Some of this is going to be pretty similar to what was discussed in the last session, but from a point of view of how to run one of these projects rather than what kind of changes to maintain. So I called it leading change with Steelhead ERP, and it's based on a change management framework. That's pretty common. A lot of these steps can be done contemporaneously, but some of them have to be finished before you move on to the next one. So steps one through three, you gotta get those done first.
Step one is establishing a sense of urgency. This is your why. What is the point? Why are we doing this? Why should I care about it? The point at which we decided that Steelhead was a thing that we needed to do, that we had no choice. In 2024, we were changing prices blind, no understanding of what our margins were, no understanding of what our job costing looked like. My boss eventually said, we have to know, we were changing things too often, like monthly price changes. It was insane. So we implemented with Steelhead, we set up our costing, and now we change once a year at best, and we have a full understanding of where we're gaining money, where we're losing money.
Real quick, just on the urgency from the deployment side, from Steelhead, you know, we've all heard the ERP nightmares, right? Of measuring ERP implementation in years and months. At Steelhead, this urgency and driving from within the company when we do an implementation like this is massive, right? We like to drive that change quick. We like to deal in daily meetings rather than weekly, monthly. Because the urgency is the spark that drives the rest of the change and makes that a lasting implementation. From both sides, the deployment and within, that is a massive first step there. So what we realized was doing nothing became riskier than moving to change. My boss kept saying, "If you break it, you have to buy it." When I told him that we needed to do this and it was going to cost us more money not to switch, we were on Job Boss ERP system before. I don't know if anyone has experience using that one. By a show of hands, it is the worst. People need to feel that urgency before they decide that they want to make a change. Otherwise, it's not going to take lift-off.
Step two is building a guiding coalition. This is your who. In order to get this done, especially in a smaller job shop, even a mid-size business, if you have just one person at the top dictating what is going to happen, a dictatorship is not going to get you there. You cannot hand it down from on high and expect people to fall in line. There are too many ways for people to get around it. So we built a team of myself, our president, our director of operations, and primarily job shop, base-level operators from the shop floor, some supervisors, some guys who were just regular old hourly employees. Some had years of experience, some had weeks. They were in the room from very nearly the beginning, setting up our processes, what it needed to look like for those guys on the shop floor, because they're the most important people reporting for the top level. Super great, very useful, definitely necessary. I love data, but if it's not easy and the guys on the shop floor aren't in process managing it, they're not going to use it. And then it's just an expense that you shouldn't have to spend. Shop floor employees are better than executives in terms of building a change management system. Their credibility is gold, and their leadership is going to be what drives the rest of the guys on the shop floor to actually want to participate. They were very intrinsic to getting our implementation going.
Step three is developing a vision and strategy, which feels a little woo-woo for a lot of people, having a vision statement and a strategy to get there. My boss didn't necessarily think that this was a requirement, but this is the what, what's the point? Without a vision, it's just a software without a vision, it's just change for making a change. There's not a point to it. So what we were trying to achieve was better quoting, less rework, and making it easier for the employees. Because with Job Boss, you had to click 11,000 times to complete any task. That's your strategy: quick deployment, hands-on training, measurable wins as quickly as possible. Steelhead is a fit because it's built for shops like ours. But you have to have a vision that your employees from the bottom up can see themselves in. It's not an ERP system for the sake of an ERP system. It's not reporting for the sake of your executives. It is, how can I make it easier for the least experienced guy on the shop floor? I would strongly recommend getting those three down and on lock before you have somebody come and deploy for you. Because if you don't have those, if you change the target, your regular employees are going to get too tired with all the changes, and they're going to quit caring about it.
Step four is communicating the change vision. I don't think we had a single PowerPoint for the entire time that we were putting together this ERP implementation. At no point were we presenting to the shop floor, "Here are the things we're going to do, and these are the steps." It was all one-on-one conversations. What's in it for this person directly? How does this help me today? It's not features and modules. It was pain relief. It was not having to locate paperwork on a busy shop floor when there's 7,000 work order packets scattered over two buildings. Not duplicating data entry anymore, so nobody has to do the same thing twice. Less time spent looking for drawings and specs because they were filed in a dozen different places, and we were repeating that constantly. The early adopters had wins. We shared those stories. So it was more word of mouth, less PowerPoint.
