Axiom steel (PVT) Ltd is a privately owned steel re-rolling firm which consists of three units and is located within the industrial zone at the outskirts of the city. Two of the firm’s units are automatic which produce wire rods & whose end users are the wire & electrode manufacturers. The third is a manually operated unit producing reinforced steel, the end use of which is for construction purposes.
The Chief Executive Officer, who is also the owner of the firm, sits at the firm’s head office which is located 25 kilometers away from the production units in the heart of the city.
Axiom Steel is currently facing all time huge losses, which the CEO thinks is due to the firm’s production planning deficiency, under /restricted use of the firm’s capacity and ability & poor marketing strategies. The CEO thinks he needs a good marketing individual who can market his products and can bring business to the company and only then can the company survive, other wise the firm is heading for a shut out which can result in not only a dented reputation for the owner & business loss but also several individuals who are related to the firm, losing their jobs.
After through screening and interviews, the firm hires a new individual at the post of assistant manager marketing whose main goal is to identify the loop holes in the company’s marketing and planning infrastructure and boost sales by formulating proper strategies thus helping Axiom Steel mills, which now poses to be a sinking ship.
The newly appointed Assistant Manager visits the various departments of the firm which includes all three units, their production technicians, marketing representatives, quality control and the firm’s ware house. A thorough marketing strategy discussion with the individuals and after discussing results in following points being put forward for analyses:-
There is no proper marketing department of the firm, the individuals that are so-called marketing people are actually being used for follow up of the orders, which are netted by the company’s CEO and then transferred to the production floor. These individuals are being paid at price which is far below the prevailing market prices for individuals working under such capacities and are working for the firm since a very very long time. A through interview also reveals that most of the marketing individuals do not posses a recognized degree in Marketing and are working on bases of sheer experience.
The production planning is being done in the head office without consulting the production capabilities with the production technicians. The production planning is carried out by the CEO himself with the team he calls his “marketing team”. Since the CEO seldom visits the production mills and depends purely on the information presented to him by the “marketing team”; he is un-aware of the ground realities; often, orders are being shipped out late, which are resulting in customer losing faith and looking for other vendor options.
There is a communication gap between the head office and the Mill’s Production Management resulting in delay in production planning and preparation of the orders at mill’s end. This gap is also due to the fact that the CEO held the powers to make decisions and enforce to his management. The CEO belongs to an older generation which is reluctant to learn new methods of communications such as the internet (Although the facility is available for use).
The fastest method of communication for the CEO is the communication via Fax and Telex.
Sales of wire rods are restricted to wire and electrode manufacturers only and thus sometimes, there came a time when the units often faced shut downs due to lack of orders!
The two Automatic units which are producing wire rods are also capable of producing reinforced steel for construction but this capability is not being utilized and the units are restricted to production of Wire rods only. This is also a reason for late shipments as bottle necks are being produced and the load is not shifted from one production unit to another which is capable but not being utilized of producing the same product. The CEO is therefore correct in pointing out this issue as one of the reasons for current losses.
After looking at above problems, following strategies are being proposed:
The company should adopt a proper marketing strategy for its firm. This includes injecting fresh blood in the marketing team, those individuals who are capable of taking the company beyond a certain level. This means certain over hauling of the marketing machinery.
The CEO must realize that if he wants the business turn over to increase; he must then look after and take care of his people well… In fact a policy of profit sharing should be introduced where the marketing individuals are given a certain %age of commission over their efforts to bring new business to the firm. If not, then the rate of payment must be increased for the individuals who have lost motivation in working for the company because of the poor compensation for their work.
There should be a separate production planning department whose specialization should be the planning of order executions at mills. These individuals will provide the correct idea to the marketing individuals and the CEO regarding the timeline of orders from raw material stage to the shipment Ex-Factory.
Each marketing individual should be provided with at-least a desktop computer work station with internet facility and designated individual email IDs which they lack today. This will help the marketing individuals to concentrate on marketing and transfer order execution information from their firm to the customer. Internet excess will also help the marketing people to search for new potential markets and fetching customers, also not to forget faster communication
The CEO must realize that if he wants the business to grow, then he must delegate authorities to the individuals working under him as with the increase of business, a phase will come where he cannot handle things on his own. The CEO must introduce a layer of Management which includes Top Management consisting of himself and his reporting General Managers, Middle Management of Managers and Assistant Managers reporting to the GM and the work staff that will be reporting to the Middle Management. This delegation of authorities and creation of Management chain will not only help in quicker decision making but also in fluent transfer of orders from top level to down.
These are the points which are basics for an improvement in the marketing structure and in the communication and centralized decision making problem which the marketing department is facing within the firm. These together with a few production related issues highlighted above, if addressed will result in better performance. If successful, more recommendations for improvement will be forwarded for perusal.