Posted by https://www.automationstechnik.at/en.html
Mr. Thilo Reich, the CEO and owner of Automationstechnik gmbh in Austria, like all successful entrepreneurs excels at many of the CHARM DANCE skills. We could easily profile his utilization of any of the CHARM DANCE skills as a prime example of the application of the proficiencies in an industrial manufacturing setting. However, in this case study, we focus on his application of two of the CHARM DANCE principles – Details and Risk. These are two elements that Mr. Reich continues to utilize daily that make his company a global success. By reviewing this case study, you will understand how Mr. Reich applies these principles to his business and the importance of all characteristics of CHARM DANCE, and how they are implemented and intertwined to achieve the greatest success.
By identifying market demand and coupling the identified void in the market with appropriate technology through the lens a mechanical and engineering background, Mr. Heinz Reich (Thilo’s father) developed a product to fill the void in the market. He developed an innovative stainless steel container to be used for the shipment of aseptic[1] liquid products from one food processor to another and storage. An example of an industry with a need for this type of container is the yogurt industry which requires aseptic and homogenous fruit for mixing with their yogurt. In 1971 Mr. Reich incorporated Automationstechnik gmbh in rural Austria to produce his newly designed of containers. In 1974 ATA produced the first cylindrical stackable stainless steel pressure container for this market and branded it the EUROCONT.
Heinz Reich’s son, Thilo Reich, started working with his father’s business in 1988 and focused his time and efforts on international sales in the brewery industry. This effort allowed him to learn the best practices in customer service and how to combine market demand with production capabilities, trade negotiations and economic principles to advance his business.
In 1988 ATA opening of plant in rural Langenwang Austria with 12 employees. Today Automationstechnik has more than 120 – 140 employees in their state-of-the-arts factory. The Automationstechnik factory combines precise robotic welding efficiencies with the craftmanship achieved by hand welding where the steady and experienced hand of a skilled welder is required.
After a decision of the shareholders of ATA Mrs. Stephanie Reich (mother) and Mr. Heinz Reich (father) in 1990 Mr. Thilo Reich took over the management of the company and has led the company to the position of the leading supplier of stainless steel containers to the global fruit prep industry. (“Fruit prep” is the term used for referring to fruit preparations that are used as ingredients in value-added food items including yogurt, ice cream, energy bars etc.). ATA now sells their signature Eurocont around the world and are the exclusive or leading supplier to many of the world’s leading fruit prep companies. With annual production in their Langenwang factory exceeding 14,000 tanks a year ATA has survived multiple economic crisis’s through the application of many of the CHARM DANCE principles however without attention to Details and taking calculated Risks ATA’s current market position would be significantly smaller, if they had survived at all as an independent company in a large corporate world.
ATA is family owned with the Reich family owning 100% of the company. In today’s world it is unusual for companies that are in industry leading positions to remain family owned and managed. In the case of ATA, 100% of the ownership decisions are made exclusively by Mr. Thilo Reich with input from his executive team, many whom have been with the company more than 20 years. This organization structure allows for the business to react to market conditions immediately without the need for management to consult with a cumbersome corporate hierarchy, outside board members, stockholders, or lenders. Having the exclusive decision rights Mr. Reich has utilized this authority to make immediate decisions as he assesses and views risks and opportunities (cost versus benefit) to calculate an estimated ROI (Return On Investment) on the fly to provide immediate responses, offers and input to the customer. His major competitors, which are divisions of larger multi-national corporations require multiple sign-off authority for issues that Mr. Reich can do independently and immediately. He does not do this without knowing the associated risk of his decisions but only upon assessment of the situation and possible outcomes.
I have personally seen this autonomous decision making process occur in many instances while negotiating with Mr. Reich for the sale of containers to a US based customer. Mr. Reich understands the value of winning a customer and retaining a customer. He, and his organization, do all that they can to make the customer happy to earn and retain their customers. By knowing the market, the M in CHARM DANCE, he is able to assess the competition’s ability to produce on time by knowing their capacity and recent sales. Through this understanding of the pulse on the market he understands his competitor’s ability to meet a price and understands the cost of materials, labor and corporate objective and knows his competitive advantages in design and manufacturing. By listening to the market, he has an understanding about his competitor’s corporate strategy. By knowing the Details of these factors, he is able to offer a price and delivery that he is confident the competition cannot match or would have difficulty matching given the above factors.
The ATA company vision presented to customers in their company profile documents is as follows:
- Customer satisfaction is our number one priority
- We manufacture only the highest quality, apply the latest norms and use state-of-the-art technology.
