Acting small, thinking big

Since its inception four years ago, Rich Hipp has been the face of Southco Marine.
He has shaped its vision, built its team and ultimately served as the middleman between his group and parent Southco, Inc., a more than 100-year-old hardware company serving industries like aerospace, automotive, bus, consumer electronics, industrial equipment, medical, off-highway, railway and trucks.
By doing so, the 19-year Southco veteran has both stretched his corporation to better respond to the needs of a small, fragmented industry and challenged the marine industry to consider new ways of looking at marine hardware and boat design.

The young MBA has passed Southco’s test of his leadership and team-building skills. His actions have given direction to an industry searching for compromise between its small business-centric experience, passion and relationship-based history and a more structured, process-oriented future, driven by the trends and tools of corporate America. Here are the key strategies Southco Marine has adopted under Hipp’s guidance:

Squeeze your company
Southco Marine may only be a small piece of the Southco, Inc. pie, but it has access to, and is setting itself up to take advantage of, technologies that most marine industry firms can’t afford, like SAP software and Web project and program management.

“If it was just Southco Marine, there is no way our small business could invest in the SAP software package, but the parent company is doing it on a global basis,” Hipp explains.
The software, which Southco Marine is implementing this summer and expects to switch over to after Thanksgiving, provides businesses with enterprise resource planning — a business support system that maintains in a single database the data needed for a variety of business functions such as manufacturing, supply chain management, financials, projects, human resources and customer relationship management.

Hipp says it will allow the company real-time visibility of production and shipping, which will allow it to more confidently tell a customer what it can do for them and when.

The “My Southco” Web project and program management has been in use in other industries for some time, and the marine group just began offering it to its customers. The company hopes it will encourage customers to bring Southco in on boat design projects farther upstream, Hipp explains. With the ability of Southco sales, engineering and production staff around the globe to access its content, the password-protected Web tool can help the company drive efficiencies into the product development process to the mutual benefit of the company and its customers.
Southco Marine is also working to provide 3-D CAD drawings in a variety of formats and allow customers to place their orders online, reducing the customer service department’s workload and the risk of data-entry error.

Fight to get small
While taking advantage of the benefits of a large company, it’s important to also eliminate the hurdles that large organizations can sometimes create, especially when they can negatively impact your customers. Southco Marine has done this by decentralizing its customer service, creating its own department within its Rockledge facility to better serve its customers. It also reduced its minimum order size to cater to the industry’s small businesses, and it acquired the David M. Arndt & Co. rep firm.

The acquisition of a rep firm by a supplier was not only unorthodox, but it also flew in the face of its parent company’s strategy of employing mechanical engineers as direct salespeople. But after Southco Marine’s acquisition of Mobella in 2003, several major clients insisted they continue to do business through the rep firm. By considering and ultimately pursuing this avenue, not only did Southco retain those clients, it has been able to work with the rep firm’s manufacturer clients to share product design trends, thereby furthering customers’ product integration strategies.

Define quality
While the marine industry’s product quality is certainly on the rise, it continues to be a challenge in the face of rising customer expectations and pressure to keep prices low. As a result of these conflicting pressures, Southco Marine recently completed a two-year project in which it defined an A, B and C spec for its face plates, each with its own pricing structure, which its boat builder customers can now select from and sign off on.

In addition, it recently introduced an EQDC chart in its Rockledge warehouse and assembly facility to help it better track problem solving, quality control and its ability to meet on-time to request dates. Just this spring, the company also launched the first in what it expects will be an annual customer satisfaction survey, designed to drive improvements from one end of the company to the other.

Keep tribal knowledge
When Hipp was assembling the Southco Marine team, he pulled employees from each of the businesses it had acquired, as well as Southco’s corporate team, in an effort to take advantage of all the knowledge and experience at the company’s disposal.

