Business Transformation at Stickley Furniture A.Johnson. Reyte on Publishing 2012. Introduction L & J.G.

Stickley Furniture was founded at the turn of the 20th century by brothers Leopold and George. The name became just Stickley Furniture soon thereafter and the first plant location was in Syracuse, NY. Known for craftsmanship in the finest woods such as mahogany, cherry, and white oak (Stickley, 2012). The company is still around today and experienced a major transformation in the 1980s when it was bought by the Audi family from the owners widow (StickleyAudi.com, 2012). The company begin as a traditional operations management organization and has evolved and experienced change in order to survive over 100 years as the premier provider of quality wood furnishings. Operations has undergone several forms over the years that have either increased or caused problems with production and the success of the company(Stickley and Audi, 2012). In he early years the brothers tried to maintain a 200 employee staff even when sales were not robust enough to support such a large workforce (Stickley, 2012). This caused the company to experience major setbacks in its ability to meet internal needs, this led to loss of the best artisans necessary to build a quality product. Once quality suffers, the consumer begins to look for comparable product at a better price which leads to loss sales. The company has faced bankruptcy as well as the envied position as leader in the industry. In reviewing the Stickley case, several questions will be considered to examine the various operational strategies experienced over the years as well as what has led to the overall long term success of the brand. First reviewing the workforce, by the 1970s the number of employees at Stickley

Furniture has dwindled to less than two dozen. This is primarily due to the overhead required to run a wood manufacturing plant. The operations strategy had not changed much over the first 70 years of its existence and therefore overhead costs had not taken full advantage of the newest strategies in inventory control and distribution channels that can reduce costs. This led to Stickley being forced to declare insolvency and all but completely shut down. Former employees took over from the family of the owners who were deceased as they were looking to sell the business (Stickley and Audi, 2012). The number of retail showrooms has been decentralized from nationwide to about five showrooms in the New York area and a couple in Connecticut and North Carolina(Stickley, 2012 ). Sales beyond these states are handled by distributors or furniture dealers who order direct from Stickley. This reduces the cost of shipping product and stocking inventory in various warehouses around the country. Looking at the production process, it is easy to see that Stickley has changed to job shop, repetitive, and batch operations. Since the product is highly dependent on individual consumer tastes, the amount of labor required to produce is quite high. At Stickley furniture much of the production cycle requires intervention by artisans and highly skilled woodworkers. Therefore there is little automation other than processes requiring the sanding or cutting of raw materials. The build of the various parts to produce a product can be completed in separate processes which require the job shop model of operations. This process involves human intervention of highly skilled craftsman and supervise the fabrication of a design to a customers specific requests. Parts have to be designed, glued, and assembled with intense attention to detail. Job Shop is defined as a manufacturing process that builds multiple types of products in

small batches in order to provide unique service to each piece within the batch. Often used for custom made products, it differs from a continuous manufacturing model which is based on an assembly line process. Requiring little intervention from workers. With a job shop manufacturing model a team of highly skilled craftsman are needed to perform work on the various pieces of the product. Each applying their own unique skill such as carving, painting, molding each piece. Working in the field of Information Technology as a website designer as major corporations for example, it is necessary to communicate directly with the customer to gather requirements of what is needed for the finished product or website. Once this is known a team or shop of skilled IT developers can then provide the various components. A content writer is needed, a photographer, a marketing analyst, a site designer, technical programmers, and so on all contribute to the finished product. With each provides a component process to complete the entire job. Batch processing could also be used by Stickley since they will have certain component parts that are standard to a number of finished products, such as casters or handles and knobs. However they are all built together and held in inventory until needed by the assemblers. These type of parts are designed and built in batches and not for example in a continuous mode where different pieces are being added or assembled. In contrast with a athletic shoe manufacturer that is creating a pair of shoes, this would be done with each piece of a pattern being designed to fit with another piece. Say the sole, lace, and upper closure have to be attached to the top, back, side, and bottom of the shoes with each being added on until the product is finished. The raw material or leather, stitching in some shoe manufacturer plants are simply fed into an automated assembler that attaches the next piece of the identical shoe pattern. With Stickley the batch pieces are pulled from

