Profit Maximization the Goal of HVTDC for Leading Pallet Producer
"The job now is for us to implement the suggestions we received from Rudofsky and HVTDC... We are no longer experiencing as many peaks and valleys, and we’re working to make our every day operations run at the same level of production."
Dan McNeilly ,
Vice President
McNeilly Wood Products, Inc.
In May 2004, the New York metropolitan area’s leader in state-of-the-art pallet production, McNeilly Wood Products, Inc. (www.mcneillywoodproducts.com) based in Campbell Hall, New York in Orange County, sought the services of the Hudson Valley Technology Development Center (HVTDC), a NIST MEP network affiliate, to create a financial analysis of the company’s operations that would support their strategic planning and decision-making. Founded in 1947 by Patrick J. McNeilly, grandsons Tim and Dan McNeilly are managers of the company today with over 30 full time employees. Tim and Dan contacted HVTDC and spoke with industrial field engineer, Les Weekes, who met with the brothers to listen to their concerns and learn what they wanted help with. The McNeilly brothers’ objective was to obtain a financial analysis of their business and a financial model they could follow into the future.
Once Weekes established the needs of the client, he brought in financial business analyst and planner, David Rudofsky, president and founder of Rudofsky Associates in Sleepy Hollow, NY (www.RudofskyAssociates.com), to evaluate McNeilly Wood Products’ production capacity, product line cost profile, pricing structure/sensitivity and other operational elements that typically affect profitability. “HVTDC took on a project management role while David Rudofsky did the bulk of the work,” states Weekes, “Our role was to ensure that our client’s needs were being met so throughout the project I would oversee check points with David to confirm that certain timelines were being met, and to discuss any adjustments that may have been needed during the course of his analysis. Sometimes there are discoveries as a project progresses and problems may reveal themselves. Our job is to be sure the project stays on course.”
Dan McNeilly, vice president, explained that he and his brother Tim recognized that they managed a profitable company, “but we didn’t know why we were profitable. Our bottom line was fine, we simply didn’t know what direction to take in terms of which of our products and services in new pallet manufacturing, reconditioned and re-manufactured pallet production, pallet disposal services, and bulk landscape mulch production we should focus on in our marketing. We needed a plan to unify our marketing with sales, operations and our financial efforts. We saw that while we are profitable we were lacking a plan for determining how we could maximize the most profits.”
HVTDC identified the objectives of working with McNeilly Wood Products was to deliver an analytical approach to calculate future pricing decisions and to pursue incremental sales opportunities as they arose; plus to provide a recommendation on the how the company could achieve maximum profit from the one-shift operation, and what strategies and tactics would be necessary to reach that goal. Creating that approach required that Rudofsky study every aspect of operations from machine capacity, truck docking, material handling, workspace allocations and the management’s capacity to supervise the workforce. His goal was to assess the capacity limit for how the one-shift company was currently operating, and to project foreseeable bottlenecks or constraints when volumes for each of the company’s lines were gradually increased 10% to 20% to 30% in an effort to increase profits.
Rudofsky explains, “Coming in as a third party objective observer, I was able to help the McNeilly owners clearly see which of their product lines were most profitable, and that was the area their new sales associate should focus on. Both brothers agreed that the analysis I delivered gave them much clearer confidence is their success to date and clarified the areas where they could increase their profits. My observational findings pointed them in the direction for more success and where they should direct their future efforts. They both agreed it was much more than they anticipated receiving from HVTDC.”
Dan McNeilly comments, “The job now is for us to implement the suggestions we received from Rudofsky and HVTDC. Our inventory turnover had been experiencing peaks and valleys in our manufacturing operations, so we’re now taking steps to increase our raw material inventory to fill in those peaks and valleys. We are no longer experiencing as many peaks and valleys, and we’re working to make our every day operations run at the same level of production.”
For more information on how the Hudson Valley Technology Development Center can help you grow your company, please contact Phyllis Levine at 845-896-6934x3001, via email at plevine@hvtdc.org, or visit www.hvtdc.org.