SCORE taught Lawrence Segrest how to go beyond his MBA training to write quotes on plastic molding jobs that are winners in the competitive arena.
Lawrence’s father, Earle, an industrial engineer, launched GreenLeaf Industries, Inc., in 1999 after having built a highly successful career with companies that used hydraulic equipment to shape molded plastic products.
Earle envisioned competing with those traditional firms with new servo motor technology that offered significant savings in labor and electricity while enhancing quality and manufacturing reliability. As part of his preparation, he’d convinced son Lawrence, a mechanical engineer working on new products for Cummins Engine Company, to go back to school for an MBA that would help him manage GreenLeaf’s financial future.The Segrests chose East Tennessee for their venture to capitalize on three advantages:
- Speedy access to the Volunteer State’s burgeoning automotive industry, a major market for molded plastic parts, via Interstates 40, 75 and 81.
- A veritable cornucopia of engineering support, student interns and staff members at the University of Tennessee.
- The magnificent Smokies.
GreenLeaf today employs 13 individuals: Earle and his wife, Rosaland, who delights in providing agreeable customer service; Lawrence and his wife, Lisa, who focuses on sales; and nine non-family members … four individuals with technical backgrounds and five non-technical staffers.
In addition to molding plastic parts, the company provides such value-added services as product assembly and screen-printing. Work for the auto industry comprises about half of the business. The rest comes from entertainment and medical and consumer products.
Few entrepreneurial ventures are without setbacks. In GreenLeaf’s case, one of its most glittering prizes – a contract to mold and assemble air conditioning vents for a leading automaker – lost its luster when the bid to renew the contract for the 2005 model failed.
“It was a major contract for us, and when it came time for a new quote, we hoped a win would open the door for additional assignments,” said Lawrence.
“I carefully followed the same procedure I’d used to win the original contract (and, incidentally, all of our other business). I calculated our specific raw material and machine costs, and made percentage estimates on sales, general administrative and office expenses.”
You can imagine Lawrence’s shock when he learned that GreenLeaf’s quote proved higher than those of at least half the field.
“I felt that, given the fact that we knew the job so well, coupled with all of our preceding successes in bidding, we had a better-than-even chance to accelerate our progress and gain the growing rewards we know are available in the automotive field,” he said. “To fall short on the quote was a wake-up call for outside help in a hurry.”
As fortune would have it, help was not that far away. An active member of the Knoxville Chamber of Commerce, Lawrence went there for suggestions.
“One of the first words I heard was ‘SCORE,’” he said. “The people at the Chamber said they were confident that members of the Service Corps of Retired Executives would have plenty of ideas about creating competitive quotes for business.”
Their confidence was well placed. Larry Struttmann, himself an industrial engineer, took on Lawrence’s challenge. After visiting the plant and studying the business carefully, he created a spreadsheet that would allow GreenLeaf to calculate all of its costs to the penny for all future bids.
Interestingly, Larry used in his example the injection molding machine that generates the company’s most publicly identifiable product: the boot mugs used for serving cold drinks accompanying the delicious meals at Dolly Parton’s Dixie Stampedes in Pigeon Forge, Myrtle Beach, Orlando and Branson, Missouri.
“SCORE, and Larry personally, were lifesavers,” Lawrence said. “We now can bid with complete knowledge of all our costs. That means we can also be very precise in deciding how large or small a profit we want in a quote, which is a prerequisite when you not only aim to win a contract, but also want to try to get a leg up on the client’s next job.”
Lawrence noted that, besides being a vital quoting tool, the procedure has proved invaluable in meeting other types of challenges as well. For example:
- Declining volume on one contract and rising raw material costs on another were killing profit. GreenLeaf was able to identify internal changes that brought profit back to acceptable levels.
- Greenleaf informed a client it could not retain a job because rising costs had erased profits. Wanting to retain GreenLeaf’s quality and production reliability, the client asked if more jobs would make its business profitable. SCORE’s procedure proved they would.
“Larry would be the first to tell you there’s no magic in what he taught us,” Lawrence said. “But I can tell you that when you are painfully aware of a large gap in conducting your business, it feels like magic to close that gap.”