- Through continuous optimization of all processes we constantly keep developing
- Our very high flexibility allows us to cater to customer requirements in all areas
- We offer expert advice in all aspects and count on a personal relationship with our customers
- Our customers appreciate the fast and non-bureaucratic processing of their inquiries
- Our ongoing quality assurance ensures that requirements are adequately met.
This company vision is in line with many CHARM DANCE points, and I know from experience working with ATA that each of the points in their vision transcend all aspects of the business.
I have known and worked with Thilo and his company for more than 20 years. My exposure and experience with ATA provide me with great examples of how Mr. Reich applies the CHARM DANCE concept of Details and Risk. Much of the success of ATA is tied to the fact that every single container is seamlessly documented and certified, and 100% tested prior to being shipped to customers. This documentation and certification are done internally and certified by TṺV Austria- Technischer Überwachungsverein. They are compliant with European CE (Conformité Européenne) standards. ATA goes beyond these accepted standards by maintaining their own control and strive for perfection.
Details and the strive to manufacturing perfection coupled with customer satisfaction are the foundation upon which ATA’s success has been achieved. With an engineered product the engineering documents and specifications are approved by the customer prior to production. The German/Austrian manufacturing process and a drive for perfection are evident throughout the ATA process. A slight error in design or execution can render the containers of little or no value beyond the value of scrap stainless steel. Therefore, attention to details is required at all stages.
A couple of examples of this effort, and how they tie with many other CHARM DANCE principles are as follows:
A customer in the USA ordered several hundred containers ($1 million plus) produced by ATA for their fruit processing operation. They reviewed the detailed specifications of the container design, materials, and workmanship. They signed off on the design confirming that it met their specifications. ATA produced the container exactly to these specifications. After receiving the containers, the customer contacted ATA with a problem in the gaskets used on the lid to seal the product (essential for aseptic product) leaking after a single use. This is unusual as these gaskets can last for several turns without a problem. ATA sells several thousand a month to their customers and if there was a problem with the quality of a lot from their supplier, firstly they would have caught it at their factory, and if by a fluke it passed inspection, their other customers would have also identified the problem when they inspected the gaskets upon arrival or operation at their factory. Learning of this problem Thilo was on a plane the next few days to fly to California to meet with the customer.
The possibility of them receiving damaged or out of specification gaskets was very small due to the controls in place at ATA. Therefore, when meeting with the customer we went through the entire process to determine why and where the problem was occurring. Though the review of this process we discovered that the customers time and temperature for sterilization of the containers was 10 minutes longer and 10 degrees hotter than others using the same general process. The gaskets were out of specifications for the added time/temperature but not per the design specifications signed by the customer.
Despite the fact that the customer had signed off on the specifications, and the problem could not have been pre-identified due the confidentiality of the cleaning process, Mr. Reich immediately authorized the shipment of new gaskets with a higher shore rating that allowed for the higher time and temperature for the entire shipment. He air freighted the new gaskets to the customer at his cost of several thousand dollars.
The decision to replace the gaskets, made by Mr. Reich, was a decision that most companies would have to “run up the flagpole” to get approval and sign-off by various departments. The immediate decision by Thilo to replace the parts, which were not their error but the customers, earned the customers loyalty and that customer has been a consistent repeat ATA customer for years.
Another example of the importance to details is outlined below.
In the late 1990’s I entered the container business through working with a Joint Venture between a large beer keg rental company and a stainless steel container manufacturer on the East Coast of the USA. Our objective was to build a container rental business utilizing a stainless steel container designed and developed by the east coast company. I had the privilege to visit the east coast factory one week and the following week to visit the ATA factory. In the factor in the USA, they were in the process of producing the standard design that originated with Mr. Heinz Reich and ultimately produced by others in various countries.
I watched the welders weld on the lids to the containers for Smucker, a leading US brand for fruit products, including at the time fruit prep for their own use and the use of other further manufacturers. Not being an expert at welding I was impressed with the workers effort on putting the lids on the containers.
The next week I was in Europe and visited the ATA factory. During that visit and subsequent discussions with Smucker and other buyers in the USA I learned that there was a huge difference in the attention to detail between the USA manufacturer and ATA. In the USA, the welders were apparently instructed to “weld the lid for the container” with few details on how exactly to do that weld. At the ATA factory the workers had very specific details on welding the lid. This was what appeared to be a small detail because both containers were produced to the buyer’s specifications, both functioned the same and the lids fit the container “perfectly” with no integrity problems with the container.
However, I later discovered that the ATT attention to details prevented a huge inconvenience and efficiency problem for the buyers. With ATA’s attention to details every container lid was EXACTLY like the lid produced before, after, and always identical to every other lid with those specifications. With the US manufactured lids, they were specific to a container – which they fit perfectly – but they would ONLY fit that container perfectly. In the end users process it is difficult to keep lids specific to containers. It is much more efficient and logical to work with interchangeable lids that can be used across the homogenized fleet.
