726 Exchange StreetSuite 812Buffalo, NY 14210insyte-consulting.com

INSIGHTS

SPRING 2013 INNOVATE

COMPANY STI-CO Industries, Inc. specializes in

the design and manufacture of covert, tactical and

public safety antenna systems. The majority of STI-

CO’s customers are local, state and federal govern-

ment agencies within the continental U.S., Canada

and Mexico. They also partner with major high-

profile OEM customers.

SITUATION STI-CO’s ability to effectively service its

customer base required improvement. Lead times

were generally two to three weeks in a market that

needed quick response, and on-time delivery aver-

aged less than 50 percent. The company’s inventory

turns were low and about three turns annually.

Management believed that a lean manufactur-

ing approach could help address and resolve the

operational issues. By innovating these processes,

the company could better position itself to inno-

vate their products.

SOLUTION The first step was to introduce all em-

ployees to the principles of lean manufacturing.

A full-day workshop provided basic knowledge in

lean manufacturing methodology, and participants

learned real-work application.

Insyte also worked with STI-CO to complete a

high-level value stream map of the entire organiza-

tion for both current and desired future states. This

mapping exercise provided a comprehensive imple-

mentation plan utilizing the appropriate tools of

lean manufacturing for each of their major product

lines. Cross-functional teams worked to organize

and understand new processes and practices; they

then introduced and implemented these concepts

into key production areas.

In addition, STI-CO and Insyte began the process

of building and implementing an ISO 9001:2000

compliant quality system, which was reviewed

with the entire STI-CO team, further establishing a

foundation for understanding and progress.

CASE STUDY: STI-CO Industries

KYLE SWIAT

“The Insyte team helped us understand our customers and helped us bring new products to the market.”

–Kyle Swiat, Vice-President, STI-CO Industries, Inc.Increase in net operating profit

Increased inventory turns from 3 to 8 annually

Sales increase

Improvement in on-time delivery

Reduction in lead times

VISIT INSYTE-CONSULTING.COM TO VIEW THE VIDEO CASE STUDY

WELCOME TO THE FIRST EDITION of

our redesigned newsletter! As part of

Insyte’s 30th anniversary year, we have

been making a number of changes,

including debuting a new website,

building our social media presence,

and the reveal of our new tagline

(“Innovation. Growth. Profit.”) to better

reflect who we are. So I would like to

take this opportunity to describe what

we do, why we do it and how we do it.

Insyte is unique in focusing our con-

sulting services on manufacturing com-

panies in WNY. Manufacturing is still

the backbone of our regional economy,

leading the way in annual gross domestic

product for our area. Manufacturing is

the third-largest employer in WNY, pro-

viding more than 60,000 direct jobs and,

thanks to the multiplier effect, account-

ing for an estimated 30,000 jobs that sup-

port manufacturing.

We design our services specifically for

the needs of our manufacturing clients.

Our innovation services help manufac-

turers with everything from identifying

and incorporating new technologies, to

installing a systematic and repeatable

innovation process to create new prod-

ucts, new processes and/or new business

models (see our article in this newsletter

about innovation). Our growth services

are aimed at increasing manufacturers’

top line revenue by identifying new

markets and customers, increasing ex-

ports and improving related processes

like quoting and distribution. In the

final analysis, manufacturers want in-

creased profits. We can help by optimiz-

ing business processes to drop more dol-

lars to the bottom line.

Many of our clients think of Insyte

as their business doctor. Our dedicated

and experienced staff partners with you

to keep your business healthy, even call-

ing in specialists, when needed, from

Insyte’s network of partners to address

your unique needs.

Insyte also supports entrepreneurial

technology start-ups. We believe that

entrepreneurship and technology are

essential to WNY’s future success. In-

syte administers the WNY Venture As-

sociation and the Buffalo Angels; we

are the longtime Regional Specialist for

the Small Business Innovation Research

grants; and we helped found and run

the WNY Business Development Fund,

which has made more than $1 million in

seed investments in our region. Insyte

participates in the Bright Buffalo Niagara

Venture Forum and the Panasci business

plan competition at UB.

As a non-profit, we strive to do all

this in support of our mission, “…to

transform our region by stimulating the

growth and creation of dynamic compa-

nies to provide a superior standard of

living for our residents.”

We know that is a big job, but that

won’t keep us from continuing to chip

away at it, just as we have for the last 30

years.

