tudyChapter 1 Operations management
7 can'í believe how much we have changed in a relativefy short time. From being an inward-lookíng manufacturar, we became a customer-focused "deslgn and mate" operaí/on. Atow we are an integrated service provider. Most of our new buslness comes from the partnerships we have formed with design houses. In effect, we design products jointly with specialist design houses that have a weli-known brand, and offer them a complete service of manufacturing and distribution. In many ways we are now a "business-to-business" company rafher ínan a "business-to-consumer" company.' (Jim Thompson, CEO, Concept Design Services (CDS)) CDS had become one of Europe's most profitable rtomeware businesses. Originally founded in the 1960s, the company had moved from making Industrial moufcfings, 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-qualrty (expensive) stylish homewares with a high 'design value'.
The move irrto 'Concept' products The move into higher-margin homeware had been masterminded by Linda Fteet, CDS's Marketing Director, who had previously worked for a large retail chain of paint and wallpaper retailers. 'Experíence in the decorative products índustry had íaugnf me the importance of fashion and product devetopment, even in mundane products such as paint. Premlum-príced colours and new textures would become popular for one or two years, supported by appropríate promotion and feaíures in Irfestyte magazines. The manufacturers and retailers who created and supported these products wers dramatícalfy more profitable than those who simply provlded Standard ranges. Instinctivety, l 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 upmarket stores, kitchen equipment and speciality retailers. Wlthin a year of launching our fírst new range of kitchen homeware under the "Concept" brand name, we had over 3000 retail outlets signed up, provided with point-of-sale display fadlities. Press coverage generated an enormous interest which was reinforced by the product piacement on severa! TV cookery and "lifestyte" programmes. We soon developed an entírefy new mariteí and within two years "Concept" products were providíng over 75 percent of our revenue and 90 per cent of our profíts. The price rea/featíon of Concept products is many times hígher than for the Focus range. To keep ahead we launched new ranges at regular intervals.' The move to lhe design house partnerships 'Over the last four years, we have been designing, manufacturing and dlstributing producfs for some of the more prestigious design houses. This sort of business is likely to grow, espedally in Europe where the design houses appreciate our abilíty to offer a Ml service. We can design products in conjunction with their own design staff and offer them a levei of manufacturing expertise they can't get eisewhere. More signifícantiy, we can offer a distribution service which is tailored to their needs. From the customefs point of view the distribution arrangements appear to belong to the design house itself. In fact they are based exclusive/y on our own call centre, warehouse and distribution resources.' The most successful collaboration was with Viliessi, the Itaiian designers. Generally tt was CDS's design expertise which was attractive to 'design house' partners. Not only did CDS employ professionally respected designers, they had also acquired a reputation for being abie to translate difficult technical designs into manuf acturable and saleable
Part One Irrtroductton products. Design house partnerships usually involved relatively long lead times but produced unique products with very high margins, neariy always carrying the design house's brand. This type of relatíonship p/ays to our strengfhs. Our design...
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