1. Salford Plant; Vision 2025
Strategy Change Proposal 2016
Group 3
Ronald James Wood – S229967
Nur Nakdali Kassab – S242781
Nsima Nseobong Asuquo – S220440
Micael Teixeira Gonçalves – S241374
Yvan Mezui – S241363
Jose Luis Rivas Pizarroso – S243862
Johannes Gasser – S239306

2. 1-2
CONTENTS
1 EXECUTIVE SUMMARY 1-3
2 STRATEGY OVERVIEW 2-4
3 FINANCIAL IMPACT 3-5
3.1 FINANCIAL OVERVIEW 3-5
3.2 RISK MITIGATION 3-6
4 CAPABILITIES TO CHANGE 4-7
4.1 POWDER PAINT FACILITY 4-7
4.2 SERVICE LEVEL AGREEMENTS WITHIN SUPPLY CHAIN 4-8
4.3 OUTSOURCING OF NON-CORE COMPETENCIES 4-9
4.4 RECOVERY AND REDEPLOYMENT OF FACTORY FOOTPRINT 4-9
4.5 DELAYERING AND RE-ESTABLISHMENT OF LEAN CULTURE 4-10
5 CONCLUSION 5-13

3. 1-3
1 EXECUTIVE SUMMARY
To do nothing now, will cost the Alamo Group significantly in exponential losses. The time has already passed in
which action should be taken to ensure the continuous growth and success of the Alamo Group in the United
Kingdom and its subsidiary groups globally.
With the current facility constrained on capacity at a revenue of £18m per annum, and a potential growth to £30m
in 2024, a number of key issues detailed in this proposal need to be addressed with urgency to ensure the future
of the group and presence within the United Kingdom. Key strategic decisions proposed and detailed will result
in the success, relieving the current capacity constraints and allowing for future growth and acquisition,
maintaining the name of our brand and further widening the gap to our closest competitor.
The Salford facility currently operates at a purely product competitive advantage, with low operational excellence.
The following proposal focuses on the introduction of operational excellence at factory level, resulting in the ability
to grow, acquire and compete with a positive consequence of putting the market spotlight on our product range
as the ‘only real option’.
An investment of £2m in the facility in march 2016 will secure additional revenue of £16m until 2024 according to
current growth and forecast reports. This does not include the potential ability to acquire additional reputable
brands that in the current situation, could not be incorporated into the existing production facility.
Acknowledge at this point that a single non-recurring cost at Operational level would be used to assist in the more
humble re-organisation of the existing facility, in terms of employee development, production cell re-structuring
and refurbishment of an aging facility.
During an assessment of the current production activities, including interviews and root cause analysis of critical
tasks, it has been highlighted that a number of issues exist that all require a change in strategy to ensure the
growth detailed already above. Selection of individual sub-proposals within this report is not an option. Three main
areas will be detailed further within this proposal.
It is required to build a new state of the art paint facility to replace the existing that was commissioned over fifty
years ago. The existing paint plant is costly, causing disruption to production, and requires on going funding to
firefight the wear and tear this aged facility throws at us daily.
The re-evaluation of the supply chain to strategically outsource non-core competence activities will allow us to
utilise recovered valuable footprint space in what is currently an overcrowded shop floor and elimination of the
current issues in existence by working with our supplier base to introduce and agree service level agreements.
Delayering the hierarchical structure at the Salford Plant will strengthen communication between the re-
established cell structure, whilst also enabling faster escalation and removing unnecessary links in the chain.
Included in the review of the hierarchical structure, the award winning lean culture that once existed at the site
will be re-established through training and processes.