PRESIDENT’S MESSAGE BY BEN RAND

THE OTHER BUFFALO BILLION Visit theotherbuffalobillion.com

INSYTE IS PROUD TO ANNOUNCE that we have surpassed $1 billion in client

impact in WNY for the period from 2000 to 2012.

What does “client impact” mean? Simply put, it is the quantifiable benefit

of the project work that WNY manufacturers have done with Insyte. These

figures are particularly meaningful because they are not our own guesstimates,

but come from our clients through an independent survey process conducted

on behalf of the federal government. We receive a portion of our funding

through the U.S. Department of Commerce (USDoC) Manufacturing Extension

Partnership program. To ensure that these funds are put to good use, the USDoC

hires an independent, third-party survey company to contact each of our clients

to quantify any benefits that client realized from their project(s) with Insyte.

In other words, the government wants to make sure they are making a good

investment.

Governor Cuomo has been widely praised in WNY for his pledge to invest a

$1 billion here for economic development. Some comparisons may be helpful to

appreciate the size and significance of these client impact figures:

Those comparisons may be interesting, but this $1 billion milestone is

significant to us for other reasons.

First and foremost, it indicates that we are fulfilling our mission and providing

value for our clients. They report an average of $1.37 million in impact from

each project with Insyte, which equates to an average return on investment

of more than $37 to $1. We are also very aware that jobs saved or created is

a measure of the human impact of our work, especially during the recent

recession. An important side benefit of keeping people employed is that they

pay taxes and purchase goods and services. New York State estimates that each

of the jobs we helped to create or save is worth a little more than $48,000 in

annual compensation, which would generate approximately $3,000 in income

taxes. Using that very rough estimate, 7,207 jobs would add more than $20

million a year to New York’s coffers for any number of uses: debt reduction,

school aid, Superstorm Sandy relief, infrastructure repairs, etc.

Many of us work hard for years with only a vague sense of the impact we

are having on our organizations and our communities. Thanks to the USDoC’s

impact surveys, we get a precise estimate every quarter of how Insyte is doing

in dollars and cents. Quarter after quarter, year after year, decade after decade

those numbers begin to add up, even for a little organization like ours (albeit the

largest management consultancy in WNY). So we will keep doing what we have

been doing, working one project, one company at a time to add value, to make

a difference and to strengthen WNY.

• $1,000,000,000isgreaterthanFirstNiagara’s annual revenue

• 7,207jobsismorethanthenumberoftotal employment of the University at Buffalo

• 7,207jobsisgreaterthanthetopemployerin Allegany, Cattaraugus, Chautauqua and Niagara Counties combined

• $1,000,000,000equalsabout2.5%ofannual gross domestic product (GDP) for the Buffalo- NiagaraMetropolitanAreaandabout15%ofits annual manufacturing GDP

• $147millionincapitalinvestmentsismore than the WNY Regional Economic Development Council’sinitialawardof$100millionfromNew York State in 2011

• 7,207jobsequatestomorethan1outofevery 10manufacturingjobsinWNY

• $147millionisgreaterthanthecombined grants of the Oishei Foundation, the Community Foundation for Greater Buffalo, the Gebbie Foundation, the Sheldon Foundation and the other top 30 foundations in WNY in 2011

WHEN JIM BURKE was ushered into the

office of Robert Wood Johnson, the leg-

endary chairman of Johnson & Johnson,

he was sure he was about to be fired.

As J&J’s product director, Burke had

introduced several over-the-counter medi-

cines for children and they had all failed.

But to his surprise, the chairman thanked

him!

“We won’t grow unless you take risks,”

said Johnson. “Don’t make that mis-

take again, but please be sure you make

others.”

Burke went on to become Chairman

& CEO of J&J, successfully guided the

company through its Tylenol troubles of

the 1980s and was named one of Fortune

Magazine’s 10 Greatest CEOs of All Time.

According to Burke, “any successful

company is riddled with failures. There’s

just no other way to do it.” His opinion is

shared by other great business innovators

and entrepreneurs. Thomas Edison boast-

ed, “I failed my way to success.”

Thomas Watson, Jr., who guided IBM

into mainframe computers, once said “the

way to succeed is to double your rate of

failure.”

Obviously, failing itself is not the goal,

but it is an inevitable aspect of experi-

mentation and innovation. Because the

vast majority of new ideas fail, you sim-

ply cannot innovate without failing. The

real key is to fail fast and fail cheap, keep-

ing your investment of time, money and

other resources to the absolute minimum.

