High Impact Strategic Partnership Results in 110% CAG
A start-up company offering high-pressure flow control equipment used in oil and gas applications had to develop a strategy for manufacturing its products. The company’s management need to answer the question: “Should we use available human and capital resources to vertically integrate our own manufacturing facility, or utilize a strategic partner?” The decision would be critical: could a strategic partner offer more than just manufacture parts, but also provide the complementary engineering and quality services that would be necessary for success? Would that partner be able to grow as fast as their products are accepted in the marketplace?
Beyond Precision Solution
The start-up company chose to partner with Acme at the time of the company’s launch because Acme provided far more than the complex precision parts for the company’s product. Acme also collaborated with engineering input to insure cost effective products and took over the supply management for most of their raw materials and machined parts.
Acme Industries’ Value
As a result of the strategic partnership with Acme, the company was able to focus its financial and human resource assets on engineering, marketing, and assembling its products. Acme’s customer conserved cash flow needed for growth instead of costly capital investments in equipment and operations infrastructure because the parts were supplied by Acme Industries. The collaboration between strategic partners led to optimization of manufacturing costs, reduction of assets and working capital, and allowed the company to grow at a compounded annual growth rate (CAG) of 110% in their first five years.