4. 1-4
2 STRATEGY OVERVIEW
The Alamo Group is a recognized company in the market for the quality, range and innovation of its products.
Thus, Alamo Strategy should focus on offering the best product to the market, that is to say; the best
specifications, innovation, technology and range of solution available to our customers.
Together with this approach, the Alamo Group has to focus our manufacturing strategy on our core competencies
in order to meet planned growth in accordance to projected forecasts. This emphasis in activities that differentiate
the Alamo Group products from the competitors will allow the company to gain competitive advantage from the
market and also increase capacity and ability to increase production rates.
Indeed, there is a huge gap in operational indicators (product availability, delivery reliability, lead time and quality
conformance) that are affecting company performance and they need to be addressed to ensure the continuity
and growth of the company in the market.
Alamo products’ competitive advantage are the features that consumers have been valuing over the past years,
resulting in a growth rate in forecast of 70% in UK over the next ten years, instead of its actual operational
performance. To keep this growth and meet customer demand, Alamo Group has to increase performance levels
by focussing in its core competences and removing the direct burden of non-core activities that can be
encapsulated by first tier suppliers.
The Gantt Chart shown below represents the timeline of the initiatives to be implemented in the future.
It is imperative to implement the initiatives that will solve the issues related to paint finish quality and on time
delivery. Thus, the building of the new Paint Plant will start as soon as possible, being its implementation finished
within a year. Likewise, the negotiations with suppliers to sign a new Service Level Agreement will be 6 months
and must start in March 2016. The next goal is to find suppliers that can meet the piece part demand in order to
outsource the machining, this should be achieved prior to completion of the Paint Shop. At this point, there is
enough space in the factory to accommodate the new variety of products in the cellular manufacturing layout,
which should take no longer than one week. Over a period of two years, a training regime will be implemented to
aid in the change of culture to a continuous improvement philosophy.

5. 1-5
3 FINANCIAL IMPACT
3.1 FINANCIAL OVERVIEW
Investment Costs - the global investment costs for this project is £2.05m.
NEW PAINTING PLANT (ASSUMPTION) £2m
LAYOUT (ASSUMPTION) £50k
SUM £2.05m
Income is expected to increase over next ten years as follows.
The Alamo Group is currently operating with a profit margin of 20%, which means a profit of £3.6m by one year.
If Alamo Group does not change the actual manufacturing strategy they will not be able to meet customer demand
over next ten years and will actually lose income to the potential value of £16m. The strategy aims to achieve a
profit margin of 30% in 2025, so it is expected an average profit margin of 25% between 2015 and 2025.
0
5000
10000
15000
20000
25000
30000
35000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Projected sales revenues
£ k
current system forescasted demand
£ m 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
PROFIT WITHOUT
IMPLEMENTATION
3,6 3,6 3,6 3,6 3,6 3,6 3,6 3,6 3,6 3,6
PROFIT AFTER
IMPLEMENTATION
3,6 4,35 4,6 4,85 5,1 5,35 5,6 5,85 6,225 6,6
STRATEGY
PROFIT
0 0,75 1 1,25 1,5 1,75 2 2,25 2,625 3
SUM £ 16 m

6. 1-6
Key Figures
§ Growth potential of 67%, based on the difference of revenues in 2024 and 2015.
§ Increases in profit margin rise from 20% to 30%, which means an increment of 50%.
§ Payback Period of 2.5 years.
3.2 RISK MITIGATION
IDENTIFIED RISK IMPACT RISK MITIGATION
An unexpected event does not enable a
supplier to deliver us their products.
Example: fire, climatic disaster.
High
Ensure risk management strategies are in place and
available for review.
§ Several facilities in different locations, with one
being able to take over the activities of the first one
for us
§ Having safety stocks (suppliers side)
§ Having safety stocks (Alamo side).
Also, links can be created with other suppliers, kinds
of backup suppliers, which can help us if needed.
Delay in the paint plant’s starting-up
Example: delays in the construction of the
building.
Medium
Use of the first plant until the replacement is fully
operational.
We have problems of quality with outsourced
machined parts.
High
Close partnership with customers, and if needed a
direct aid to them.
One supplier does not accept the new terms
of the contract.
Low
Tender out to alternative suppliers with requirements
detailed upfront. We are already starting to find new
suppliers in Europe and UK for the supply of
gearboxes and rams. However, this would increase
the costs for Alamo
Employees do not accept changes in the
factory.
High
Leader’s persuasive force to federate the team around
him, with common targets
Suppliers don’t manage to keep up with the
growing demand.
High
More collaboration with the suppliers and investigation
of multi-sourcing.