From the deployment perspective and from Steelhead's perspective, this is the why, right? There's a reason that you've partnered with Steelhead, and when we're in that implementation, that's got to be communicated. We don't want it to be just, "This is why from leadership, and you're going to do it." Like Dina's mentioning, talking with each team and figuring out and explaining their why and why they should change makes everything go smoother. Because now it's not just a forceful implementation when Steelhead comes in to help, and we are discussing what changes need to happen, how we're going to train, how we're going to roll it out. Everybody's more receptive because they know why we're doing it and how it's going to help them. That why really aligns every team or everybody across the organization and across organizations when we're partnering to work towards a common goal. That's the vision that we're trying to achieve and why we want to get there.
At this point, a lot of these steps can happen out of order. I changed the order of these slides about a dozen times, but step five is generating short-term wins. When you start seeing success, you have to blast that to the entire company. As many people as possible need to know about it. One of our early ones was creating certs that used to take a dedicated full-time employee for certificates of conformance. They took inspection data from our quality team and put it into a nice little form and sent it to our customer all day and every day—a whole person. Before Steelhead, you were writing these on paper, and then one person was taking those travelers, typing into a Word document, next traveler, typing into a Word document, right? The first week after we implemented, it was like 115 certifications created with a click of a button. It was incredible. What was taking us 15, 20 minutes per work order was instant because all of the quality inspections were entered by the quality team during their normal inspection. They weren't writing it on paper; they were putting it into the software, and then they just pressed a button and signed their name, and it went to the customer. It was so easy. Our ability to track where parts were—Jordan remembers, I used to track all of our parts, all 500 work orders, on a truly unhinged Excel spreadsheet that I updated once per day, and it took me two and a half hours at best. Now I press a button, and I see everything everywhere all the time. It's amazing for me personally; it saved me 15 hours a week minimum. Now we know exactly how long a part has been in a specific area. Instead of parts sitting in an abandoned corner gathering dust for literally months, nothing sits for more than 48 hours unless there's a problem with it at this point. That's the only graph I put in this presentation, but it's our average dock-to-dock time. Starting from when we implemented to now, we went from 35 days on average to less than 10. When I first started at Precision, they had parts that were on 20-week lead times. I have nothing that's spent more than five weeks in the shop.
For the audience here, explain maybe a little bit what Precision does, what kind of parts we maybe missed at the beginning. We're a chrome and carbide finishing company. We put hard chrome and HVOF plating on a variety of different industrial products. Most of it is oil and gas, but we're moving into ball valves, hydraulics, completions, that kind of stuff. Lots of changes, but generating quick wins—the more you can show that here are the places it's going to be useful, the more people who are suspicious will begin to care and stop standing in the way.
Step six is empowering broad-based action. The main problem with change is not technical. It's not that the software is too hard. We have several employees who have attempted on various occasions to claim that they don't know how to send emails. This is simply not true. They have cell phones; they can do it. Steelhead is not that much more complicated than an email, to be perfectly honest. It's not the complexity of the tech that is the problem. It's fear. People think that the system is going to either slow them down or show off that they are making mistakes. The fact that Steelhead is so simple helped remove the fear. I was on the phone with Jordan every day for like an hour. I had meetings with half the shop on a weekly basis for a while, making sure that everyone had seen it, everyone had touched it, everyone had moved a part before we ever went live. They had nothing to fear. They still come to my office on a daily basis: "This is a problem. The specs are broken, the cert is broken, somebody forgot to do this." Most of the time, it's not actually that big of a deal, and they can fix it themselves, but they still come. It is a welcoming environment to come. The primary thing to understand is you, as the people who are driving change, you're a coach, not a cop. It can't be about just punishing people. You have to give them an opportunity and a reason to want to participate. The more you empower those people, the less likely you're going to have to take drastic action.
A key piece there is the meeting with the production team or meeting with the teams throughout the process and getting that feedback. Removing the barriers is key for the Steelhead team as well. As we're implementing, you are the expert in your business. We're a tool to help your business grow or move towards certain goals. Removing the barriers to allow people to give us feedback so that we can help you make the changes that are needed is crucial. Having that environment that Dina's speaking of, checking in with the production team, and not just pushing it on them and saying, "This is what you're going to do," because that says, "I just have to use this, and I can't give any feedback." The team at Precision Spray would check in all the time with those individual teams, get the feedback, and then give that feedback to us to allow us to make configuration changes and ensure everybody is using it smoothly.
