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Regional Manufacturing Survey Reveals Differences Between High and Low Performers
November 2001
A new survey conducted by Alpern, Rosenthal & Company and Robert
Morris College cites some of the business practices that set apart
high performing companies from low performing ones. Results of the
survey will be released in various phases, with this being the first
phase.
The survey was designed based upon the principles of the Balanced
Scorecard, a method of measuring business performance and setting
strategies. The four-page, 73-question survey was sent to
manufacturers with revenues between $5 and $100 million located in
Western Pennsylvania.
The study found there were several statistically significant
differences between the high and low performers. A high performer is a
company that expects their annual average sales to grow more than 11%
in the next five years and their average net income before taxes are
more than 11% of their sales. A low performer expects their annual
average sales to grow less than 5% over the next five years and their
average net income before taxes are less than 5% of their
sales.
"One reason we developed the survey was to stay on the forefront of
manufacturing trends and issues so we can deliver better advice to our
clients," said Fred Rock, CPA, director of the manufacturing services
group of Alpern, Rosenthal & Company. "Our intent is to inform the
regional manufacturing community on what best practices they should be
employing to be growing and profitable companies."
"As an institution, we are continually looking at employer and
business trends because we want to know what will be expected of our
students after they graduate," said Richard Stolz, dean of the School
of Business at Robert Morris College. "By partnering with Alpern,
Rosenthal & Company on this research project, we are able to
comprehend the current state of the manufacturing industry in our
region so that we will be better equipped to provide our students with
the necessary skills they will need to be effective leaders in their
chosen careers."
The following is a summary of characteristics possessed by high
performers:<
Products
- High performers are more likely to measure the profitability of individual product lines
- High performers are more likely to evaluate capital projects based upon a return on investment basis
Vendors and customers
- High performers are more likely to integrate their sales and operation plan
- High performers are more likely to use technology to link customers and employees
- High performers are more likely to use technology to link vendors and employees
- High performers are more likely to use inventory management techniques
- High performers are more likely to use vendors to aid in the development of their products
Employees are valued
- High performers are more likely to have a formalized training program
- High performers are more likely to use employee inputs to improve their processes
- High performers are more likely to offer financial rewards to employees for their ideas that save money
Another interesting finding were characteristics that were not
statistically significant to either high or low performers. This
means high and low performers were both as likely to have these
characteristics. They are:
- Evaluating capital projects based upon a return on investment
- Surveying customers on a regular basis
- Being ISO 9000 or 9001 compliant
- Rating suppliers on quality and timeliness as well as price
- Regularly surveying employees
The Balanced Scorecard was developed by Robert Kaplan, a professor of
accounting at Harvard Business School, and David Norton, the founder
and president of Renaissance Strategy Group, a consulting firm located
in Lincoln, Nebraska as a strategic control instrument within an
organization. Using this method, managers are able to look at a wider
set of measures, rather than just relying on financial information, to
better understand what is happening at their company and to develop
strategies. This study is the first of its kind, because it is using
these same measures to evaluate an entire industry.
Founded in 1961, Alpern, Rosenthal & Company, certified public
accountants and business consultants, offers accounting, audit, tax
and computer consulting services, in addition to a full range of
management consulting services. As one of the largest certified public
accounting and business consulting firms in Pittsburgh, Alpern,
Rosenthal & Company currently employs a staff of more than 170 to
serve the needs of companies operating on local, regional, national
and international levels.
Robert Morris College, founded in 1921, is a private, four-year
institution with an enrollment of approximately 5,000 undergraduate
and graduate students at its Moon Township Campus and downtown
Pittsburgh Center. The College, which will officially become Robert
Morris University in January 2002, offers 27 undergraduate degree
programs and 13 master's and doctoral degree programs. An estimated
22,000 alumni live and work in Western Pennsylvania.
For more information, contact Elisabeth Mehta-Leach, Director of
Marketing, at (412) 281-7692, ext. 353 or eleach@alpern.com.
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