Changing from Leading IT to Running Manufacturing

January 8, 2010 3:37 AM

Changing from running IT to running a manufacturing shop. How do I do this?

I've spent 20+ years working my way up in managing IT projects and I'm now a division head. I manage about $10M in contracts and over 40 people, mostly white collar staff.

My dad owns and runs a small manufacturing shop making gear for soldiers. He wants to retire and has asked me to take over the business. It's exciting because I will be given full control over the business.

However, I know nothing about this business! Where do I start to get smart in running a business like this? I'm going from a very white collar staff to a blue collar environment.

posted by pxharder to Work & Money (1 answer total)

I've done both jobs, but in reverse order to what you're suggesting.

If you have any IT experience with ERP systems, or at least, with inventory control and accounting systems, you can readily map your IT experience onto the manufacturing floor, with additional bits of process control, job accounting, and shop floor control disciplines, as needed by your shop. At the outset, you may need some help in understanding the basic documents and systems used to control work flow and materials requisition/accounting, but current employees, and your Dad, should be able to give a cogent explanation of the current system, in your takeover phase.

You'll need some overview of your new accounting system, including shop floor control, from your Dad and internal (or external) accountants. That should encompass everything from your vendor profiles in purchasing system, to A/P, to the G/L interface, to how your current liabilities flow through to your principal financial reports (balance sheet, P/L, income statement, cash position, reserves, etc.) You should then expect a walk through of your current receivables side, from your Dad, and whoever else is in charge of sales and accounting for the company, to include A/R, including account aging, and any factoring the company may be doing for cash flow management.

What you're going to have to develop, in the early stages, is a "feel" for manufacturing economics. There are several ways of organizing shop control and accounting systems, but essentially, your ability to buy raw materials economically, accurately, and with good delivery, plus your ability to convert those raw materials to finished products you can invoice, by application of your labor forces' work and intelligence, will determine your continuing profits, if any. A bad major customer, a bad major vendor, or a single bad product/production contract, can kill any manufacturing job shop, so you also have to constantly spread your capabilities, effectively, over market opportunity.

Start with your Dad, in at least a close advisory role. Stay, for at least 2 years, if you can, with your Dad, if he's been successful, in an ongoing consulting role. Be humble, and be good to your staff. As much as you can, learn how to make the things your company makes, yourself.

I loved my jobs as a manufacturing executive, even on the hardest days. Not that they were any better than my IT jobs, on their best days, but there is something to be said about heading home with tired hands after counting inventory for 12 hours in a hot warehouse, that can't be said about successfully testing a new billing interface, after a 12 hour test session.

Good luck, and welcome to the blue collar world!
posted by paulsc at 5:07 PM on February 19, 2010