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Page 162 GO IT ALONE!
had just completed a quarter in which it lost $219 million on $684 million in sales, had inventory that was turning over just four times a year, and had poorly regarded products. Most analysts assumed that Inouye would liquidate the company. Instead, eMachines Chairman John Hui took the company private, and Inouye led a turnaround in the notoriously difficult PC market that is nothing short of remarkable. By the end of 2003, eMachines had been profitable for eight quarters running, achieving a sales volume of $1.2 billion dollars, and had surpassed Gateway to become the number-three desktop PC manufacturer in the United States. While the company is larger than a typical go-it-alone enterprise it had just 139 employees at the close of 2003, which means that the firm was averaging sales per employee in excess of an extraordinary $8.5 million. In 2003, Inouye proclaimed that “other than Dell, we are the only company making money in the PC business.” In early 2004, eMachines and Gateway merged, with Inouye becoming CEO of the combined company. Inouye and his team engineered this extraordinary turnaround by focusing on a few central operating principles: - Focus on high-leverage processes. The company developed a vision of the computer manufacturing and distribution system as a whole. “We looked for the real leverage points that could lead to success, “said Inouye. “Leverage applied to the right places is what leads to success in business today,” Inouye added.
- Use extreme outsourcing. eMachines followed a path of extreme outsourcing for the manufacturing of products. The company did not view its strength as research and development. Rather, it focused on lowering costs and purchasing components developed by other manufacturers. By the end of 2003, eMachines had what was probably the lowest
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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.
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