Step seven is consolidating your gains and driving more change. Momentum is what's going to push you through. You cannot stop. One of the primary ways that change management projects in general fail is people declare victory when they are not done yet. They're like, "Look at these things that we've done better," and then they stop, and everybody loses that urgency. The reason to keep pushing is this is a continuous process. It's continuous improvement. It's very tempting to relax, but you can't; you have to keep going. We used the early momentum to tackle things that were harder. We got the momentum from certs and used that to improve our scheduling. We got momentum from being able to track where parts are and used that to push into prioritization and inventory management because our employees trusted the system. They didn't twitch or balk when we said, "Okay, more." We just started using purchasing in Steelhead. We were doing it all out of QuickBooks until last month. Now we're doing 90% of it in Steelhead, tracking the billing and tracking our inventory. It gets more complicated as the days go by, but we keep going, and I'm pushing to add maintenance by the end of the year. We'll probably do accounting after that if I can convince our controller.
The last thing is to anchor it into the culture. Change is difficult. If it is not baked in, if I left Precision tomorrow, this change, Steelhead, they'd keep running on it. They would not go back to Job Boss. They would not go back to Excel spreadsheets and paper lists because everyone's trained on it. Now this is easier. The culture is what you're attempting to change almost as much as the software. Although we have paper travelers out on the shop floor, that's not what's driving what the team is doing. There are work boards all over the place. There are iPads all over the place. We have a big shop there. There's 600 work orders moving in all directions across two buildings. It's a lot. Trying to do it on paper and not having to anymore is huge, and nobody's going back to the way it was before. Unfortunately, culture is not something you can define from the top down. You don't get to dictate that as CEO, president, or production manager. You have to nurture it. You have to reward when it's good and divert when it's bad. When people see it as essential is when the change sticks.
What's the bottom line? This is just an example of a framework that gave us a roadmap. Steelhead gave us the tool, which is a great tool, and together we're changing the entire culture of Precision Spray as a company, not just for the management but for the operators and all of our customers. Hopefully, this model is something that all of you can use if you are implementing. If anyone has any questions, now is the time.
Audience: I love your expression of "unhinged spreadsheet." That's special. Question to you: You said you're a data geek, and that's fine, but have you encountered gamification from your employees to tweak the numbers to make, say, a work cell look better than it should?
Dina: Not so far. I think we've been toying with putting together a bonus structure based on specific revenue goals out of specific product lines. I'm sure once we publish that, they're going to try. But with the visibility that we have in Steelhead and with the way that they're using it right now, if they started to make those kinds of attempts to fudge the numbers to make themselves look better, you can't just improve overnight, right? You can't just decide that they were going to do a good job, and suddenly they've doubled the amount of parts that are going through this line over the course of a week. It's not realistic. Luckily, we've got a base of data that we can see what they've been doing, and they've been pretty dedicated to using it because it's easy to use, to be honest. It's ease of use that is 90% of this.
Audience: Quick question, Dina. The chart you showed was 35 days to seven days average door-to-door time, is that correct?
Dina: Yep. That's our dock-to-dock time.
Audience: My question is, how have customers responded to that? Because that's a nice stat and incredible progression there, and I'm certain the customers notice that.
Dina: That is our primary competitive advantage at this point. It's that and quality. They say you can either have it fast, you can have it good, or you can have it cheap. We left cheap by the wayside a long time ago. We were never going to be the low-cost producer; we have way too much overhead for that. But right now, I have parts that two years ago were taking us eight to 10 weeks, and I'm turning them in three. So I have a hundred percent of the work from those customers pretty much, unless it's something that we physically can't do.
Audience: How do you transform your business with 15 extra free hours per week?
Dina: There's a lot of data analysis that I have time to do now that I could not do before. One of the things that we started doing once we got Steelhead was understanding our margins. That's possible now that we have all that data, but it's certainly not quick. So I use a lot of different dashboards in both Steelhead and Power BI, depending on what my needs are, and I have time to do that. Also, the price of competence is more work. So I took over a supply chain and our IT in addition to all the stuff I was already doing.
Audience: Will you tell me one unexpected benefit you got from all of this other than more work? I'm not looking for more work.
Dina: Unexpected? I mean, there are the expected ones, like the obvious things you expect toушка
Audience: Understanding of your costs faster, lead times, cost of poor quality, that kind of thing.
