April 2, 2011

Encole - An Engineering Business Model for a Recession

Encole LLC, (Encole) is an American mechanical engineering and industrial product distribution company focused on quickly responding to the needs of development engineers and maintaining the distribution methods in line with the current trends.


Background

Founded in 2009 by engineers for engineers involved in complex and demanding development projects, Encole serves as an outsourced engineering department operated on a stand-by basis. In the beginning of the most recent economic downturn a number of new product development projects within technology companies have been put on hold, canceled, or reduced in scope, which resulted in a restructuring of how large development projects are approached.


Current Trends in Mechanical Engineering Product Development

The current trend in the mechanical engineering industry is to shorten development lead times and break a large project into smaller, more manageable sub-projects often outsourced to outside contractors. As a result, staff engineers are more focused on the core technologies while important non-core engineering work is done by specialized vendors.


Current Trends in Industrial OEM Product Distribution

Industrial components are specified and recommended for purchase by engineers. During inter-company product design review meetings, technical managers and engineering peers discuss the design and comment on the assembly, which contains a bill of materials. By the time such reviews take place, a development engineer creates the bill of materials integrating the assembly with vendor components. Such integration typically results in a sale of the vendor supplied parts. The development engineer typically has limited time to create a 3d engineering model of a vendor product. This presents an opportunity for vendors of stock and semi-stock OEM products to aid a sale by making 3d models available to the development engineers on staff, while at the same time responding with model updates should the overall project require part design changes.


Company Culture

Encole is a operates on the 80-20 Pareto principal in allocating 80 percent of time to paying projects and encouraging its affiliates to spend 20 percent of their time on personal projects. This model takes advantage of 80-20 rule stating that 80 percent of the results come from 20 percent of efforts. Such balance of business and personal activities motivates innovation, builds trust, and promotes ownership of the results.