Business Workshop Report 3 
- Evertaut

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BUSINESS WORKSHOP REPORT

FURNITURE PRODUCTS

British Plastics Federation

 

THE BUSINESS WORKSHOPS

The Business Workshops are supported by the DTI as part of the Partnership in Plastics (PIP) Programme. The Programme is designed to improve the competitiveness of the UK plastics processing industry by building links between major customers and small to medium enterprises (SMEs). The focus of the Business Workshops is on informing the SMEs of the changing needs of major customers and the means of meeting these needs.


INTERNATIONAL MARKETS

The UK furniture industry produces products ranging from domestic to industrial/commercial furniture and uses a wide range of plastic parts in these. Plastics used in furniture products must not only add to the style and look of the product but also have a functional role to play in the product.

Some customers, such as Evertaut, purchase up to 85% of their plastics requirements from outside the UK. The customers want to purchase in the UK but only do this when the UK industry matches their needs and the benefits already on offer from foreign suppliers.

The differences between this market and many others became obvious during the Workshop. For instance, the industry tends to use available “standard products” and to concentrate on “functionality”.

CUSTOMER IMPROVEMENTS

Evertaut is a trade name of Idem Furniture Ltd. who produce furniture ranging from polyethylene bucket chairs to high quality desking solutions (under the Hillé brand name).

Management changes gave Evertaut a unique opportunity to both assess and improve their operations. Upper management was reduced and middle managers were empowered to create change and reduce costs. In purchasing and stock control the focus was on reducing the purchasing and stock costs. Typical actions were:

  • The supplier base was examined to find "preferred partners". The supplier base was then reduced by 75%.
  • Stock levels were reduced (from £2 million to 1 weeks production) by working with the suppliers and by encouraging delivery direct to the shop floor. Reduced stock levels made stock control and parts location easier, gave clarity of work flow, reduced the time for a stock-take to 2 days, and gave better production control. The ultimate result was a 90% reduction in delivery time from over 8 weeks to 5 days.
  • Suppliers were provided with a broad requirements forecast and a detailed block order for shop floor delivery.
  • Suppliers were encouraged to add value by completing a sub-assembly (i.e. a complete chair base), rather than simply providing a component.
  • Suppliers were encouraged to achieve ISO 9002 certification and 100% of major suppliers now have ISO 9002.
  • Suppliers were required to produce a functional guarantee but otherwise had relative freedom in design and materials selection.

Evertaut have improved their operations considerably by working closely with their foreign suppliers. Unless prospective UK suppliers can offer new products and substantial benefits then it is unlikely that they will be considered.

THE SUPPLY CHAIN - A NEW SERVICE MODEL

During the Workshop, a gap between the customer and the suppliers was apparent. The two groups are operating on different models of the supply chain and points of contact are few. The customer is using a new "service and solutions" model while the suppliers are still worrying about materials prices, "efficiency", tooling costs and other technical issues.

The industry model

The prevalent industry model is really about renting time on machines and purchasing machine capacity. The supplier is generally more concerned with keeping the machines opening and closing than with providing true solutions to the customer. Some suppliers claim to be "market led" but this is reactive rather than leading the market.

This model avoids almost all market risk to the supplier and transfers it to the customer. The customer is often expected to sign off the product design before tool-making begins, the tooling is made to the customer’s order and the customer pays for it, product is made to order and stock is rarely held.

This model also does not generally encourage adding value to the product or sub-assembly manufacture but sees these operations as simply necessary to get the particular job, rather than as an essential part of the solutions business.

The traditional model is one of a manufacturing operation that provides a conversion service. What about teaching elephants to dance and creating service companies who also manufacture?

The customer model

The new customer model is simpler - the customer is interested only in the functional aspects of the product and a guarantee that it will work.

The customer wants a "solutions supplier" and the supplier makes the decisions to meet the customers stated needs. This may require tooling but the solution is the "thing", not the tooling or the machine utilisation or materials price. The customer says "I don't care about the materials, I buy products to do a job”. Buying a computer does not require a knowledge micro-processors works yet we expect the equivalent knowledge from our customers before they can buy a plastics part.

What is it that "solutions suppliers" provide to their customers:

  • They provide a pro-active partner with ideas, concepts, new materials and product ideas - "partnership" is not simply a way of binding the customer to them but a method of operation.
  • They have a long term vision - when they talk about 2005 they mean longer term than 8.05 p.m. today!
  • They take an open approach to terms and conditions.
  • They accept some of the risk sharing in funding tooling for a potential share of the rewards.
  • They deliver direct to the shop floor with minimal stocks held at the customer - the suppliers hold stock (or reserve capacity) based on a forecast with shorter blocks for direct delivery to the shop floor.
  • They communicate, communicate, and then they communicate some more - they visit existing customers to discuss developments, needs and methods of extending the partnership.

The competitor’s model

The successful foreign competitor’s model is almost entirely service based. They are pro-active in sales and have distribution and sales networks selling products and solutions rather than capacity and capability. Rather than simply thinking about their home country, they regard the world as their market-place and have long term strategies for product and technology development. Products developed in one country are sold in many other by their sales and distribution networks, tooling costs are then less of an issue and incremental sales produce the revenue for re-investment. This model may be applicable only for the furniture industry but it needs to be examined - it may be that this is the future of the industry.

EXAMPLES OF PLASTICS IN FURNITURE PRODUCTS

  • Chair arms.
  • Chair shells and bases.
  • Castors and wheel systems.
  • Upholstery trim systems.
  • Handles and grip extrusions.
  • Cable management systems and clips for desking.
  • Edge band, laminates and foils for board products.
  • Sealing strips.
  • Adjustable feet for carcasses products such a kitchen and bedroom units.
  • Decorative trim systems
  • Bungs, stoppers and miscellaneous small plastic parts.

THE KEY LESSONS

  • The foreign competitors model meets the customer needs better than the current UK industry model.
  • The supplier is responsible for being a “solutions provider” producing an innovative solution rather than a product.
  • The processing industry needs to examine where it is going. The "old" model of a custom moulder "renting machine time" to the customer is not necessarily the way forward.
  • The competitors regard the world as the market-place rather than simply the UK.
  • Innovation is the key to entry to the market.
  • Price is important but having the right product to sell is even more important.

GROWTH PROSPECTS

The furniture market is subject to extensive foreign competition and relatively slow growth at present. UK suppliers can easily improve sales in this market by delivering what the customer wants – a “solutions provider approach to the customer’s problems.

 

The PiP Programme consists of a range of activities including:

  • Business Workshops and Reports
  • Plasticity Seminars
  • Pentamode Code of Practice

Note: Any opinions expressed in this Business Workshop Report represent those of the author and not necessarily those of the BPF, DTI or Idem Furniture Ltd.

Produced for the PiP Programme by Tangram Technology Ltd. (info@tangram.co.uk)

 

For further information about the PiP Programme contact:

The British Plastics Federation
6 Bath Place
Rivington Street
London EC2A 3JE
Tel: 0171 457 5000
Fax: 0171 457 5045

This Business Workshop Report is based on the results of a PiP Business Workshop held in June 1999. The customer viewpoint at the Workshop was presented by Mr. Steve McClatchey and Mr Paul Scofield of Idem Furniture Ltd.

July 1999

All logos and trademarks acknowledged. The assistance of Idem Furniture in the provision of logos and artwork is also gratefully acknowledged.