One example of this is Polly Anderberg, who was a business development analyst at Arndt & Co. before being named operations supervisor for Southco Marine. In addition, Customer Service Supervisor Dan Hottinger started with the parent company in an accounting role, then moved into corporate customer service before assisting with a Southco Marine acquisition and being offered a permanent position with the marine group. Anderberg was able to bring her field knowledge to her position while Hottinger was able to bring processes from corporate to help shape the marine industry team. The two now sit next to each other and attend each other’s departmental meetings in an effort to facilitate communication between the operations and customer service departments.

Another example is Orcas Founder and President Oren Cotton, now Southco Marine’s director of product innovation. Cotton, with a background that includes stints as a boat salesman, boat mechanic and boat builder, has a unique way of designing products that takes into account the impact on all stakeholders, from installers to mechanics. And he’s also been able to train Southco Marine’s team of young engineers to broaden their thinking.

But Cotton has brought more than just engineering genius to Southco Marine. Coming from a small, nimble company known for its ability to quickly identify a problem’s source and turn out a custom solution, he has challenged the larger company — with its focus on processes and procedures, its dedication to increasing efficiency and its need to be accountable to the parent company — to move faster and be more customer-centric. On the flip side, Hipp has encouraged Cotton to consider how custom-designed solutions can have wider applications, the pursuit of which can be more profitable than hopping from project to project.

Southco has also retained the vast majority of its key personnel at Sweden-based Mobella, acquired five years ago. For example, Leif Andersson, the general manager for Mobella, is now the European Union general manager for Southco Marine and is expected to take on additional global leadership responsibilities going forward. Pernilla Lindberg-Eriksson, who started as a sales/marketing coordinator for Mobella, is now the global marketing manager for Southco’s marine unit, driving its communications and marketing strategy worldwide. Henric Johansson, who started as a contract engineer for Mobella, is now the engineering manager for Southco Marine Europe, responsible for the technical definition of Southco’s “one look, one lock” strategy and integrating the product design of Southco, Mobella and Orcas. Finally, both Patrik Larsson, originally an operations supervisor in Sweden, and Johan Pusa, a former production planner/buyer in Sweden, are now on assignment as a SAP integration team members working in Southco’s corporate global headquarters.

Unite the globe
Southco Marine manufactures 25 percent of its products in the United States, 25 percent in Europe and 50 percent in China, selling its products around the world under the protection of a global warranty. Therefore, it sees an importance in not only gaining a sense of team at individual locations and between those locations, but getting those employees as close to the customer as possible.

In an effort to do that, Southco Marine held a sales meeting this past spring that brought together its staff from around the world, as well as a handful of key customers. Hipp says this not only offered an opportunity to unite the company around its strategic direction and showcase its dedication to the marine market, it gave his global team the opportunity to get to know their customers, thereby putting their work into context and upping their commitment to getting it right.

Southco Marine’s story is far from over.
In fact, Hipp still sees it as a start-up business. The company has spent much of the past few years focused internally on consolidation, business systems integration, team development and global processes. Now, it needs to turn to product development. Three years from now, Hipp says he’d like 40 to 50 percent of Southco Marine’s product line-up consist of products not yet developed.
But he won’t be at Southco Marine to see that happen. This fall, Hipp accepted a position as managing director of Southco’s Asia Pacific region, where he hopes to continue to drive improvement in its marine business by raising the bar of its Asian manufacturing. Going forward, the global general manager of Southco’s Transportation Unit, Ralph Ulisse, will oversee the division in addition to his other responsibilities. While this means there will no longer be an executive focused exclusively on this segment of Southco’s business, it isn’t a lessening of its commitment to the marine industry, according to Hipp. Rather, it’s a sign of the company’s faith in the team that has been built around him.

That faith is understandable. The division has already made leaps and bounds since its inception four short years ago. Revenues have increased five fold in the North American market and by six to eight times worldwide. And the company is far along in its integration of the three major acquisitions of the past few years.

“Even with the pressure of these times, I feel the Southco Marine business is in good hands with the global team that has been developed,” concludes Hipp. “If anybody can do it, they can. It comes down to our ability to execute better, smarter and faster for our customer base around the world, communicating the benefits of integration and differentiation, especially in this downturn.”

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