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  Wabash National
Corporation was founded on April Fools’ Day in 1985. Rather than give in to the
temptation to joke about that, it’s better to look back at the real meaning of the
“fool.” In times past, the fool was the wise man, the visionary. In its first
year, the company built 1,600 trailers. In 1994, Wabash became the largest trailer
manufacturer in the U.S. And with a total production capacity of 70,000 units (that’s
160 completed trailers a day, or one every nine minutes) the company is also the largest
trailer manufacturer in the world. The force behind this phenomenal growth is the
“vision” of Donald J. “Jerry” Ehrlich, Chairman, President and CEO of
Wabash National Corporation. Essentially, his vision is to apply non-traditional strategic
thinking to a highly traditional industry. And his ability to apply that vision earned him
INC. magazine’s award as “Entrepreneur of the Year” in 1992. Since Jerry
operates totally in the real world, we asked him to explain his strategies, his plans and
his vision. |
Is Wabash National Just A Trailer Company?
“No. We have a broader view than others. We look to developing transportation
solutions for our customers. Although those solutions may involve trailers of some type,
we look at the total picture.
“For example, we examine how we can help customers reduce
the physical handling of cargo, or in some way speed up the process, or eliminate multiple
cargo transfers, or improve the protection of the cargo against damage, or provide haul
versatility.
“It’s after we answer these types of questions that we
get into trailer design. And since many of our customers have very special transportation
needs, the bulk of our production is in ‘specials’”Can You Build Custom Trailers
And Still Be The Low-Cost Producer?
“That is our goal. I don’t believe the two are mutually exclusive.
“I can’t tell you how many times we’ve reorganized
our manufacturing to squeeze out inefficiencies, eliminate duplication and increase the
flexibility of our production lines. In fact, that’s a never-ending process here.
“As well, our machinery and equipment are the most
contemporary. And we add value in-house by manufacturing as much internally as we can
(which we intend to expand) while our just-in-time philosophy keeps our outside-supplier
inventory at four days.
“All these factors give us high productivity. In fact,
we’re at $280,000 per associate per year.
“So we believe we can build the kind of custom trailers our
customers require as solutions to their transportation problems and still maintain
low-cost strategies by internal management.
“It’s not easy, but we do it.”
You Depend On
“Associates” Not Employees?
“That’s right. We haven’t had a two-party system nor bureaucratic lines
around here since the company started. Sometimes we’re all labor. Sometimes,
we’re all management. That’s how all of us make it happen.
“The ‘it’ being attention to high quality and
reliability standards, cost-efficient management and maximum productivity from all of us.
“They say that successful companies are focused on people,
product and profit. I say success comes from focusing on people, people, people. That is
what will be necessary for any company to survive over the next decade.
“So our process is a true team approach. That’s
why we use the word ‘associate’ instead of employee. We consider our people as
an integral part of our company. And we make sure that they receive the education and
training they need to function in their jobs and advance themselves. And when that
happens, the company grows.” |
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If Partnership Is Your Vision Internally,
Does It Also Apply To How You Do Business With Customers?
“Definitely.
In the normal customer relationship, a customer will go out and seek bids from various
suppliers and then select what it considers to be the best proposalwith price being a
major defining factor. Once the product is delivered, the relationship is usually
overexcept for warranty coverage. Then, when the time comes to buy again, the supplier
selection process starts all over again.
“We prefer to establish long term partnerships with
customers as their single source of supply. By doing so, we can provide solutions to their
individual transportation needs at significant economies of scale. With all
‘like’ equipment, support costs come down. And, we keep track of our equipment
in service and monitor it carefully so that we can identify future problems and arrive at
workable solutions that will produce even more operating efficiencies.
“As part of the relationship, we show our partners all of
our costs so they understand the fiscal fairness of the arrangement.
“And because we are our customer’s single source of
supply, we have a big responsibility to do whatever it takes to make absolutely certain
the equipment is delivered precisely when our customers want it.
“I believe the true foundation for productive partnerships
is mutual trust and that is what makes our business strategy work for us and most
importantly, for our customers.”
How Does Innovation Fit Into Your
Vision?
“Innovation
is an absolute necessity. But it must be innovation based on a total understanding of what
a customer needs, or might need.
“Take for example, the composite trailer idea. Our customers
told us they needed a trailer that would be lower in cost, lighter weight, more durable,
easier to repair and wider than anything that’s on the market now. That drove us to
the composite strategy.
“Most people think a composite is some kind of reinforced
plastic. However, by definition, a composite is the result of combining different
materials. In the case of the composite plate trailer, we sandwiched high-strength steel
with thermoplastic.
“We now expect the composite trailer to make aluminum
obsolete. And that comes from the company that developed the aluminum plate van and is a
leader in its manufacture.
“That’s just one example of our belief in continuing
innovation.” |
Are You Ready Now To Expand
To The Rest Of The World?
“Sure. Our
target is to grow at least 20 percent a year. In order to achieve that rate of growth, we
obviously need to expand our markets. International sales hold a huge potential for us,
and we are already selling in Australia, New Zealand, Europe and will soon be active in
China.
“But we will never lose sight of the fact that our products
must precisely reflect the total transportation needs of our customersno matter where
they are in the world.”
How Do You Deal With Change?
“We’re
definitely not afraid of change as many companies are. In fact, I think that the greatest
challenge facing companies todayfleets includedis being prepared to accept constant
change over the next decade. Those that resist change or can’t keep up with it,
won’t be around.
“And change isn’t only in materials, equipment, methods
and purchasing habits, it also involves being able to manage the tremendous amounts of
information that are now available to us, and to our customers.
“You might say that we’re the exception to the old
adage that ‘the only people who like change are wet babies.’”
How Do You Manage
Information Technology?
“We were one
of the early companies to move into LAN-type communication. Earlier this year, we
installed TV monitors throughout our facilities so that all associates are always aware of
what’s going on in this company. And, we have a home page on the internet as well as
easy e-mail access to anyone in our companyincluding me. I answer all my e-mail, just
like everyone else does around here.
“We look forward to incorporating the information
that’s available into our thinking, management and operational processes.”
Where Will Your
Vision Lead You Next?
“I’m
not sure right now. But as long as we focus on solving transportation problems with our
products and stress the spirit of innovation and partnership, I feel that our people will
be responsible for the futurenot just me. I started the ball rolling. Now, they’re
perfectly capable of pushing the envelope further.”
Thanks Jerry. |
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