Small detail, big difference in quality and value.
Mr. Reich understand the role of acceptable risk. In this analysis the fact that the company is family owned, and therefore able to focus on the long-term, allows ATA to take risk and make investments in efforts that others would be unable or unwilling to accept. With large companies’ managers need to show immediate return to their bosses and up the chain to the investors. This need for immediate returns limits the patience of management and investors ability to make long-term investments.
Having a longer ROI than companies with a large managerial chain, stockholders and board members that require immediate, quarterly, and annual ROI allows Thilo to invest in the future where his competition will not.
I have witnessed the ability of Mr. Reich to assess risk and returns (ROI cost/benefits) in many instances. Examples of this ability are illustrated by the examples below.
When I first met Mr. Reich, ATA had a major competitor in Europe that was selling on an exclusive basis to Agrana, one of the largest fruit processors in the world. Stöcklin Containers was a small division of a larger company involved with warehouse operations – Stöcklin Logistik. The container business enjoyed a high sales price and resulting high profits on their sales to Agrana but had little business outside of their relationship with Agrana. At the time I was working with a large US based container management company that was working to sell Agrana a container tracking system. My contact with Agrana was Mark Close, who was in charge of global container management for the Agrana network, which was recently a merger of several large fruit processing companies including Ramsey Sias of the USA and Pernod Ricard of France. I utilized my network within Ramsey Sias/Agrana and introduced Thilo to Kevin Dulin, Director of Process and Sourcing and Mr. Mark Close, the Senior Project Manager Worldwide who was the person within Agrana responsible for their stainless steel fleet and introduced him to Mr. Reich and ATA. This introduction strengthened his existing relationship with Agrana and advanced their dialogue.
Ultimately ATA was able to quote Agrana a price. Knowing the value of the Agrana business, Mr. Reich was able to utilize his unilateral decision process and offer Agrana a price which was below the Stöcklin prices and very attractive in the market. I do not know if ATA lost money on each of these first containers, however, I do know that they sold at a lower price than they would have had they not known the markets and assessed the risk and reward of winning the Agrana business. Considering the long-term relationship between Stöcklin and Agrana, ATA needed to do something special to earn the business. Knowing this and knowing the risk Thilo was able to offer a competitive price and win the business and his quality and service won the loyalty of Agrana for years to come.
The risk that Mr. Reich took in offering a low price paid off as Stöcklin could not compete and that their resources were better applied to their core business of warehouse management infrastructure and ultimately exited the business selling some of their assets to ATA for their manufacturing process. Since that time, ATA has been the exclusive supplier to Agrana on a global basis.
Another example of Mr. Reich’s ability to analyze and accept risk is his efforts with Container-parts.com (CPcom) on the sale of his containers into the USA market.
ATA knows that they can compete with the USA on price and quality. However, to achieve greater success in the USA market they need a presence to compete with manufacturers who produce locally, giving them a quicker turnaround from order to delivery, do not have currency exchange and international freight issues to address.
ATA has been working for the greater part of two decades with the owners of Container-parts.com (CPcom) including the incorporation and management of ATA USA by the CPcom management and a cooperative effort with Compagnie des Containers Reservoirs (CCR) to enter the USA market with container sales (ATA), rentals (CCR) and parts (CPcom.)
Through the decades of personal relationship, friendship, and business experience between Mr. Reich and the CPcom owners Thilo understands the capabilities of the CPcom team. Therefore, when presented with the opportunity for further cooperation an agreement was reached that has proven to be mutually beneficial between the companies with both parties accepting risk within their abilities and understanding.
To address the Leadtime factor Mr. Reich accepted the terms of sale to CPcom on consignment. This allowed ATA to have inventory in the USA, CPcom to sell inventory in the USA but not have to make payment for the inventory until the containers were sold. This minimized capital outlay of Cpcom, a limiting factor for expanding the business, and put ATA in a position to meet the needs of the market without having to have their own sales force in the USA. This developed a truly win/win team which was made possible by ATA’s understanding of the Markets, Customers, and their ability to accept calculated risk and knowledge of their partner.
[1]The word “aseptic” is a combination of “a” denoting “absence” and “septic” which is derived from sepsis or a form of infection from pathogenic microorganisms like bacteria. In non-technical terms, “aseptic” means “absence or free from bacteria or infection”. A container that is aseptic is a container that keeps product in an aseptic environment without exposure to outside influences – air and liquid. Pressure and a nitrogen blanket are utilized to force air out of the container and keep contaminates out.
