Testing environment Featured

11:01am EDT January 24, 2005
Keithley Instruments designs and manufactures complex electronic instruments and systems used for testing and monitoring by the electronics industry.

Its customers are engineers and technicians involved in research and new product development, which puts Keithley at a disadvantage when times are bad. If Keithley's customers slow their product development because of slow sales, there is less need for Keithley products.

So no matter how good Keithley makes its products, the company is still dependent on demand from electronics companies. And, like many other organizations, Keithley has felt the effects of a slow economy. However, President and CEO Joe Keithley and his leadership team have not been sitting idly by hoping for an improvement in market conditions.

Instead, Keithley turned the company's focus internally and started several initiatives that he hopes will ultimately make the business even stronger when economic conditions finally improve. Slow sales quarters were the perfect time to look for fat to trim and to implement major technology initiatives that, because of their disruptive nature, could not have taken place during busier times. So starting in 2003, Keithley focused on improving his business processes.

"We have implemented programs to strengthen ourselves during the electronics industry downturn, initiatives that would be hard to pursue in an expansion cycle," says Keithley. "Our strong balance sheet afforded us the financial strength, as well as the confidence, to pursue these initiatives. We believe our strategy makes sense and is sound. We are clear on who our customer base should be and which applications we want to serve."

In mid-2003, the company implemented the first phase of its Enterprise Resource Planning rollout. This first stage covered financial systems, inventory management, and manufacturing scheduling and planning in the United States, and was followed by additional manufacturing planning and business intelligence modules worldwide. Keithley also rolled out a global Customer Relationship Management system.

"ERP and CRM give us the tools to coordinate production quality, sales and account service on a global basis, which is very important because purchase decision-makers and the ultimate users of our instruments don't always work in the same location," says Keithley. "This will be even more important going forward, as production centers in Asia will have a greater role in purchase decisions than they do today.

"Together, our ERP and CRM systems provide us with an infrastructure to support a larger company and the financial management tools that will enable us to improve our efficiency as a global company."

The company also instituted lean manufacturing processes.

"We've made major changes to the way we purchase and manufacture as we adopted lean manufacturing principles," says Keithley.

But lean manufacturing didn't bring overnight results. Overall manufacturing costs actually increased initially during the early phases, but as processes were fine-tuned, manufacturing costs started to drop.

The company focused on creating an environment that encourages engineers to innovate while focusing on specific customer needs. Teams were created with a combination of marketing and engineering experience.

"Our business development teams, led by marketers with deep backgrounds in both measurement and engineering, act as a natural bridge for new ideas between our customers and our product development engineers," says Keithley. "We've also set up a fast company response team. We'll take advantage of the Keithley culture of listening to customers and responding to their needs when there is a solid business case for doing so. Our competitors often can't match this type of responsiveness and flexibility."

Customer requirements have gone beyond the old "faster and better" scenario. Today's customers will invest in new measurement tools only if those tools will do something special, something that makes their jobs easier or more productive and eventually results in greater profitability.

"By understanding our own core competencies and the real needs of our customers, we can win with exact customer solutions," says Keithley. "We can also see opportunities where others don't or where they choose not to compete."

The company has long understood the importance of relationships, not only with customers but with other regional entities as well.

"Our relationships with our customers, along with our partnerships with leading universities and researchers, provide insights into future innovations," says Keithley. "This interaction gives us early indications of the technologies we need to address, and the new measurement challenges our customers will be facing."

How to reach: Keithley Instruments, www.keithley.com