CASE STUDY

$$I can$$t believe how much we have changed in a relatively short time. From being an inwardlooking manufacturer, we became a customer$-$focused $$design and make$$ operation. Now we are an integrated service provider. Most of our new business comes from the partnerships we have formed with design houses. In effect, we design products jointly with specialist design houses that have a well$-$known brand, and offer them a complete service of manufacturing and distribution. In many ways we are now a $$business$-$to$-$business$$ company rather than a $$business to$-$ consumer$$ company.$($Jim Thompson, CEO, Concept Design Services $($CDS$))$ CDS had become one of Europe$$s most profitable homeware businesses. Founded in the $1960$s$,$ the company had moved from making industrial moldings, mainly in the aerospace sector, and some cheap $$homeware$$ items such as buckets and dustpans, sold under the $$Focus$$ brand name, to making very high$-$quality $($expensive$)$ stylish homewares with a high $$design value$.$

The move into $$Concept$$ products

The move into higher$-$margin homeware had been masterminded by Linda Fleet, CDS$$s Marketing

Director, who had previously worked for a large chain of paint and wallpaper retailers. $$Experience

in the decorative products industry had taught me the importance of fashion and product

development, even in mundane products such as paint. Premium$-$priced colors and new textures

would become popular for one or two years, supported by appropriate promotion and features in

lifestyle magazines. The manufacturers and retailers who created and supported these products were dramatically more profitable than those who simply provided standard ranges. Instinctively, I felt that this must also apply to homeware. We decided to develop a whole coordinated range of such items and to open up a new distribution network for them to serve up$-$market stores, kitchen equipment and speciality retailers. Within a year of launching our first new range of kitchen homeware under the $$Concept$$ brand name, we had over $3,000$ retail outlets signed up$,$ provided with point$-$of$-$sale display facilities. Press coverage generated an enormous interest which was reinforced by the product placement on several TV cookery and $$life style$$ programmes. We soon developed an entirely new market and within two years $$Concept$$ products were providing over $75$ per cent of our revenue and $90$ percent of our profits. The price realization of Concept products is many times higher than for the Focus range. To keep ahead we launched new ranges at regular intervals.$$

The move to the design house partnerships

$$Over the last four years, we have been designing, manufacturing and distributing products for

some of the more prestigious design houses. This sort of business is likely to grow, especially in

Europe where the design houses appreciate our ability to offer a full service. We can design

products in conjunction with their own design staff and offer them a level of manufacturing

expertise they can$$t get elsewhere. More significantly, we can offer a distribution service which is

tailored to their needs. From the customer$$s point of view, the distribution arrangements appear to

$2$

belong to the design house itself. In fact, they are based exclusively on our own call center,

warehouse and distribution resources.$$

The most successful collaboration was with Villessi, the Italian designers. Generally, it was CDS$$s

design expertise which was attractive to $$design house$$ partners. Not only did CDS employ

professionally respected designers, it had also acquired a reputation for being able to translate

difficult technical designs into manufacturable and saleable products. Design house partnerships

usually involved relatively long lead times but produced unique products with very high margins,

nearly always carrying the design house$$s brand. $$This type of relationship plays to our strengths.

Our design expertise gains us entry to the partnership but we are soon valued equally for our

marketing, distribution and manufacturing competence.$($Linda Fleet$)$

Manufacturing operations

All manufacturing was carried out in a facility located $20$km from head office. Its molding area

housed large injection molding machines, most with robotic material$-$handling capabilities.

Products and components passed to the packing hall, where they were assembled and inspected.

The newer, more complex products often had to move from moulding to assembly and then back again.

Questions

$1.$ Why is operations management important in CDS$?$

$2.$ Draw a $4$Vs profile for the company$$s products$/$services$.$

$3.$ What would you recommend to the company if you were asked to advise on improving its operations?n for further moulding.