexus, Mazda, Nissan, Saturn, Toyota and Volvo.
That, says Rotuno, will put OEConnection in the black by year's end. Not bad for an Internet firm competing in "the new, new economy."
Hotwired for success
Unlike others who failed in the dot-com industry, Rotuno realized the new economy wasn't just about new technology -- it was about everything that supported the technology.
"A couple of years ago, e-commerce was all the buzz, and there were so many products and supposed solutions being thrown at the dealership community," Rotuno says. "We came in just about the right time and said, 'Here's a solution that's totally focused on you and your supply chain,' and they liked it."
The challenge is to fight against the perception that everything Internet is all smoke and mirrors.
"Whereas two years ago it might have been easier, we're working against a negative market perception about e-commerce," Rotuno says.
Because of that perception, the challenge is to persuade shop owners and dealers to use the Internet for important transactions, and Rotuno admits that it is taking more time and effort than expected.
"Many have been unsure of how the Internet can really assist them in doing their business," says Michael Farnum, GM's liaison manager. "It represents a tremendous behavioral change for many of my customers who are dealers."
In response, OEConnection embarked on some innovative marketing campaigns. One involved a dollar-for-dollar gift certificate, redeemable at one of five top national retailers. And in a promotion this year, it gave away three pickup trucks, donated by Chrysler, Ford and GM, to customers.
Rotuno won't reveal revenue, but says the company's goal is $100 million a year by 2005. If the increasing payroll roster is any indication, that is within reach. In 2000, there were two employees; today, 70 fill the 15,000-square-foot office space in Richfield.
"Since we've gone from 50 to 75 associates in the last 12 months, I expect we'll grow from 75 to maybe 100 next year," Rotuno says.
But even if that happens, it won't necessitate relocating to a larger space -- yet.
"We outsource the hosting of our site to a third party, which eliminates some of the space needs required for hardware," he says, "so we're fairly comfortable where we are right now.
"We've been very focused on being a successful start-up that doesn't end up in the trash can like so many before us. What we must do now is continue finding products that are easily understood and implemented, so that when users experience the product, they know instantaneously that it's a better mousetrap." How to reach: OEConnection (888) 776-5792 or www.oeconnection.com
Dimoff retired from the force on disability after being injured on the job, but security never left his blood. The Akron native then spent close to a year researching why U.S. corporations typically lose employee-related lawsuits and determined there were five areas being neglected by business owners when dealing with their employees -- the hiring process, training for supervisors, development of foundation policies (employee manuals and drug testing), security-related matters and consistency of implementing the four across all shifts and locations.
This information became the nucleus for Dimoff's firm, SACS Consulting.
Ten years later, he has built a reputation not only as a security and training expert in employee-related matters, but also as an entrepreneur willing to invest time, money and energy in emerging regional businesses.
Active in organizations including COSE and the Greater Akron Regional Chamber of Commerce (Dimoff is chairman for the chamber's Small Business Council), he serves on the University of Akron's Community and Technical College Advisory Board as well as on Witness Justice, a Washington, D.C.-based advisory board that works with victims of crimes.
Part of Dimoff's passion is to stave off regional brain drain by bridging the gap between education facilities and the local business community. He regularly brokers meetings with university executives and regional business leaders. And he has put his own money to the test by investing in several local start-up ventures.
When he's not busy helping facilitate Northeast Ohio business, Dimoff coaches youth sports such as soccer, basketball and baseball.
Since Sept. 11, business security has moved to the forefront of issues that affect employers. SBN sat down with Dimoff to discuss security measures and other pre-employment steps owners can take to protect themselves, their employees and their companies.
Why is security such a big issue?
Because of Sept. 11. It’s caused us to reexamine everything that goes on around us. We now have no choice but to be aware of the security around us. Simply put, we expect it to be better.
So what can businesses do to reduce their risk exposure?
It’s a lot of simple things. People aren’t using things they already have. For example, they have access control but allow everybody and anybody to come into their business. They may have cameras, but don’t upgrade them or use them. These are very simple things. Many companies can do simple procedures with employees, vendors and visitors that are cost effective. It usually comes down to using what you have and upgrading a little.
More important is developing procedures for security and actually using them. Many companies have them in place, but don’t. Consider piggybacking. That’s where an employee has an access control card. They swipe the card, and the next 20 people behind that person don’t swipe their cards. The first person just holds the door open until the entire group is in.
