Page 5: Stoves Ltd
'The first thing you need to start a new company is a clear strategic plan and vision.' John Crathorne, managing director and CEO of Stoves Ltd (producers of cookers and hobs) is quite specific about what he and his colleagues wanted to achieve through their management buy-in in May 1989. 'We wanted to create a quality company which was capable of satisfying consumer needs in a rapidly changing market.'
The achievement of that vision makes an astonishing story. The first thing the new management team did was to research the market in detail, something which had not been done before. At that time, 85% of all built-in electric ovens were imported. The results showed that consumers were becoming increasingly sophisticated. Not only did they want a well-designed, quality product, they wanted it tailored to suit individual needs.
“In the modern kitchen, cookers are virtually the only appliance you actually see. Consumers want to have a say in their colour, size, and shape. They want a cooker which is hygienic, safe, easy to clean and geared to the food they cook, in the way they want to cook it. In other words, they want innovation, more involvement, more choice.”
In the past, engineers came up with bright ideas and the marketing department then
decided how to position them. Stoves turned all this on its head. Its our plan was to identify user innovation and then satisfy it. We see this as the trend of the nineties - mass customisation. How could this idea be put into practice? The changes came in several stages. In 1989, the factory employed about 500 people; the first challenge was to communicate the strategic vision to the staff and gain their involvement. The long production line was restructured into teams of 8-10 people, each team being responsible for the whole production process.
Employees’ pay was no longer linked to volume, each person was paid a salary, in recognition of their value as one member of a company’s own training school production team. Virtually every employee was retrained at the company’s own training school on site, learning how to work more effectively as a team by tackling problem-solving tasks which were highly relevant to the work.
“You cannot be a quality company unless you believe in, and invest in, your staff. Our people know they are special.”
The current training cost is approximately £500,000 per year, for a staff of 680 people. Central to the vision of the Stoves’ management team is the relationship they have with suppliers. In 1989, Stoves had approximately 250 suppliers. They unloaded their products into a central area and the goods were then checked and either accepted or rejected. Now, things work very differently.
Suppliers as partners
'We have 50 key suppliers and we regard them as partners, with whom we have a mutually beneficial relationship', says John Crathorne. There has to be a high degree of trust because they are closely involved with all our new products. We believe that when two companies form this kind of partnership, they make sure they don’t let the other party down because there is too much to lose. In our factory, the person who delivers the goods identifies with the team he services. He finds out the programme for the day or week ahead and makes sure that the right material is in the right place at the right time. Each team has its own telephone for instant access and team leaders are in constant contact with suppliers. How many companies can say that they never have to give their suppliers a schedule? Or that time spent invoicing can be cut down to one transaction per month?
The factory never knows two days in advance what it will be producing, yet they produce about 1,200 units per day. They have no warehousing and very little stock. Products are produced against orders for immediate delivery. What does all this mean for the consumer? - Customised quality products, designed, produced and delivered quickly.
As for the company, the figures speak for themselves. In a market which has declined by 30% between 1989 and 1994, Stoves increased its turnover from £17 million to £42 million. Managers at Stoves are no longer ‘directors of people’, they are more ‘directors of traffic’. Their role is to ensure that the system as a whole is running smoothly and that it is supported by the appropriate resources.
“This company used to struggle to launch three new models of cooker a year. We now have the capability to launch a new model every single day of the week.”