7. 1-7
4 CAPABILITIES TO CHANGE
4.1 POWDER PAINT FACILITY
In view of the increase in customer demand and projected sales, there is a need for the company to invest in a
new powder paint plant. This will boost the manufacturing capacity of the company resulting in the attraction of
more sales gaining a solid competitive advantage over our competitors. The new powder paint plant will
automatically eliminate the reliability issues of the old plant and enhance efficiency.
In addition to addressing the painting issues, a new paint shop is necessary to accommodate all variants of the
existing product range in addition for a reasonable amount should new company acquisitions be made at which
new products would be openly inherited.
The overall benefits of investing in a new powder paint plant is to directly address the issue of poor finishing of all
the product that comes out of the factory. The new paint plant will be of a good specification that can allow multiple
colour changes for new added products. The new paint shop will be reliable and thus will eliminate delays or
breakdown in the manufacturing processes. It will also address the problem of rework as it will always produce a
good finishing for all products.
The new painting facility will ensure Alamo maintains a high quality finish, coupled with the re-allocation of painting
responsibility of the rams to the suppliers, removing the use of wet spray that is currently carried out in the factory
yard. Investing in the new paint shop and plant will be the key selling point of our products as all bottlenecks in
painting will be removed. Again, this will eliminate the use of the wet spray area from the factory
The use of power coat painting is Alamo’s unique selling point that is often a key decision in choosing their
products over alternatives from competitors. With the use of the powder painting, we are sure to distinguish
Alamo’s products from competitors which will drive a huge increase in our market share and with the best quality
products.
In order to erect a new paint shop, we propose to use the space around the South West factory wall for the new
paint shop. The old paint shop will still be in operation until the new one is ready for use. Immediately after the
new paint facility is commissioned; the existing paint facility will be removed thus recovering 20% of the total
factory footprint that will be re-utilised for additional and larger production cells.

8. 1-8
The cost of getting the new powder paint with a good specification that can allow multiple colour changes to
accommodate newly added product range is estimated to be not less than £2m in total to erect a new paint shop.
With an estimated the payback period of two and a half years proposes a strong growth potential and success
factor to achieving the projected sales of the company.
The new paint shop is estimated on initial quotes to take a period no more than 12 months to build together with
installation of the internal equipment.
The implementation of preventative maintenance at the start and end of Alamo’s annual peak production period,
we can ensure the plant is in good condition to enhance our productivity during high demand seasons, mitigating
the risk of stoppages during production.
4.2 REDEFINE SUPPLY CHAIN
Our plan provides a rethink of the relationship that Alamo has with its suppliers. The way it works today does not
enable good results in terms of quality and delivery. To reverse this negative trend in a sustainable way, several
options can be considered. The first one is to renegotiate a new service level agreement with our Indian and
Chinese suppliers of gearbox and ram assemblies. In this agreement, the expectations of the company in terms
of delivery and quality must be clearly specified: less than 1% of defects on the products, and 95% of on time in
full delivery the first year progressing to 99% after five years. This has to result in a commitment from the supplier,
and to enforce penalties if it is not achieved. This enables a clear requirement, which will result in greater quality,
thus better satisfaction from our customers and further demand.
We believe that our suppliers have the capacity to fulfil our expectations, this is why a focus should be on
identifying the root cause of current issues and working with our suppliers to resolve these and strengthen our
partnership through a long term commitment, leading to more efficiency, a better understanding between the
entities, and better results at the end. In order to mitigate risks, our suppliers will be evaluated. If Alamo’s
expectations are not fulfilled, the latter will have the possibility to terminate the contract and pursue its business
with an alternative supplier through a tendering process, including verification and validation of proposal promises.
Further to implementing service level agreements, a proposition to ensure all hydraulic ram assemblies arrive on
site painted in a completed ready to fit condition. Currently, these are wet sprayed outside in the factory yard with
no protection from the weather or contaminants. This has shown on regular occurrences that the paint is likely to
not adhere correctly to the rams, and as a result undergo considerable rework causing further disruption to
production, and harming our reputation if the issues are found in service by the customer.
This series of solution will allow us to have a better quality of our parts and better delivery results. The price for
the gearboxes will remain unchanged as our new negotiation will step in this direction: new terms without any
increase in price. The only additional cost relates to the new requirement about painted hydraulic rams. However,
the additional price for this is negligible, with an increase limited at less than 1% of the final price on average.
Benefits include:
§ Setting new targets and requirements to our suppliers will allow Alamo to return to standard basis in terms of
quality and delivery: less than 1% of defects is expected within 1 year.
§ Painting hydraulic rams prior to delivery to the Salford Plant, will accelerate the manufacturing process locally,
which constitutes an important step in anticipation of the forecast ramp-up.
Communications and agreements with our suppliers can commence immediately upon approval of this strategy,
with no potential disruption to the existing production line, only benefits.

