In 1995 the organization was confronted with the consequences of a general economic malaise. The operating profit decreased. The market placed increasingly higher demands and more serious competitors were added. Furthermore, internal operations were under stress due to the deteriorated situation.
In 1997, the organization was taken over by another company. In this case description, we focus on the company’s strategy to refine markets and focus on core activities.
After the takeover, a number of changes were implemented, mainly focused on redefining the markets and focusing on core activities. The core activities of the company were defined as the development, production and sales of centrifugal pumps. The company finished their work for third parties, which previously accounted for 20% of the production capacity. The company also decided not to make displacement pumps anymore. The design, plus the associated markets, was sold to another company. One reason for the sale of this type of pump was the required investments in production (manufacture + assembly). Besides, the nature of the required R&D efforts did not fit with the further development and production of centrifugal pumps.
Furthermore, management decided not to make the standard parts of the centrifugal pumps anymore, but to have them delivered from a sister company in India. This means that SPX Assen only produced small series of parts.
The changes resulted in a significant reduction of the lead times of customer orders from several days (depending on the product type) to one or few days. Due to the choice for only making centrifugal pumps and the increased efficiency in the assembly, the number of employees has been reduced from approximately 160 to only 100 people. This was achieved through natural redundancy of personnel.
The market situation improved considerably is the upcoming years. The company supplied and still supplies high-quality pumps for a wide variety of applications. Often customers do not have a real alternative to the pumps. And if there was an alternative, SPX Assen competes on quality and speed. They are not the cheapest among all the competitors.
In the
course of years, the manufacturing department of the company became also considerably
smaller. The management of the company however decided to keep modern
production equipment and, eventually purchase new machines, in order to produce
special or unique components. These
items are directly delivered to cells. There
is no need for a warehouse between parts manufacture (elsewhere or at home) and
assembly. Only for very large series, which are supplied from India, the
warehouse is used.