The Ghost in the Machine

How a collective consciousness of improvement has helped a 108-year-old machining business grow into a data-driven innovator at the cutting edge of technology.

When John “JC” Cosgrove detoured from our Werxfest tour to visit our customer Sutton Tools and talk with its director Rob Sutton, he wanted innovation to be central to their discussion. With AI being a core theme of the Werxfest events, he knew Rob would be able to provide a unique point-of-view on how businesses and their people can embrace technology to deliver extraordinary products and superior customer experiences.

Sutton Tools is a unique Australian success story. While manufacturing in Australia, as a percentage of GDP, has declined from around 20% to less than 5% in the last 100 years, Sutton Tools has grown to become a world leading maker of cutting tools. You may have spotted their drill bits in Bunnings but if you are making jet engine turbine blades in Europe you will also be familiar with this Australian brand.

Less than 10% of Australian businesses make it to 20 years of age. Somewhere around .01-.05% make it to 100. While Australia is unusual in having 8 out of 10 of its largest companies being more than 100 years old, e.g. BHP, very few small to medium sized firms make it this far, and even fewer which remain family owned. Sutton Tools is an outlier in the Australian experience – a 108-year-old, family owned, high-tech manufacturer that has grown and prospered in a rapidly shifting global environment.

The innovator’s mindset

Their growth has come from the collective consciousness of five generations of the Sutton family who believe businesses must “innovate or perish”. That innovation goes beyond their tool manufacturing to how they have built a technology stack that makes them data-enabled and crystal clear on where true value lies.

The need to innovate goes right back to their beginnings but part way through the conversation Rob recounted a story about innovation that would resonate with any businesses contemplating AI today.

The Sutton’s have always travelled to be exposed to new techniques, benchmarks and best-practices around the world. His father Jim was sent to work in the UK at an unrelated business. This factory was making taps in a very manual process, but the owners were keen to improve productivity. New state-of-the-art NC machines (early versions of CNC) were ordered but the staff refused to unpack them. This cultural push-back saw that business eventually fail and Rob told the story to highlight what we face today with the advent of AI; “If you don’t embrace the new technology you are going to fall behind.”

Drilling down into data

Sutton Tools have been outpacing their competitors through relentless technology innovation since day one. It is ingrained in their DNA. In the 1960’s they moved from the industry standard roll forge process to a grinding process that was more accurate for making drill bits. It wasn’t easy, or cheap, but the tolerances that their customers demanded were getting finer and accuracy is key in their industry.

The pain of innovation was also felt when they looked at their tech stack. They moved to a new ERP 20 years ago – a seismic and difficult change, but this has been a foundation of their success since. Inventory, product data, shipping and marketing were vastly improved. Their customers yearn for product information and fast-found-facts makes their lives easier, helping them identify the right tool for the job.

The ERP was the start but their move to Salesforce 15 years ago lit a fuse under their customer service capabilities. “Product will only take you so far” Rob said while talking about how real time inventory, product documents, CAD plans and purchase history, along with more effective marketing, build loyalty with their customers.

With Salesforce Commerce and Marketing Clouds, Analytics and Data Warehousing, their larger customers can now access a suite of analytics and information on product preferences and availability, service levels and warranties and sales promotions and incentives. This change has seen them be able to take a “more aggressive and progressive approach to information.”

Data was key and Cloudwerx was engaged to implement Snowflake to clean and unify their data and help them leverage more reliable data for analysis and decision-making. With over 20,000 products the task has been large, but the results are impressive.

Feeding the customer need

Their growth has seen them make several acquisitions. New businesses, usually in the $5-$10m turnover range, can now be quickly integrated into the tech stack resulting in tremendous new opportunities for their growth and rapid integration into the broader Sutton Tools offering.

The recent purchase of a maker of measuring equipment saw Rob calling around their big customers to discuss the change and inform them that the product range would be on the Sutton tech stack in 3-4 months. The customers were thrilled because although they loved the products they had been frustrated with the information availability. “They want to know all the product information, the inventory levels, they want to know if it’s in stock in Singapore, Japan or Australia – they want to know if they can get that tool in 24 hours.”

Early experiments in AI have been promising – focused mainly on product and specification search but with Salesforce they “are hitting a sweet spot now.” The business is at a juncture where their global website and business structures need to be reviewed, and they are considering how they can go forward. With the luxury of a flexible, AI enabled and data-driven technology platform, any changes they make will be faster and cheaper than they would have been otherwise.

In the 108 years they have existed the business has seen unprecedented change. Their success lies in their ability to embrace that change, not just to make better products but to deliver a far superior customer experience.

JC left the Sutton factory in Thomastown, Victoria under no illusion that Sutton will one day join the ranks of Westpac and Cascade Brewery in reaching the 200-year milestone and that they will still be one of Australia’s most innovative manufacturing businesses when that bi-centenary arrives.

You can view the full conversation with Rob Sutton here.