RT Tanner & Co Ltd
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Business Plan
Corporate Objectives
Short term
1.01 Reduce Cost Base:
It is essential that the Company’s cost base is reduced to fall in line with the current sales volume and to provide a sound
platform for the future. An estimated £209,000 needs to be taken off our costs in the current year and once completed will be
subject to perpetual review.
1.02 Operate on one site in the South:
This will reduce our cost base and improve our management control over the day to day operational side. It is increasingly
difficult to manage Dartford effectively from Crayford in today’s competitive environment. We are fortunate that the adjacent
property on the Crayford site is available to rent.
1.03 Training of workforce and establishment of a staff development policy:
Better trained employees will produce a better service to our customers, better quality products, reduce waste and duplication
of work. Importantly it should also further increase the commitment of our employees, now a clearly visible career path is
available.
1.04 Maximising Profits and Cashflow:
It is vital that the Company produces sustained and increasing profits that can be ploughed back into the business. This
will reduce borrowings and provide for future investment. Margins will be improved by concentrating on selling high value
lines to the direct consumer market.
Cashflow is critical in today’s climate and the Company intends to draw in debtor days outstanding during the period to
31st March 1992 to an average of 51 days outstanding and continue the process of holding suppliers to the present payment
pattern. Extra credit can be negotiated with suppliers and this will be instituted with the aim of creditor days consistently
exceeding debtor days by 20.
At the same time our stocks of finished goods and raw materials are being reduced by 28 days over period of 7 months.
1.05 Improve Quality and Timing of Management Information:
The introduction of our new computer system was a painful process. However, Phase 1, is now complete and fully tested thanks
to the intervention of a new software house. The information now available to the Key Staff members on Sales, Stock, General
Ledger and Purchases is of a far higher quality than the previous system offered. Information is now on almost instantaneous
demand twenty four hours a day, seven days a week at both Crayford and Leeds.
Phase 2 will commence in October 1991 providing key employees with production information far quicker than was available
before. This will encompass machine loadings/lead times, bottlenecks, costs and variance costing, estimates, downtime analysis,
machine profitability etc. Phase 2 should be complete by January 1992.
Additional reports can be taken via the Report Generator and stored for future use. This can be performed in house at no
extra cost.
All this will make a positive impact on the timing and quality of management decisions. At the same time communication
should be greatly improved throughout.
1.06 Improve Productivity:
This in part will be addressed in the cost reduction programme. It is important to improve the Sales to employee ratio from
its present £65,000 to £88,000 by 31 March 1994.
Manning levels within the factory are under scrutiny and negotiations are in progress. As the Company’s position improves
carefully targeted investment should have a substantial impact.
Similar to the cost reduction programme this will be under perpetual review.
Medium Term
1.07 Attain BS5750 Certification:
(i) envelope manufacturing
(ii) paper merchanting
The Company needs to attain BS5750 accreditation in its manufacturing to underpin the quality assurance on its products.
Customers are increasingly looking to us to provide this and in time the customer base may be damaged unless this is underway
in the next eighteen months.
As certification will be required for all envelope products, including stock, it would be cost effective to include paper merchanting
in at the same time. This could prove a useful marketing tool in this area.
1.08 Improve development of high quality products:
The Company will be looking increasingly at developing further quality products which yield the right return. Our reputation
for quality clearly gives us an extra advantage and we will be seeking further licensing and distribution deals in this area.
1.09 Develop Investment Programme in New Machines:
As profitability and cash flow allow, a planned investment programme will be implemented. This will take account of productivity,
bottlenecks, demand (present and future) and cost reduction. Obviously, the timing of any decisions will be based wholly on cash flow,
borrowings, rate of return and pay back. We intend to sell Crayford freehold and lease new premises by April 93. This will reduce
borrowings and allow Tanners to reinvest earlier than would otherwise be possible. The current investment programme included in the
projections is set out in paragraph 2.10 in the Products and Production section and paragraph 5.08 of the Financial Summary.
Long term
1.10 Increase Turnover in Europe
The Company is in an unique position to increase its sales to the European market in the high value added sector. A bridgehead in
Sweden, Austria, Malta, and indirectly via Mills to assorted locations has been developed.
This business is ripe for expansion and it is the company’s intention to spread its turnover geographically both for expansion of
high quality lines and as a hedge against the vagaries of each European economy in isolation.
It is only in the last two years the company has started to export. Further efforts in this field are part of our long term plan.
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