The Turnaround

Last December, Yunker Industries Inc. was in trouble. The Lake Geneva-based designer and printer of interior retail signs, point-of-purchase displays and related items, had seen orders for its products dry up through the second half of 2008.

Yunker’s customers are in the convenience, grocery, sporting goods and big-box retail sectors. Its customers include national chains such as Petco, Tractor Supply Co., CarQuest, Office Max and Ross Stores.

“I knew we needed to cut expenses,” said Kari Yunker, president and chief executive officer of the firm. “We had a great company, a great product, a great team and a great reputation in the market. We had a sales issue.”

Yunker Industries had about 125 employees at the time and was not profitable. Something needed to change.

To help transform the company, Yunker retained Kevin Seiberlich, managing director of Optimus Financial Services LLC, a Menomonee Falls consultancy firm that specializes in helping manufacturers improve profitability and operations. Seiberlich became Yunker Industries’ interim chief operations officer and chief financial officer.

“This was really a performance and profit improvement project,” Seiberlich said. “I was titled COO and CFO, but I was really looking at being a change agent, looking at the company as a whole and drilling down into all of the areas we could improve.”

Throughout 2009, Yunker Industries has changed the ways it designs and builds its products, how it works with customers, how it handles its internal cash flow and how it orders materials.

Those changes have had a dramatic effect. Yunker Industries will finish 2009 with a profit. The company’s bottom-line financials have improved by 50 percent over its 2008 levels, despite the Great Recession.

“We’ve turned the bottom line from a historical loss into a profitable position,” Seiberlich said.

To transform its operations, the company needed to bring in someone like Seiberlich from the outside, Yunker said.

“We weren’t going to change unless we had someone cheerleading and being the driver,” she said. “We needed someone to challenge (us) and think outside the box and coach our people through the changes.”

Internal improvements

Most of Yunker Industries’ improvement has come from changing its internal operations – how it collects funds from its suppliers, handles its internal cash flow, quotes projects and builds its signs and point-of-purchase displays.

“In our purchasing department, we now go out to more suppliers (for bids), and we’re smarter with the way we deal with those suppliers,” Seiberlich said. “That gave us a 10-point pickup right there.”

By involving its experienced designers and printers in the bidding process, Yunker is able to more accurately bid projects and win more work.

“We know how to ID a project, to hone in on it and give our best pricing, value engineer it and provide different looks and options,” Seiberlich said. “That’s resulted in us winning more deals and has added several points to our numbers.”

Yunker has achieved significant savings and quality improvement by carefully scrutinizing the way it orders and stores raw materials, and builds and assembles its products. For example, it has rearranged most of its printing and assembly areas, to ensure that materials move in a logical flow from components to finished products.

Today, the company has dramatically reduced its lead times, improved its quality and lowered its costs.

“We’ve made sure to set up our flow and processes so that they run very lean and there is not a lot of re-work or re-dos,” Seiberlich said. “We were going through projects in an inefficient manner – we’ve had a huge pickup on the manufacturing side. That’s allowed us to identify issues on the front end and figure out how you get around them in the most cost-efficient manner.”

Changing management

One of the first changes made at Yunker Industries was in the company’s top management.

“The majority of the senior management team that was here is no longer here,” Seiberlich said. “There were three directors in the company that had been here for 10 to 15 years each. Those three stepped up and were promoted to vice president. Assembling this management team has been critical to deploying the improvements we needed to execute. That was one of the biggest things that (Kari Yunker) had on her and my agendas.”

Seiberlich also helped find and hire Jon Nedland, now Yunker’s vice president of marketing and business strategy. Nedland worked previously as a consultant to several European retail and financial chains, helping them develop interior branding, signage and point-of-purchase campaigns.

“Having Jon come on board, he’s developed a strategy of attack for increasing our sales activities,” Yunker said.

“We now deal with our suppliers the way our clients deal with us,” Nedland said.

Customer relationships

Earlier this year, Nedland talked with customers that Yunker Industries lost in 2007 and 2008. Several of those former customers said Yunker Industries’ prices were too high.

To recapture some of those lost customers and grow the company’s future prospects, Nedland believed the company needed to change the way it worked with clients.

“From a sales standpoint, I looked at how we can get opportunities to gain an audience, how we present ourselves and package ourselves so we’re palatable,” Nedland said. “We developed a different strategy in how we develop customers and how we work with them. We want to be a partner.”

Today, Yunker Indistries’ designers and senior printers are involved in bidding new work and pitching new projects to clients, allowing the company to more accurately bid, help clients select the most appropriate materials and inks, and assist in the design process.

“Now that we’re in a tighter economy, if you don’t try to reinvent your
products and services to customers, if you just circle the wagons,
don’t push forward and
think out of the box, you’re dead in the water.”

— Kevin Seiberlich, Yunker Industries Inc.

The company now also involves its top-level managers in meeting and pitching to new sales prospects, Seiberlich said.

“Part of it is going in as a management team and showing them the package, who (the customer) is dealing with and understanding where the buck stops,” he said. “Now that we’re in a tighter economy, if you don’t try to reinvent your products and services to customers, if you just circle the wagons, don’t push forward and think out of the box, you’re dead in the water.”

Nedland agreed and said Yunker’s main focus is deepening its connection with existing and future customers.

“This is more about being position proactive,” Nedland said. “The more you can be a partner in the process (the harder it is to move work away from you). Clients depend on their vendors and partners to make them perform.”

Faster delivery

Part of the new message that Yunker’s sales force is taking to customers focuses on the company’s short lead times and its ability to complete projects within 72 hours. The company’s lead times will improve further in several weeks when the company receives and installs a new Inca Onset S-20 large format digital printer, an investment of more than $1 million.

“That will triple or quadruple our capacity and will give us very competitive pricing,” Seiberlich said. “It should cut our turnaround time in half.”

The company’s purchase of the new printer was financed with a loan with First Banking Financial Centre, which Yunker Industries has been banking with for at least 20 years, Yunker said.

“They’ve supported us through good and bad times,” she said. “They’ve been our primary financing in anything we’ve done.”

Normally, when companies add a machine that greatly improves output and cuts lead time, employment is cut. However, the new printer will result in the company adding at least one position because of its high capacity.

It also will give the company a significant chance of capturing new business throughout 2010 and 2011, Nedland said, which could grow employment significantly.

“This gives us the ability to pursue other markets because of our speed and quality,” he said. “It could enable us to add a third shift.”

Improvement with slow sales

Yunker Industries’ improved finances have been made at a time when its sales have continued to fall, mirroring trends in the print industry.

“The industry is down 15 to 30 percent, and we’re at the lower end of that,” Seiberlich said. “Our sales are down, but with the new initiatives we’ve implemented we’ve been able to lock in some guaranteed sales for 2010, which will be critical to our success. They’re probably about a third of our business for next year.”

The company believes its sales will increase significantly because many customers are reporting improved sales projections for next year, Nedland said.

“Our pipeline has picked up significantly,” he said. “Our clients and prospects are showing their allocations for 2010. I believe that our sales decrease we had in 2009 we will make up for in 2010.”

Yunker said the change at the family-owned business has been dramatic, but the company has preserved its culture and history.

“Every night I say, ‘OK, this is a dream,'” Yunker said. “The good thing is that we’ve been able to reap the benefits of all of the changes we have made without having to go through a restructuring or let a lot of people go. We are stable, we are competitive and we have a great team in place to move us into the future.”

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