Presented to: Ahmad Zargari PhD. In partial fulfillment of the degree: Master of Science in Engineering and Technology Management Morehead State University IET 619 Group Project 2

An Interview with Tim Livingston The Corporate Quality Manager of Big Ass Fans in Lexington Kentucky

Company Vision & Mission  Big Ass Fans strives to produce the best quality fans in the world.  BAF markets their fans in commercial, industrial as well as residential markets.  They have multiple sites in multiple countries to include:  Four facilities in Lexington Kentucky  One in Australia  One in Malaysia  One in Hong Kong  And One pending in the United Kingdom

Inputs & Outputs  The company specializes primarily with custom fan designs, and can build fans to any size and shape desired by the customer. However they also sell a large number of their standard product line of fans.  The primary goal of all fans built by Big Ass Fans is the “destratification” of the air in a particular building structure. In order to ensure their product effectively achieves this goal, an initial visit and consultation is usually conducted by the innovations team to properly evaluate a customer’s facility.

Inputs & Outputs  They are a 70% supplier dependent making them a 30% assembly organization.  Their process is best described as a “value added process”.  85% of their products are made here at home with even more of their manufacturing projected to return to the United States in 2014.

Inputs & Outputs  50% of their business is in the residential market but this only generates 30% of their revenue.  Their primary competition being a similar organization in California.  Big Ass Fans has currently been growing at a rate of 40% to 45% each year for the past several years.

Organizational Behavior  The corporate manager is a firm believer in individual employee empowerment.  Weekly meetings are conducted via Skype with the lead quality managers in each facility around the world to create and review facility “action plans”.  Daily morning meetings are conducted by all quality managers (referred to as “Gemba Walks”) to ensure the quality and safety of all manufacturing.

Quality Assurance Techniques  Since they are 70% dependent on Supplier Quality they have an entire division devoted to Supplier Quality Assurance and Development.  Receiving Inspection using Acceptance Sampling  Weekly Quality Communication Meetings to attack quality issues (Quality Circles)

Quality Assurance Techniques Con.  100% inline torque testing and traceability. Torque statistics can be traced down to a specific serial # Fan.  100% End of Line testing for motor functionality.  They are ISO 9001 certified  Warranty Data Pareto analysis to attack the largest contributors of customer returns.

Will They stay competitive?  By owning 85% of the North American Market they have a enormous head start to stay competitive.  They have a great network of sales and service staff to address the consumers needs.

Weaknesses  However their global strategy of expansion still lacks the management structure, quality systems, and infrastructure that are present domestically.  They are also considered high end brand which inflates their overall pricing which could turn away potential buyers.

Growing too Fast  BAF is growing too fast, while most of the time this is a strength it can also become a weakness.  BAF is growing up to 45% a year

Growth Weakness  Having an overload of growth can make the quality of the product sloppy.  It is important to find ways to cut back on growth but still have great quality for your customers.

Improvement Recommendations for Growth  Having a more organized management structure for your global positions will help slow the rate at which BAF will grow  Better decision making in marketing and in quality  Will create a stronger infrastructure  Also it will create better quality of product.

Improvement Recommendations for Growth  Develop a cutting-edge analytical toolkit that enables them to continuously assess and respond to changes in consumer behavior.  Possibly cut back on the service in North America, since 85% of market owned is there. But still ensure quality

Strengths  Custom Fans  Can find a buyer in any market for this product as it can be made to their specifications.  Strong Warranty  The product is guaranteed for 5-7 years with shows assurance in the product.

Strengths  Strong desire for domestic market.  Product created in America for the American market, which is a strong desire of consumers for products.

Strengths  Communication  Company communication is maintained.  Other locations report at least once a week.  Regular updates to ensure highest possible communication.

Becoming More Competitive  Create a line of lowered priced fans.  The average person can afford this.  Increase in business by gathering a larger target consumer group.  Used in residential areas by the average home owner.

Becoming More Competitive  Big Ass Fans has a competitive edge currently.  With limited competition, it would not be hard to get ahead in this business.  There are several ways that the company can continue to develop a more competitive edge.

Becoming More Competitive  There is a larger possibility for residential business than industrial business.  Increase Residential Business.  Reach out to residential business.  Try to have fans placed inside new homes as they are built.  Since 50% of the sales are already residential, try to increase this number to 75% or more.

Becoming Competitive  Since 85% of the industrial market is in North America.  As industry is branching out to other countries the market should be shifting between these countries.  Reach out to more industrial companies throughout the world.  Lessen the burden of having all the industry in North America

Improvement Recommendations for Growth  Plan a negative contingency plan in case business grows more slowly and a positive contingency plan in case business grows more quickly.  Drop problematic profit loss customers. This type of customer would be the one that is always trying to cajole you into getting a cheaper product

Improvement Recommendations  Move towards a TS Quality System that measures compliance on improvements in Quality, Delivery, Order Accuracy, and Inventory turns.  Place more emphasis and resources on their global initiative. Bring Top leadership in Australia, Malaysia, and Hong Kong for extensive on-site cross Management systems training to apply lessons learned.

Improvement Recommendations  Intentionally slow their growth plan down to ensure that they can grow their infrastructure at the same pace.  Enhance and grow their supplier quality management team to aid in supplier development since they are 70% dependent on supplier quality success.

Improvement Recommendations  Enhance their purchasing strategy to review and reduce overall cost of supplied parts.  Review their pricing structure to ensure its accuracy.  Lower inventory levels down to reduce costs in a Lean model.  After cost review look to reduce their overall pricing of their fans to open up new markets that have been cost prohibitive.

Conclusion  BAF is a very large and fast growing organization  They must control the rate at which they expand  International positions need better management structure to improve quality of product

Conclusion  Adding a lower price of fans will make them more attractable to the average income  BAF strives to be the best at what they do, with a few modification they will be able to continually achieve this goal.