Dina: Unexpected. It became very clear very quickly that some of our customers, we were basically paying for the privilege of doing their work. We were not, and had never been, making money from some of these customers. Being able to identify those people and come up with a plan to either increase their prices to fix that or stop working with them altogether—it's still in process. It's hard to drop a customer that you've worked with for a long time. But if you're never going to make money from it, that's a business choice you need to make. The unexpected negative, for me specifically, is I'm buried in this system a hundred percent of my time. I used to spend quite a lot more time out on the shop floor. I don't do that. I have too much data to deal with. But that works because we have other people that do spend time on the shop floor. We have enough overhead, we have enough managers that me specifically, it's not a sacrifice for me to be bound to my computer for the company as a whole. I'm not sure there really is one. Maybe our electricity bill went up because everyone's on iPads and work boards now instead of running around with paper. But counterpoint, we're saving trees.
Audience: We're a thermal spray shop too. We have 21 spray booths. We're looking at the scheduling system for on-time delivery, where things go. You had a pretty significant decrease. How did that help?
Dina: Part of it was Steelhead set up a custom report for us. We set up a report where it would show us specifically what had been sitting around for the longest. So I have a running list of the thing that hasn't moved in the largest number of hours. At this point, I have a meeting twice a week where it's like, "Alright, this part hasn't moved; it's been a week, part hasn't twitched, where is it? What's wrong with it? Somebody put hands on it, move it to the next process." I don't care if it moves immediately; it has to move today. Keeping everything in motion so there aren't parts just sitting that get forgotten about because we have other shinier work over there to worry about has really helped. In terms of average lead times, I don't necessarily use prioritization as much as I probably could. We've been very happy using the work boards with just first-in, first-out and setting labels if we need something specific to pop to the top. But for the most part, we have twice-weekly meetings, and we talk about all the parts that are sitting still.
Audience: One of those, just to touch on that, was the repair work that you do. When something needed to be repaired, it would get put to quality. You want to touch on how that would kind of get forgotten?
Dina: That's in that same meeting. One of the things that we talk about is anything that gets put on quality hold. We use the quality management dashboard pretty aggressively. Right now, I just checked before this presentation; we had 60 parts on hold, probably because I wasn't there to have that meeting yesterday, and they skipped it because they're cheaters. So we talk about anything that's on hold. After that meeting, usually, it drops from whatever; it chops at least 50%. Things that are explicitly on hold, we talk about parts that have returned from the customer because something's wrong with them. Usually, there's not that many, but we generally have like one or two in shop because of whatever reason, which is a huge decrease because it used to be like 20 at any given time. I don't have metrics for that, but it was a lot. The quality management dashboard, I think it's an extra, it's worthwhile. Having the visibility of what's on hold, how long it's been on hold, who put it on hold, why it's on hold, and then being able to transmit that into NCRs, corrective actions, seeing all of it in one place—it's really helpful. I recommend it.
Audience: Dina, you take to water on technology and data and things like that. How about the rest of the leadership team? Ownership team? Sounds like the plant floor, they've been amicable to using the system and kind of falling in line and getting with the program, and things are moving slowly, but as far as your dive in and embrace it and drive—I mean, this is like double the value of this company in like two years. Just that chart alone, how has the rest of the team reacted to it and engaged with it over time?
Dina: It's a little person by person, so it's always a bit generational. Obviously, technology is scary for some people, and I think some people have this idea that they're bad with technology that is not necessarily based in reality. It's just they decided that they were long ago and have never had the opportunity to change their mind. Like, I decided I was bad at math when I was eight. That doesn't mean I'm actually bad at math. We learned differently as time passed, but my production manager, even though we have Steelhead and there's a beautiful iPad with his name on it, he will still go to the Watchtower and print the entire thing so he has something to carry in his hands. It drives me bonkers because that data is old as soon as he printed it. But he does it, and Steelhead just means that nobody has to update that for him. He can print seven of them a day, and it's always going to be up to date. Of course, you're going to have your holdouts. We have one area of the shop where their clock-in accuracy is abysmal, but the rest of the shop is at like 95%. So you just kind of move section by section. We'll get 'em eventually. Steelhead isn't hard; that's the thing. SAP is such a pain to use that companies spend billions of dollars implementing, and it's still not very useful for many people. This is extremely friendly.
Audience: Alright, well thank you, Dina. Applause. Thank you.