Stickley Furniture, founded in 1900 as a family business, specialized in manufacturing high-quality furniture made from cherry, white oak, and mahogany. In the 1980s, the company decided to relaunch their mission oak furniture collection, which has become a significant portion of their sales, representing nearly 50%. Over the years, Stickley has experienced substantial growth, currently employing 1,350 individuals. They have expanded their reach by establishing five retail showrooms situated in New York, Connecticut, and North Carolina.
Stickley Furniture, like many other companies in a competitive market, must enhance their products and operations to stay ahead. To accomplish this, the company needs to assess its manufacturing facilities and create a plan for a more efficient system. This evaluation will include analyzing the current production methods, tracking job status and location, and determining the suitability of their current production policy for increased demand.
Once all factors are taken into account, including benefits and problems, recommendations will be given for creating an action plan.
Stickley Furniture, established in 1900 by the Stickley brothers, specializes in producing superior, top-notch furniture. The company currently has 1,350 employees and operates five retail showrooms in New York State, Connecticut, and North Carolina. Additionally, they distribute their products to 120 dealers across the country.
In order to remain competitive in today’s highly competitive global market, Stickley Furniture, along with many other companies, must enhance their product and service offerings while also improving their manufacturing operations (Taj & Morosan, 2011). To achieve better overall manufacturing performance, Stickley Furniture needs to assess their current operations at their manufacturing facility and develop a plan to streamline their system of operation.
A leaner system will result in the company manufacturing with minimal waste, which can be defined as anything other than the essential equipment, materials, parts, and working time necessary for production (Taj & Morosan, 2011). If Stickley implements a leaner system without compromising demand in the short or long term, they can enhance operational efficiency and profitability by reducing costs.
One crucial factor in lean operations in manufacturing is the system design in manufacturing facilities. The elimination of waste involves mapping out every step and individual action in specific service processes and analyzing the flow. According to Soriano-Meier (2011), this helps identify and eliminate waste. The main goal of layout design is to enhance the efficiency of material or part movement throughout the process, as stated by Ubani (2012).
The selection of processes is crucial in determining layout decisions. There are five primary process types: job shop, batch, repetitive, continuous, and project. Stickley’s production involves simple or standardized tasks and includes numerous repetitive functions. Therefore, utilizing an assembly line layout would be the most cost-effective approach for manufacturing their products. This layout allows for the employment of lower skilled and lower cost workers and minimizes equipment variations, among other advantages.
Stickley’s may need to focus on batch processing due to the numerous product variations they offer. Their furniture products, such as dressers, drawers, frames, etc., come in different sizes and shapes. This differentiation cannot be fully accommodated by an assembly line. Therefore, a batch process layout would be more suitable, as the employees on the floor have varying tasks to perform.
This may result in slower output speed compared to that of an assembly line, but it is more suitable for Stickly’s business. The furniture industry is characterized by a relatively low turnover, which distinguishes it from other industries. While Stickly demonstrates elements of batch processing to accommodate product variability, their costs are more aligned with those of a repetitive process. An example that highlights why a fully repetitive process cannot be applied to all Stickley orders is their reliance on master woodworkers for custom orders.
It is not possible for this highly skilled craftsman to have a fully repetitive process due to the need to accommodate many customer requests or carpenter high value items. However, allowing for customization in orders changes the layout into more of a job shop layout, where necessary mundane tasks can be performed that are repetitive but still allow for customization at a slower pace compared to other processes. Compared to batch processing, job shop processing has higher levels of job variety, job skill, process flexibility, and lower unit costs for lower volume output (Stevenson, 2009).
By allowing customization, Stickley’s can attract a wider range of customers. They can cater to customers with unique interests while still appealing to lower-end customers who prioritize price over quality. Offering both affordable and customizable high-cost products will help Stickley reach a larger audience and increase brand value. With a greater complexity in product offerings, proper management is necessary to keep track of manufacturing progress and the current stage of each product.
Stickley uses a product layout strategy to track the progress of goods on the assembly line. This method is commonly used in repetitive process layouts as it efficiently tracks goods from start to finish. Product layout also enables labor specialization, reduces material handling costs, and maximizes the utilization of labor and equipment. The benefits of the product layout approach are evident in its establishment and use for routing, accounting, purchasing, and scheduling (Stevenson, 2009).
Both advantages and disadvantages exist in the concept of a product layout process for tracking. This can become monotonous for floor workers and potentially expose them to ergonomic risks. In addition, workers with insufficient skills may neglect equipment maintenance and compromise output quality. Furthermore, the layout is not flexible enough to accommodate changes in volume. Since the company is prone to shutdowns and necessitates preventive maintenance, implementing individual incentive plans is not feasible in this situation. Moreover, a cellular layout can be utilized to track various furniture pieces.