9. 1-9
4.3 OUTSOURCING OF NON-CORE COMPETENCIES
A major component of this strategy is to outsource all the machining activities that are not considered as core
competencies at the Salford Plant. Preferable outsourced locations are in Eastern Europe to benefit from lower
supply costs or United Kingdom for lead time. A by-product of this initiative also results in freeing up factory
footprint of 20% that can be re-utilised for cell growth as per section 4.4 of this proposal. This will also reduce the
investments for the growth of the activities in Salford Prior as costly factory extensions valued at £750k; become
a second option.
This proposal assumes a maximum overall increase of 30% in purchasing costs for the machining activities if we
want to keep the same level of quality as what we currently have machining parts internally. This represents an
increase of approximately £100 per product on average, and £2.5m over a period of ten years.
As a result, calculations have determined that increases in productivity by 5% can be expected, helping the future
production ramp-up accompanying the growth. Operators will also be allocated to other tasks requiring more
people in the future. Finally, we will have lower operating costs per square foot as the space is greater utilised.
4.4 RECOVERY AND REDEPLOYMENT OF FACTORY FOOTPRINT
A continuation from the outsourcing of the machining operations releases a significant footprint of 20% of the
existing plant footprint.
Cell manufacturing has been implemented since the early 1990’s, grouping machines by process or different
product families. However, due to the addition of new products to the manufacturing capability at Salford and its
inadequate management; the current layout provokes excessive set up times and bad process flow. Hence, the
productivity of the process has decreased substantially since the beginning of the mergers. The proposed solution
to this problem is the implementation of cellular manufacturing, where each cell in the fabrication area is focused
on the production of one specific product at a single time, but maintain the flexibility to accommodate different
products when the cell becomes available. Each cell will hence provide a set of different tools to manufacture all
of the components of one product.
Benefits of this sub-proposal include:
§ Improvement of the productivity of the process by 50%. Each of the machines in the cell will carry out a complete
manufacturing process, eliminating congestion and shortages. Therefore the labour becomes flexible in where
they are working.
§ Increase in the capacity of the process by 50%. This will be vital to meet the forecast demand given by the
efficiency of the operational process. Reduction of the manufacturing costs by 15% will also be achieved.
§ Facilitate the implementation of preventive and corrective maintenance during lower demand months, i.e. autumn
through to early spring.
§ Reduction of non-value added costs by fabricating, assembling and finishing products in a single cell.
§ Process Flexibility. Possibility of manufacturing a wide range of different products, growing in the market share.
§ Work in process and Inventory reduction in 60% promoted by the effective process flow as a result of lean culture
deployment. This will also enhance quality, avoiding possible defects caused during storage and handling.
After an exhaustive planning and the purchasing of the equipment, the implementation of the new cellular layout
could be performed within a week. This would be done during Alamo’s off-peak demand months, as the production
needs to be stopped, thus minimizing disruption so far as reasonably possible. Nevertheless, there will be a
learning curve to provide the proper training to the relocated Welding Operators. This relocation will help the plant
focus on its core operation.

10. 1-10
After its implementation, Continuous Improvement Engineers, Cell Managers and Operators can identify new
gaps and improvements to make the manufacturing process more efficient, ensuring engagement and capturing
the experience from those as the forefront of the manufacturing process. The manufacturing costs are forecasted
to be cut down by 5% every year as a result.
4.5 DELAYERING AND RE-ESTABLISHMENT A CONTINUOUS IMPROVEMENT CULTURE
It is proposed to invest time and money in re-structuring the organisational structure within the company. The
reason behind is that the successive layers of Managers is actually not beneficial for a cellular manufacturing
environment. In fact, it kills the essence of lean philosophy and does not allow the cell members to take ownership
of their cells. One of the key factors for Bomford Turner reaching success 25 years ago was mainly to the simple
organisational structure implemented. The following illustration compares how it was and how is it today.