inventory by assemblers as needed based on multiple customized designs during a final building of the product. They cannot easily be assembled in a continuous automated fashion. The need for skilled assemblers negates the continuous process of manufacturing. Secondly, in relation to tracking job performance and the location of the product in the process, Stickley requires managerial oversight in quality control (Stickley, 2012). The production team led by a manager has the responsibility for making quality checks throughout the build of the product from the time an order is received. Each stage of the manufacturing process is tracked by management with an identifying stamping process which includes a date of production. Each piece carries a unique identifier or bar code that tracks directly to the customer for which the piece is being built. The code is entered in a computer to track from order entry, through production and assembly, inventory, and out to distribution and shipping to customer receipt. This computer bar code system easily tracks the components of building a product and reduces confusion and loss of product. Each piece in the manufacturing process is managed and can be easily reported on through computer access by management for quality control as it moves through the plant. This provides a way of tracking the location of any component of a customer order. Providing not only the status of completion through the production date info but also inventory control and customer service information. Sales order and receipt is also identified through the bar coded product in order for management to determine which pieces are selling well at any time of year based on sales and production dates. This in turn can assist manufacturers in getting data about when to contact suppliers for raw materials that may be in high demand at certain times of the year. For example if custom

designed doors are popular in early spring, managers involved in securing various types of wood can determine the quantity required prior to the market trend or season. The production schedule is built around building only product that has been ordered for most of the inventory. There is some white inventory of items that can be easily crafted into customized pieces, such as standard table tops, legs, and grove fittings. The basic order for production scheduling is matched to supply customers from inventory on hand. The production cycle is driven by customer demand. In this way costs are managed and operations costs are kept to a minimum without expensing beyond what is necessary to meet customer demand, yet enough to cover operational costs. Thirdly, after receiving 40 mission oak dining sets, what is required for job processing, scheduling, and planning. As a manager of production it is necessary to thoroughly comprehend what the customer is requesting. If any information on the order is unclear, it should be reviewed directly with the customer to get clarification and approval of any corrections. The production planning cycle for actual costs to the company needs to be budgeted including materials, design, build, assembly and quality control. The finance or pricing department should be consulted to price the product out for the customer. Financing includes pricing requirements such as overhead costs which are fixed, along with variable costs such as labor and materials. The materials necessary to build the product should be part of planning the order. A deliver date is needed in order to build a schedule for completing the 40 dining sets. Next comes the scheduling as to the type of labor and time requirement to set the job for processing. Once the details have been planned out and scheduled. Any additional requirements such as original materials or customized

equipment will also be addressed as part of job processing. Based on the scheduling a decision to build within 12 weeks is determined. Each part of the planning needs to be mapped within this schedule from week one to delivery in week 12. Therefore a production manager will have ensure the production cycle can have all of the necessary raw materials, equipment, laborers, and craftsman accessible to within each stage of the schedule as they fulfill their individual batch and job shop duties. The entire order will be bar coded down to each individual piece to build every single dining set of the 40. This way each order can be tracked individually and collectively based on its destination. Quality control measures must be in place throughout the production cycle to make certain the product is being inspected by management to meet Stickley standards. Each stage of production requires management review and controls to determine if the level of quality is acceptable and follows Stickley business goals and objectives. This maps back to using the company materials and assets wisely, making sure inventory levels are kept, the correct production yield or count is met, along with ensuring the product is delivered without defect to the customer in a timely manner. The fourth question discusses the benefits, and problems based on the company production policy. The production of furniture is often based on a seasonal timetable of demand. The highest rate of sales are generally during the first months of the year, followed by the fall or third quarter. Therefore the times to set the production cycle are in the fourth quarter to coincide and prepare for first quarter sales. Along with the second quarter for third quarter sales. The remaining product after the first and third quarter should be placed in inventory to ramp up for the succeeding seasonal sales periods. In this way product is

