FAAC delivers a primer on creating dynamic business synergies through considered decision-making, smart integration, and unflinching execution.
The power of that suggestion has not only placed a thriving enterprise on the world stage, but more importantly, holds lessons for any business in the throes of complex growth and change. Based in Rockledge, Fla., the domestic division of the multinational FAAC Group is overseen by our quote’s author, Bruce Pate.
As CEO of FAAC, Magnetic Autocontrol, and Viking Brands in the Americas at FAAC International, Pate has overseen a blending of cultures, strategies, and tactics that are boosting mutual strengths to make three great brands into powerhouses in the niche markets they serve.
Here’s how the company’s ownership breaks down: Italian parent firm FAAC Group, owned by the Roman Catholic Archdiocese of Bologna, oversees all the products and the many divisions it operates, led by the FAAC brand which originated in Bologna. The Magnetic Autocontrol brand of motor control technology is helmed out of Germany, and both firms work closely with the US divisions that are run by Pate and his teams. Fifty-five percent of their stateside business comes beneath the Magnetic brand, 20 percent under FAAC, and 25 percent under a new acquisition: Irvine, Calif.-based Viking Access Systems, makers of gate operating systems.
When Pate came aboard in 2013, FAAC and Magnetic were successes in their own right, located about 2½ hours apart. (The Viking acquisition finalized in April of this year.) Both companies were delivering very different highly engineered solutions for the commercial and residential access control market. Magnetic’s products are build-to-order, and FAAC solutions are build-to-stock, and Pate’s task was to unite both facilities under one roof, operating system, culture, and set of methodologies.
“It’s interesting when you have the opportunity to consolidate two organizations, bringing together the cultures, trying to assimilate not only the people but also the products and processes, and try to identify how best to do that while meeting customer needs at the same time," he said. “The appeal came down to the fact that there were two brands that were very high-end in their market segments and were very successful unto themselves. It becomes very appealing to be part of an organization where you can make a difference — but you don't necessarily know all the things under the cover at the time. From the outside, that's what I could see: two strong brands, good at what they did, and the ability to consolidate them into one facility and integrate those two cultures.”
Beneath the surface, there were significant process improvements to be made. Managing sales order intake and lead times were crucial first steps. “We created the standard lead time definitions that would enable our sales team to be able to promise consistency to the customer base and then to the operations team meeting that. That was quite a change because the organization was accustomed to, ‘If I’ve got it, I'll ship it as quick as I can.’ Sometimes the lead time would be two weeks, and then four months later the same customer orders again and now the lead time is six weeks for the same product, same order. That was just the reflection of various circumstances, whether it was demand or supply, and it created a lot of challenges for our customers.
“When I joined, you could tell that our customers were struggling with how to manage variation in lead times. As a challenge, we found internally that we were cognizant of our lead time from our supply base, but we weren't managing our lead time from our supply base.” At the time, the companies couldn’t fully grasp what their inventory position had to be. “We weren't understanding when to place the purchase orders to ensure consistency in supply and therefore meeting our customer demand.
“On the other hand, we didn't have a good MRP to be able to estimate the variation in demand, not only from a volume point of view but specifically by part and all the complexity we have to deal with. We said, ‘We can't just use simplification and try to manage it by brute force. We've got to have an effective MRP that's going to allow us to achieve a consistency in supply.’ That changed the perspective entirely within our operations and enabled us to then set not only minimum stock levels, but also enabled us to deliver an on-time delivery metric, which, by the way, you must have if you want to meet your customer’s standard lead times. So we implemented that, too.”
On the Ops side, the changes took about eight months to achieve. Said Pate, “We were delivering consistently according to the standards that we needed, and that's a reflection of lead time from our supply base, filling our stock, getting that back up to the level that we needed to be able to fill those orders. At the same time, we were standardizing the processes between the two companies, so we had the two brands operating within the same facility but not operating on the same systems. We had two ERPs but we were using the same processes; we adopted a blend between the best practices of the two companies.”
It took about 14 months to consolidate fully. "At that point it was a seamless transfer because all of the processes were the same. People were speaking the same language, they knew how to enter orders, they knew how to deliver them, how to manage invoices. We made a seamless transition into one system with no disruption at all with either our organization or to our customers because we'd done all of the hard work earlier in consolidating all of our processes.” With the new addition Viking onboard, these same steps of integration are underway.
A high level of complexity comes with working from both a build-to-order and build-to-stock perspective. “This is the key part of the change, and what becomes interesting for different organizations.” Pate mused. As a midsized company serving a niche market, FAAC International puts tremendous emphasis on service. “Efficiency improvements are not necessarily applicable as much in this case to the manufacturing floor as they are to the processes that support the manufacturing floor: efficiency in communicating effectively what those orders are, consistency in how we manage and finish those, managing accuracy for delivering those orders to the floor and to the customer, and ensuring that accuracy enables us to deliver consistently with a high on time to get rate, despite the fact that we are delivering three brands, 700 customers, dealing with 9,000 part numbers, and 20,000 individual orders per annum.”
Variation isn’t driving complexity into the business — it's the business itself. "Complexity is standard, and what we are trying to deal with are the exceptions and the exceptions become, ‘OK, there's something very strange about this order; it's not just a build to order product, but it's something exceptional about that build to order product, maybe a special color or it's got some special cutouts on it,’ and those are difficult for a very standard organization to deal with. ... We must be able to deal with that within our standard lead time to our customers and then manage those true exceptions that aren't a part of our standard portfolio,” he stressed.
Working together, Pate’s approach has slashed inventory by 30 percent, increased on-time delivery to over 95 percent, more than doubled cash flow, and resulted in a double digit CAGR. He credits a robust team culture, a shared eagerness to become truly great, and the support of strong parentage.
As you might expect, the company is also a giving one, supporting local efforts to feed those in need through House of Hope, as well as being part of other endeavors.
“It's a fantastic business and we are very blessed to be able to work in it,” Pate said. “Each day we come in and we're seeing growth, and that's a great place to be. There’s so much more that we can do to improve, so every day we have an attitude where we come in and see the challenges and we try to find the best way to solve them.” That’s the true power of suggestion at work.
FAAC is a leading international pioneer in the automated systems industry and in the control of pedestrian and vehicle access for residential and commercial applications.
The Group’s activity is focused around three Business Units: Access Automation, Parking Technology and Access Control. FAAC was founded in 1965 and is today an international industrial Group with a direct presence in 24 countries throughout the world, 16 different manufacturing locations and over 2.500 employees.
The Group Headquarters is based, ever since its foundation, in Zola Predosa, Bologna, Italy.