Swagelok CEO Arthur Anton On Moving Beyond 'Make-To-Stock'

Privately held Swagelok Co., Cleveland, has been evolving from a traditional manufacturer of fluid system valves and fittings to an innovative and adaptive global provider of products and services. It is transitioning from a "make-to-stock" fulfillment model to a more customer-centric make-to-order, configure-to-order and engineer-to-order offering.

IW: How specifically has offering custom-made products helped Swagelok? Did you secure new customers? New business from existing customers? A higher price?

Anton: About two years ago we conducted a global survey and learned that customers were open to receiving more products and services from Swagelok. They wanted more than our traditional fluid system components. They wanted to tap into our technological expertise to help them solve problems. But as tempting as it was, we didn't rush right into new development activities. First, we spent some months shaping our company's vision: "Truly understand our customers' needs and act on them." Then, we went to work on providing new services and a wider product range. We redeveloped our Voice of the Customer (VOC) process to improve our batting average when bringing out new products. That process entails, among other things, detailed interviews, collaborative design and beta testing of our initial designs.

Some of our growth in 2004 and 2005 can be tied directly to the new custom offerings. New business from existing customers comes by way of make-to-order and engineer-to-order products, including low-volume specialty items such as custom skid-mounted systems for the pharmaceutical industry. Another example is in the analytical instrumentation market, where we sell tube fittings, instrumentation ball valves and needle valves. The goal in that industry is to reduce the footprint and get fast, reliable, repeatable chemical analysis. Our new, customizable modular platform components technology helps do just that. We're also selling these systems to customers who are on the leading edge of technology adoption, and to gas customers who then expand the learning into full-plant applications.

IW: What had to be done internally before this service could be offered?

Swagelok Co. President and CEO Arthur AntonAnton: We have a strong culture at Swagelok based on our heritage of quality, integrity and respect. Our brand is known for high quality and reliability. A good percentage of our manufacturing associates and distributors alike have been with the company for many years. We're moving quickly into new areas requiring rapid skill-building, so we needed to find a way to accelerate the development of our people. That's why we created the Swagelok University [online learning service], which now has more than 350 training programs available in six different languages. We have also stepped up the flow of information to associates via our intranet, which is now available to all of our employees from home. And we're also working hard on our "emotional competencies," which include self-awareness and listening skills. I believe we must understand ourselves before we can truly understand our customers. The challenge is to build on our traditional values with a new understanding of the customer, and to challenge conventional wisdom to create new value.

IW: Certainly many manufacturers have become more responsive to customer needs in recent years, but one concern about this trend is that new ideas outside of specific customer requests are not being born. How are you fostering innovation outside of customer-dictated designs?

Anton: We are quite proud of our technical horsepower. Add up all of our engineers, scientists and technicians, and you're looking at nearly 450 people. Each year we file about 75 patent applications through our technical community. Besides customer input, we rely on industry roadmaps, internal brainstorming and technology transfer to get our ideas for innovation.