readily available to sale to the public when the market is hottest or at its most saleable times. Even the inventory that was not sold will most likely sell during the peak seasons if priced strategically. The excess inventory and unsold inventory of the previous season can then be sold without having to produce repeat product, saving the company production costs as well as delivery and shipping costs. This is a win win system for Stickley, they are making sales on the custom orders and the excess inventory during peak selling seasons. Based on the outcome of sales during these seasons marketing strategies can be reviewed and tracked as well as which items are selling best. This will help prepare for the next production cycle. Information can also be gathered from what is not selling well and what items are returned. This data can be used in making decisions about suppliers of materials, changes in labor such as hiring or transferring of workers or even replacing or purchasing more equipment. With such a production cycle in place the firm is best able to manage its business operations based on firm data provided from actual sales throughout the cycle versus projections and forecasts of business planners with no knowledge of actual results (Vieira, Jeffrey &Edward, 2003). Decisions about production can be made based on such knowledge including when to downsize or change production schedules to meet demand. For example for a toy manufacturer, it is probably a prudent strategy to lighten workforce and lessen production during the first quarter of the year after the fourth quarter holiday season. This will save on the costs of production as this is a time for inventory and possibly to start conducting market research into what type of toys are desired for the next season. This is an efficient way to run the business as they are no unnecessary manufacturing costs incurred. Stickley has a level production plan that does not take into account market trends. The system is very efficient because of

steady production year in year out without dependence on crash production program which may occur during high production periods. Therefore the inventory load may be extensive if projected sales are inaccurate. This increases costs due to unsold product, which can result in a loss for the company (Portougal &David, 2000). With a level operations strategy the continuous production system is in place in most manufacturing plants. This means that regardless of the season, the same production cycle is kept online. This again can cause inefficiencies due to having more employees than work available. As was the case with Stickley in earlier years. However if the workforce is matched to customer demand, this can be an adequate operations strategy. As the customer demand increases, a good production manager will ramp up the other components of operations such as hiring more employees, adding suppliers, and monitoring inventories. What type of changes may benefit Stickley Furniture The case suggested Total Quality Management (TQM) which is focused on quality standards throughout the manufacturing plant departments. This would allow various levels of acceptability based on customer demand and therefore established to exceed expectations (Stevenson 2009). The processes within the various components or departments would be completely documented and examined for relevancy in meeting efficiency and quality standards of measurement. A system of continuous improvement to existing processes is required to consistently improve operational processes. Another change would be the use of less inventory through customer based production also called Just in Time manufacturing. This will allow only inventory that has been ordered to be built or produced. The drawback with this process is the lack of any excess

inventory to sell during a peak season such as mentioned with the first and third quarter of the year. This could mean a loss of sales due to not having enough extra inventory to offer eager purchasers looking for furniture at those peak times. To recap, the operational strategies that Stickley has adopted such as job shop and batch processing have served them well and positioned them for success, however is it enough. TQM would greatly enhance Stickley Furniture by saving even more in overhead costs by improving efficiency in every department or component of manufacturing (ASQ.org, 2012). With updated processes being reviewed for further improvement on a regular basis. All incidents of waste or untapped resources will eventually become apparent and corrected. The areas of waste can be reinvested into more productive use. For example changing the inventory process. While an area of untapped resource such as any employees that are not being used to their full potential due to a slower season, being transferred to another area where business is more robust. Or possibly using that resource in another department such as marketing to seek out new trends in the market for the upcoming season. This is often overlooked by product managers. They are so focused on the day to day business that they are not seeking upcoming trends and communicating with customers to discover what types of products or processes are desirable for the future. Running operations in todays global markets is much more than the simple day to day business. It is important to look ahead to what type of equipment, raw materials, supplier resources are becoming available. For example, with new technologies evolving faster and faster, tools such as social media and mobile devices could possibly provide opportunities for connecting with customers directly. This is largely an untapped market of customers for furniture manufacturers and could be a major opportunity to expand into

new niche markets.

References ASQ.org. (2012). TQM: About total quality management. Retrieved April 12, 2012 from http://asq.org/learn-about-quality/total-quality-management/overview/overview.html Portougal, V., and David J. R. (2000). Production scheduling theory: where is it applicable. Interfaces 30. Stevenson, W.J. (2009). Operations Management, 10th ed., New York: McGrawHill/Irwin Read "Stickley Furniture" pages 688-690 Stickley.com. (2012). Our stickley story. Retrieved April 12, 2012 from http://www.stickley.com/green/ Stickleyaudi.com. (2012). Showroom. Retrieved April 12, 2012 from http://www.stickleyaudi.com/StoreLocator.cfm?showroom=WhitePlainsNY