11. 1-11
It is clearly observed how two layers had been introduced since then; the Manufacturing Manager and the
Production Manager. These layers are not only causing vertical communication problems with cell team members
but also horizontal communication with the Purchasing Manager. One might think that with no Managers, things
would get worse, but, if you look at the past; you will understand the future. That is the structure worked
successfully 25 years ago, and due to a number of acquisitions, has gradually morphed to what it is today,
however taking the step to return to that standard, should re-align us in the most optimum position.
Implementation of this initiative is not simple because it involves several factors such as costs, people, maintain
continuity in production, etc. Therefore, an analysis has been done of the impact of simplifying the organisational
structure to how it was 25 years ago.
No doubt that going ahead with this initiative will involve a cost in terms of time and money. In terms of time
because once the management layers are removed, it will take some time to train the cell team leaders in the
tasks that Managers were doing before. Nevertheless, a brief training will be given to the cell team leaders before
removing the layers of management, in order to facilitate the implementation process later on (the training will go
on during and after the implementation process to all the shop-floor operators). Therefore, the following costs are
involved when implementing this initiative:
Training and development of all Cell Team Members: included within the operational investment of £50k.
The cost of redundancy packages for the Manufacturing Manager and Production Manager.
Regarding the benefits, the communication would now be much more direct between the Cell Team Leaders and
the Managing Director, and also the horizontal communication with the Purchasing Manager. Therefore, these
would be the positive impacts of going ahead with this initiative:
Easier understanding of requirements from the cell teams because of the direct communication with the
Purchasing Manager.
Recover the spirit of cellular manufacturing allowing operators to take ownership of their cells and having a clear
vision of their common objective. If achieved again that “lean culture”, no doubt it would be a key competitive
advantage for the company.
By giving shop-floor Operators the ownership of the cells, people will take a more active interest in all the activities
of the team. They will share success as well as failures and will work and promote continuous improvement to
increase the achievements and decrease the malfunctioning. If this way of functioning is well used by the top
Management, the communication will be more fluent and shop-floor workers will become involved and motivated
in the planning as well as promoting the change along the organisation.
Two key aspects are analysed here in the implementation: how to do it and how long it will take. No doubt that
this initiative is a challenging strategic task as it involves changing and dealing with people, which usually resist
to change. In order to ensure a smooth transition from the current organisation structure to the simpler one, the
following actions are proposed:
1. Before implementation: brief training of Cell Team Leaders on some of the tasks that the
Production/Manufacturing Manager are responsible for at the moment. It is estimated here to spend one month
training them on the basic tasks in order to be able to launch the strategy. The purpose of the pre-training is to be
able to maintain continuity as far as possible on the production facility during the implementation.
2. During implementation of overall strategy: training and development of all shop-floor workers on the cellular
manufacturing concept. To do that, it is proposed to train them theoretically but also practically, for example, with
Just-in-Time games and team building exercises. The change management process might take long to learn it,
assimilate it and be applied by workers, so an approximate time of 18 months is estimated here.

12. 1-12
3. After implementation of overall strategy: once the proposed initiatives are implemented and being run, it is vital to
ensure a continuous improvement environment. To achieve that without a Manager telling you “do this, do that”,
it is key here to keep involving the operators in coming up with proposals to modify, add or delete any parts of the
process in order to improve performance.
The correct implementation of “Lean Culture” twenty-five years ago in Bomford Turner led them gaining a
worldwide reputation, receiving manufacturing awards and visitors of more than 350 companies with features in
trade, national and local press such as the Financial Times. The aim of VISION 2025 is to recover that lost
reputation which will indeed open the chance to penetrate new emerging markets and opportunities.
It sounds easy to say but actually is the hardest and most challenging initiative. There is no receipt or magic
formula to implement Lean Culture because it is not only about implementing a set of tools but also managing the
change of people’s attitudes and thinking. To achieve this, it is needed to identify “Lean Leaders” capable of
engaging people to align with Lean; questioning every aspect within the processes (continuous improvement);
quickly identifying waste and remove it, working in teams with common objectives; basing their decisions on facts
and not on emotions and giving them the ownership, control and responsibility of their own cells. This culture is
needed to support the growth and improvement of Alamo.
Obviously, it is necessary to invest in training and development of all cell team members regarding lean concepts.
However, the cost to do that is not high (£500/day). On the other hand, the expected benefits if implemented
correctly are going to have the biggest impact overall. Higher productivity, shorter lead times, inventory reduction,
increase in quality and infinite more advantages. That turns into higher revenues as well as higher profit margins,
and most importantly, a core competitive advantage over the market: Lean Culture.

13. 1-13
5 CONCLUSION
Vision 2025 provide an ambitious plan to support the expected long-term growth of the business. Not reacting to
this situation will damage Alamo’s reputation, brand and drive future annual profits into an exponential decline.
The input of a relatively small investment and implementation of this proposal will guarantee current and future
production rate and further widen the gap between the product offerings of Alamo and our nearest competitor.