Connect the dots
Along with growth, ADS has expanded its margins with sharper execution, which in turn generates more profit.
Barbour says the company is working to decrease working capital as a percent to sales. ADS was in the high 20s as a percent to sales, and it’s down to the mid-20s, with a plan in place to get it to the low 20s.
“That’s not a new formula, but what I’ve perhaps emphasized a bit more is how those dots connect, making it very visible to our employees that what they do makes a big difference, what they do matters and moves the needle for us,” he says.
For example, ADS opened a new Missouri plant. It was doing pretty well, but as a new plant, it had to learn how to work inventory. So, Barbour spent time explaining what it means for the company when inventory sits for 100 days, rather than turns in 60 days.
“We try to make it real for the employees,” he says. “We have a very nice culture here. It’s a matter of making sure we’re communicating the priorities that drive our future, pointing them toward where we’re going and communicating that.
“I firmly believe that if people know where they’re going and they can put it into context of what they’re doing every day, and they know what they do matters, they’ll do a great job.”
As often as Barbour feels like he’s repeating himself, he says you’ve got to continue to drill home a simple, actionable message.
Communicating is also critical when challenges arise.
Barbour knew it would be tough to make the fourth quarter goals for 2017, his first quarter at the company, but he felt ADS really needed to do that.
Thirty days out, management communicated that some people needed to work on a holiday. It wasn’t going to be full crews and they would get holiday pay, but orders had to be filled.
“I wanted to really demonstrate and send the message, ‘We told our board we were going to make this number. We see a path to getting to that number. Now we’ve all got to be in the boat and row hard to get to that number,’” he says. “And people did a very nice job of executing on that.”
With ADS’ focus on fundamentals and execution, technology investments and IT spend are also important. Like many manufacturers, ADS is interested in how Industry 4.0 can be used with the complicated extrusion and corrugation equipment that manufactures its pipe.
Barbour says as the company puts in new equipment or refurbishes machines, it’s adding the latest generations of controls that provide more data.
“It helps you become more efficient. It reduces scrap. You get better throughput. It gives you better visibility on where your product is in that manufacturing process, which leads to better customer service and inventory control,” he says.
But just as important is how Industry 4.0 can help ADS attract and retain the factory worker of the future, especially with a fair amount of turnover on the horizon for the next 10 years.
“Think of all the things an employee does with his iPhone or his computer today, and the personal experience he has with that,” Barbour says. “That comes into the workplace and they expect to have that same level of functionality with the tools, equipment or processes they’re interfacing with at work. In many ways, that creates a high bar for the company to be investing in the technology that enables the employee to do the job in the way they want to do it or are comfortable with doing it.”