The faster you identify and eliminate the

flawed ideas, the sooner the best ideas will

emerge. That is what Watson meant by

“double your rate of failure.”

Our Innovation Engineering methodol-

ogy emphasizes this “fail fast, fail cheap”

approach by focusing on what we call

“death threats”—those aspects of a new

idea that are most likely to kill it. Any new

idea will have multiple death threats, so an

integral part of conceiving a new idea is

identifying all the major ones. Examples

of a death threat to a new product might

include a performance issue, the customer

value proposition, or intellectual property

rights. Once these threats are identified,

the innovation team moves to construct

a test or experiment that will quickly ad-

dress each of the death threats that have

been identified. In this example, you

might build a working prototype to test

the technical performance question(s). Or

survey your most trusted customers to

gauge the value proposition. Or do a pat-

ent search to answer the intellectual prop-

erty concern. As a rule of thumb, Innova-

tion Engineering looks to address at least

one death threat per week in these Rapid

Cycles of Learning.

Rapid Cycles of Learning will rarely

provide 100 percent certainty regarding a

death threat, nor are they meant to. The

objective is to learn enough to confidently

move forward while lowering your risk.

For example, you may find a patent that

would apply to your idea. You now have

several options including: adjusting your

technical concept for the product to avoid

the patent; investigating the potential to

challenge the patent; explore licensing the

patent; or killing the idea completely and

moving to your next innovation opportu-

nity. Only when all the death threats have

been resolved is an opportunity ready to

move into development. Compare this to

the all-too-common case of a company

without a systematic innovation process

that invests large amounts in engineering

and design only to discover this patent

problem at the eleventh hour, if at all.

The most important decision of all is

to start. As hockey great Wayne Gretzky

once said, “You miss 100 percent of the

shots you never take.”

When was the last time your company

took a shot at innovation?

INNOVATION: Fail Fast, Fail Cheap“You miss 100 percent of the shots you never take.”

–Wayne Gretzky

EVENTSRECENT PROJECTS

BUFFALO NIAGARA PDMA - SPRING INNOVATION CHAPTER MEETING

PDMA.ORG

THURS MAY 9– UNTIL –

5:30P.M.

8:00P.M.

WNY VENTURE ASSOCIATION - COMPANY PRESENTATION FORUM

WNYVENTURE.COM

WED MAY 22– UNTIL –

7:30A.M.

9:00A.M.

2013 MANUFACTURING AWARDS

BIZJOURNALS.COM/BUFFALO/EVENT

TUES MAY 14– UNTIL –

7:30A.M.

9:30A.M.

A SAMPLE OF PROJECTS THAT INSYTE

HAS RECENTLY CONCLUDED WITH

WESTERN NEW YORK COMPANIES:

• Developed an equipment layout to

support an Erie County printing com-

pany’s consolidation of three separate

facilities into a new larger facility, re-

sulting in capacity for growth and im-

proved workflow.

• HelpedaChautauquaCountymanu-

facturing company identify and en-

gage U.S.-based component suppliers

to reduce manufacturing and logistics

costs and improve service levels.

• Used Lean Manufacturing method-

ologies and tools with an Erie County

equipment manufacturer to improve

its production process workflow, re-

duce scheduling inefficiencies and in-

crease product throughput.

• Guided a Buffalo food products

manufacturer to develop a sales and

marketing plan to increase sales of its

branded products.

• Helpedamaterialsmanufacturer in

Cattaraugus County develop market

positioning and content for its market-

ing materials and website.

• Facilitateddevelopmentofa strate-

gic plan, including strategies, action

plans and metrics, to help a South-

towns manufacturing company posi-

tion itself for significant growth.

• Worked with a Niagara County

equipment manufacturer to evaluate

and improve internal business process-

es including order processing, invoic-

ing, and materials management allow-

ing internal resources to focus more on

business growth.

• Developed and implemented an

ISO9001:2008 compliant quality man-

agement system with a Buffalo box

manufacturer.

• Provided Design of Experiments

training to a Tonawanda industrial

products company to provide the

capability to reduce errors and asso-

ciated costs by applying appropriate

statistical methods.

• Provided Lean Six Sigma training

and project implementation assistance

to a Buffalo printing technology com-

pany to reduce variation and defects in

manufacturing and support processes.

INSYTE-CONSULTING.COM