Alphamet (UK) Ltd.

From Bust (Nearly) to Boom

Alphamet (UK) Ltd. began trading in 1988 as a multi-metal broker. Its industry went through changes due to the recession of the late 80s and early 90s. Many of the poor performers in the industry went under and excellent service became a prerequisite to staying in business. Alphamet had to change to make a profit.

The company's TOC journey began in 1995 when Managing Director Alf Wheeler attended an "Overview of TOC for Industry" facilitated by Eli Goldratt. During the program, the way Alf thought about doing business changed. A month later he went through a Management Skills Workshop, followed by the Jonah Program during which he realized that he himself was Alphamet's core problem.

Alf realized that he struggled between an autocratic and democratic leadership style and the result was chaos. He saw that a deep conflict with his co-director needed to be resolved. And he begrudgingly accepted that possible negative outcomes of actions and ideas must be acknowledged and addressed - a lesson he learned only after the company had suffered losses.

In order to address internal conflicts and constraints, the entire Alphamet staff went through the Management Skills Workshop in September 1996. At the time they were a group of bitter, unhappy and unmotivated people. Some then used the tools they had learned to challenge Alf's authority and position. About one third of the Alphamet staff left - unfortunate, but necessary if Alphamet was going to move forward.

Alphamet now prepared to use the TOC Thinking Processes to construct and present Unrefusable Offers to its vendors and customers. The company did a survey via fax of current and potential customers to determine their problems and needs. The majority of those surveyed responded within 48 hours - an indication that Alphamet had something that the market wanted.

In order to meet the needs of its customers, Alphamet would need the support of its vendors. The company made Unrefusable Offers to its three vendors - two refused and one accepted. That one is now the only major player left in the market.

Alphamet then began making Unrefusable Offers to potential customers. The offers addressed the issues identified in the customer survey. Some issues raised were considered "trivial" - such as packaging, others were policy constraints. All were "so simple" to deal with, thus giving the customers what they wanted.

Other actions taken during this time included:

• Alphamet prepared to upgrade the plant in order to offer a complete product range to the market
• Slow moving inventory was dumped at a loss in order to generate necessary resources (cash and warehouse space)
• Declining markets were dropped in order to free resources to focus on the new targeted markets
• The company tried very, very hard to stay on course and not be distracted by other obstacles

The results two years into Alphamet's TOC Journey:

• Alphamet now supplies 80% of the UK market (up from just 15%)
• Pretax profits have increased from £2,700 to £146,000 and are still growing
• Gross margin is up from 29% to 41%
• Projected 1998-1999 pretax profit is upwards of £250,000
• A much happier team earning better wages, receiving larger profit sharing, empowered, with a higher level of self-respect than two years ago.

• To deal with current growth - and prepare for future growth as well -
• Alphamet is moving to larger, more comfortable premises
• The company is investing in additional capacity as well (systems, people, equipment, etc.).
• Alphamet's computer systems are being overhauled for Y2K compliance.
• The company will now return its attention to formerly profitable areas of business it had neglected during this tremendous boom.

Alphamet is not becoming complacent, though. The company recognizes that its competitors will be breathing down its neck and is preparing additional strategy - and Unrefusable Offers - to stay ahead. Internal conflicts and constraints are addressed on an ongoing basis, and Alf Wheeler is still struggling with his own "sales versus managing" conflict. The TOC tools will be used to guide Alphamet as it continues to lead the UK market and forges into the global arena.

These results were presented by Alf Wheeler, Managing Director of Alphamet (UK) Ltd. at the Jonah Upgrade Workshop in November 1998. The presentation is available on video (#JMT-11).