If the purpose of access control is to keep a record of each person who enters the building, piggybacking prevents that. It lets in visitors, vendors and other people who potentially could be criminals coming in while employees are pouring in. Someone who is a threat could stand back and watch this, then penetrate that first level of security.
What about drug testing? There are many changes going on in drug testing procedures. Where’s it heading?
It’s another tool to help better select applicants. Statistically, people who are using drugs tend to have to resort to criminal actions to support their habits. Their judgment can be suspect and their safety questionable. It trickles down to causing trouble in the company and costing it money. We know that potentially anybody utilizing drugs in the workplace have a 40 times higher rate of injuring another worker. When you start using a higher rate of medical benefits or down time, it translates into millions of dollars. That’s why it’s important to include drug testing in any hiring process.
But hiring isn’t an exact science, so how can you improve upon it?
When companies are hurting for money, one of the first areas they cut back on is the hiring process. That’s the last place they should be cutting back. That hurts their ability to screen applicants. The hiring process is the key to the rest of your company, so it’s a bad idea to cut back there first. Beyond that, most companies don’t have a strong hiring process it can be a sloppy process. If it becomes sloppy, it’s more difficult to correct a problem after the hire than during the process.
Is there one issue looming out there that will become the next big issue companies will have to face?
The employee-on-employee altercation issue. People aren’t getting along as well as they used to and there’s been a breakdown in cooperation and working together. We’ve already seen the start of it, and it’s heading in the wrong direction.
How to reach: SACS Consulting, (330) 255-1101
Katherine Kleski, co-owner and founder of Katherine's Collection Inc., received the 2002 Governor's Awards for Excellence in Enterprise. The Women's Excellence in Enterprise Award recognizes women-owned businesses that have shown outstanding financial and operational strength. Gov. Bob Taft selected Kleski in the Wholesale/Retail category based on the growth Katherine's Collection has experienced over the last 11 years.
The Akron-based integration solutions firm hired programmer Brian T. Phelan to work in its Akron office.
COHEN & CO.
Bob Brahler was promoted to manager at Cohen & Co. He is based out of the firm's Alliance office in the tax and accounting and auditing department. Nevin Nussbaum was promoted to manager. He is based out of the Akron office's accounting and auditing department. Lisa Caraballo was promoted to senior staff accountant in the accounting and auditing department of the firm's Akron office.
Superior Staffing, with offices in Akron and Canton, hired Liz Kehn, executive recruiter.
DOCTORS HOSPITAL OF STARK COUNTY
Angela M. Boyle was hired as human resource director of Doctors Hospital of Stark County. Boyle most recently worked for Humility of Mary Health Partners in Youngstown.
SPECTRUM SURGICAL INSTRUMENTS CORP.
Patrick Benz was hired as sales representative and technical service guide for the Stow-based company.
INNIS MAGGIORE GROUP
The Canton-based communications firm hired Roya Long as senior media buyer and Shane Brown as graphic designer. Megan Hartong was promoted to senior account executive.
THE HOOVER CO.
Hoover named Clarke Van Dyke as LeanSigma project manager, Joseph M. Wagner as manager of budget and Dennis W. Williams as manager of general accounting.
Kristi Provance was promoted to regional manager for the family-owned Canton company.
BUCKINGHAM, DOOLITTLE & BURROUGHS
Craig S. Marshall was named managing partner of the Akron office. He joined the firm in 1986 and represents a wide variety of privately-held business throughout the area.
CHILDREN'S HOSPITAL MEDICAL CENTER OF AKRON
Marilyn Espe-Sherwindt was named director of the Family Learning Center in Tallmadge.
Carole Gifford was promoted to insurance operations officer, Jeannine Tate to vice president, Janice Holzopfel to assistant vice president and William Nappi to assistant vice president. Lucia Pileggi joined the bank as vice president, team leader of private banking.
HOMETOWN HEALTH NETWORK
Scott D. Price joined the Massillon health network as managing director of self-funded projects.
The Wooster-based company hired Brad Hochberger as western regional sales manager for industrial products.
ROETZEL & ANDRESS
The Akron-based law firm added James D. Kurek as partner in the labor and employment law group.