On balance.

Was Ohaus customer-oriented or manufacturing-oriented? Could it continue to meet varying customer demands without slowing its production line, missing its delivery dates, and losing ground to its competitors? Through a complete overhaul of every aspect of its business - conducted under the twin rubrics of "industrial design" and "mass customization" - the company emerged as both a customer-centric and an agile manufacturer.

Applications for lab balances vary widely in the industrial and laboratory sectors, and market demand is highly diverse. While one user may want weights displayed in grams, another may want carats, and a third may want grains. A scientist in a well-lit, environmentally stable biomedical research lab has far different needs, in terms of precision, raggedness, and display requirements, than a quality inspector on the production floor of the manufacturing plant. And even within a given industry, there are widely varying geographic and cultural preferences, which means the perfect balance for a jeweler in Seoul, for example, won't necessarily appeal to his counterparts in Seville, or Secaucus.

Ohaus Corp., a manufacturer of precision balances, traditionally met this challenge through custom engineering. Carving out a comfortable niche between the low-value imports and the ultra-high-end models some of our much larger competitors offer, we generally delivered whatever the customer needed, whether it was a custom pan shape, a software tweak, or a special display.

That approach worked, bringing years of record-breaking sales.

Still, that approach's success was also its weakness. From our basic line of six models, product variations had so proliferated that, by 1994, we were producing 34 balances in more than 600 versions. While our manufacturing department, which had been organized to produce six models using mass-production methods, had done an impressive job shifting gears to meet ever-changing demands, it was becoming clear that efficiency needed to be addressed.

Too many product variations made it impossible to forecast demand for any specific product accurately. Finished products built for inventory often proved to be the wrong ones - in some minor respect - when the order came in. Many components had to be ordered in small lots, and lead times as long as 12 months reduced our purchasing economies and made production scheduling extremely difficult. As a result, we missed delivery dates, which antagonized the very customers we were trying so hard to satisfy in the first place.

Therefore, though our sales were booming and our company was thriving, we saw that nothing short of a complete change in the way we developed, produced, marketed, and sold product - as well as administrative changes throughout the company to support the new structure - was in order.

SIGNING ON

Of all our senior staff, Ziggy Pobocha, our manager of product development and engineering, and John Enterline, our marketing manager, were most intimately affected by the situation. The need to engineer specific solutions for individual customers was taking Ziggy's department's attention away from new product development, and John was finding the lack of new products and missed deliveries of existing lines to be marketing liabilities. Together, they found a broadly encompassing approach to rectify the situation.

Ohaus, they felt, was trying to act like an agile customer-oriented company though structurally it was still manufacturing-oriented. Customers, they knew, were not so interested in buying products; they wanted functionality. Ziggy and John reckoned that a new product, designed from scratch to be easily customizable, might solve the problem. Delving deeper, they found literature on "mass customization" - the manufacturing ethos that stresses the ability to efficiently produce products on a one-off basis in response to customer demand.

Adopting a system of mass customization, however, would require Ohaus to adopt a vastly different approach to every aspect of its business. Nonetheless, top management gave the go-ahead, and Ziggy and John built their own team of converts, counting among their early adherents the director of manufacturing and the product marketing manager.

THE MODULAR CONCEPT

For every customer, there is a list of functions or features that must be supplied, or even optimized, to make a sale. We identified a few dozen functions and features that, in different combinations, had made up the 600-odd product variations we had been producing. We began lumping these functions together in logical groupings, which we soon began to refer to as modules. Rather than pulling together several hundred discrete components in order to build an individual balance, we figured that if we could build a limited number of modules, each containing several built-in functions or features, we could greatly simplify manufacturing - and everything that was required to support it. Each module would contain functions that applied across fairly broad ranges of market segments; by combining modules in different combinations, we would be able to essentially custom-tailor the product for a specific user.

STRATEGIC DESIGN - AND MANUFACTURABILITY

Under the joint ownership of Ohaus's heads of manufacturing, marketing, and product development, the modular concept was proceeding essentially as an engineering project. But while our engineering department could certainly have designed a product suitable for modular assembly that incorporated all the required balance functions, it would not necessarily have been easy to manufacture, easy to use, or attractive to potential customers. Our outside marketing and design firm, J.S. Mandle & Co. of Paramus, NJ, suggested we might address all of these objectives at once, through the use of "Industrial Design."

Product design has moved far beyond the simple objective of putting an attractive enclosure around a functional device. By incorporating elements of manufacturing engineering, tooling design, ergonomic studies, user surveys, comparative product analysis, and field research, the discipline of ID seeks to incorporate the multiple objectives inherent in any manufactured product to ensure that the product can be manufactured efficiently, can be attractive, and can appeal to customers from both a marketing and a functional standpoint.

While Ohaus had used outside design services in the past, we hadn't thought of their work as being strategic - something we thought about before we did the engineering. Instead, after we had engineered a new product, we would contract with a designer to create a more or less attractive enclosure for it. Manufacturing would then determine how to build the product, after which marketing would try to sell it.

That approach was clearly inappropriate this time around because it failed to address manufacturability. We decided it made sense to address the strategic issues of marketing, design, and manufacturing holistically, using a team approach.

Largely because of its experience with other scientific and laboratory products - and its capacity for incorporating market-driven considerations into design, while working with both engineering and manufacturing to optimize manufacturability - Hollis, NH-based Roche Harkins Design was selected as the team's design member.

Roche Harkins suggested we bring in a final outside member of the team - the American Institutes for Research. AIR's specialty, "human interface," addresses the critical issue of cognitive interface design, the sorts of layout, labeling, and user-control considerations that determine, for example, whether a VCR is easy or impossible to program. AIR considered such issues as the logical order for instructions and results to appear on the display unit and the number, placement, and labeling of control buttons for maximum clarity and ease of use. These considerations, of course, affect not only marketing, but engineering, design, and manufacturing.

With industrial design as the axle, the project started rolling. With the first set of sketches in hand, we became believers. Team members began thinking in concrete terms: Will that work? How shall I build it? Can I sell it? Those questions, and their answers, were fed back into the hopper, and the design began to evolve.

The team's progress was unlike that of any corporate department or task force any of us had ever seen. With true commitment to team play among its members, it moved forward with support, but with little overt direction, from top management. As CEO, I had very little to do with actually managing the project. My job was to make sure the managers were in a position to manage it. People who thought things couldn't be done had to be encouraged to find ways to do them. People who lacked the confidence to accept the wide-ranging philosophical change this project represented needed to see the imprimatur of upper management stamped clearly upon it.

On the other hand, the fact that the impetus for this project had come from the staff level greatly increased top management's comfort level; once Ziggy, John, and the rest had gained support from within the ranks, we were persuaded this was a sound direction in which to move.

THE PULL OF MANUFACTURING

The key to the successful implementation of mass customization, for example, proved to be the creation of a new area within the plant, which we called Final Configuration, where the separate modules would come together and become a real product, tied to a customer order. To make this work, manufacturing had to change from a "push" system, driven primarily by demand forecasts, to a "pull" system, driven primarily by sales. This forced changes in inventory, purchasing, sales, and marketing - and on and on throughout the company.

Final Configuration sits at the intersection of order taking and fulfillment, assembly, and shipping. Now, when an order comes in, personnel in this department bring together all the modules into a single package: the physical modules, along with the relevant instruction manual, labeling, packaging, and shipping documentation.

In the end, the final design successfully incorporated the objectives of every department, every team member - and virtually every customer. For example:

* Customers can now select specific parts and receive a finished product that gives no visual sense of having been assembled from separate components. They can even upgrade by snapping out one panel and replacing it with another.

* The modular system also allows Ohaus to readily incorporate new technologies, reducing future redesign costs.

* The balance's plastic enclosure features design elements that simplify assembly and minimize secondary operations.

* Products are now built and packaged strictly to order, with the proper modules being brought together in Final Configuration. We can now provide nearly 6,000 product variations more easily than we produced 600 variations in the past.

* More than 98 percent of shipments are being made on schedule.

* Manufacturing economies have improved substantially, and margins are more favorable than ever.

* Ohaus developed a public persona as a technologically advanced company.

The structural changes required to pull off this foray into industrial design and mass customization could easily have been postponed. We had, after all, been enjoying record sales, and the risks associated with this level of change seemed substantial. What if the basic product concept was wrong? What if our new manufacturing system proved no more efficient than the old? What if we were blindsided by a new technology that made ours obsolete?

But there were more risks associated with not changing: most notably, the risk of being perceived as non-innovative, the risk of becoming inefficient, and the risk of losing market share to stronger sales organizations. The risk involved in making the changes we made was clearly less. And the rewards were clearly greater.

James Ohaus is president of Ohaus Corp., a Florham Park, NJ-based precision-balance manufacturing company.