The CL process creates work stations that direct different parts to specific locations based on the product type and step. Unlike the FL which separates machines into separate departments based on function, the CL clusters machines needed to produce similar product types into independent cells (Jerbi, 2010). This approach of grouping like parts is similar to group technology, where similar items are directed to the same workstations to utilize the same technology for manufacturing or designing the product.
The concept of how their lumber moves through mills and how finished products are assembled is in line with the idea of streamlining their manufacturing process, resembling an assembly line function but with more specificity and a lower volume focus. Alongside the process layout, they also employ barcodes to identify the current stage of each job. “Upon completion of each operation, the operator removes a barcode sticker and delivers it to the scheduling office, where it is scanned into the computer. This enables production control to track the progress and location of a job.” (Stevenson 2009, p. 690)
By utilizing this, management can monitor the progress of a specific unit in its journey towards becoming a final product. It also enables tracking of parts for inventory management and accounting purposes. Not only does this enhance efficiency in minimizing inventory costs, but it also aids management in accurately estimating the required time for job completion and timely delivery of the finished product to customers, ensuring customer satisfaction while keeping costs low.
It may also help management assess employee performance on the job. An example illustrating this is when a wholesale or retail company places an order for a large number of drawers. Management must plan the entire schedule to meet the customer’s deadline. This schedule should include the time required for each step, as well as the quantity of wood and glue needed.
With the basic materials determined, it is important to establish the duration for each step until the project is completed. A work schedule is essential for effective management to track progress and ensure completion within the designated time frame, while also maintaining accuracy and cost efficiency. Additionally, management must decide the order in which orders are fulfilled or prioritize job tasks for different components. After establishing the sequence, it becomes necessary for management to assign the tasks to the appropriate employees and ensure they are fully aware of the schedule requirements.
Supervisors should consider additional operational tasks, such as the time and cost of setting up, ways to minimize lead time and work-in-progress inventory, and how to maximize machine and labor usage without affecting workflow. Suppose Stickley’s received a large order for 40 mission oak dining table sets. They must find the most efficient way to complete this order in a timely manner, avoiding excessive costs and meeting the customer’s specific requirements regarding time and value.
When completing larger bulk orders, it may be necessary to switch from a standard product layout to a process layout. This is in contrast to an assembly line or cellular layout. A product layout system uses standardized operations to ensure efficient, fast, and high-volume flow by assigning tasks evenly to workstations. This helps to ensure that each workstation has a similar amount of work. (Stevenson, 2009) Each station is assigned specific timeframes to accommodate the necessary steps, which are referred to as cycle times.
In order to maintain a consistent workflow, it is important to minimize downtime by assigning each part to the appropriate steps and keeping each station constantly active. A process layout system can accommodate various processing needs simultaneously (Stevenson, 2009). This system is the most effective way to produce a large quantity of complex items efficiently.
Process layouts have several benefits. One advantage is that the system is less susceptible to shutdowns caused by mechanical failure or absenteeism. This is because the equipment is arranged by type rather than by processing sequence (Stevenson, 2009). Another advantage is that process layouts decrease the physical distance between raw materials and the manufacturing floor. This organization of flow allows machines to work continuously, resulting in faster production and reduced manufacturing time. Additionally, process layouts help minimize waste.
There are drawbacks to choosing this process. Inventory costs may increase due to the need for having everything in stock to prevent downtime during reorder periods. Moreover, it can be challenging to route the necessary components without an efficient tracking system that monitors workers’ movements. Additionally, material handling is inefficient, equipment utilization rates may be low, and unit handling costs tend to be higher compared to product layouts. (Stevenson, 2009)
There can be job complexities that may reduce supervision and increase supervisory costs. Additionally, certain products may require special attention and result in more accounting and purchasing needs than product layouts (Stevenson, 2009). However, management can effectively manage these drawbacks by having sufficient labor and machinery to handle the high workload. A level production policy is suitable for high turnover, low-cost products.
While a level production policy can make employees efficient in their specific area, it may not satisfy them or result in cost savings if inventory becomes excessive. Although it increases production, if items don’t turnover rapidly enough, the cost outweighs the benefit. Moreover, this policy burdens employees.
Repeated or monotonous work environments diminish employee motivation and reduce the quality of their work. This not only hampers productivity but also poses health risks. Additionally, it limits a company’s flexibility, especially when producing products that are becoming obsolete, making it burdensome if demand suddenly changes. Furthermore, the industry they are in presents additional challenges related to the uniqueness of the products they produce.
As previously mentioned, if the products being produced do not have a high turnover, inventory costs will significantly increase with a level production policy. It is evident that furniture and the raw materials involved in its construction occupy a significant amount of space, making inventory costs a major expense for this type of production. Investors and other stakeholders may believe that there are preferable ways to allocate funds rather than keeping them tied up in inventory costs. Streamlining their system may involve adopting a Just-In-Time approach to production, which entails carefully predicting demand or implementing other planning methods.
Overall, Stickley’s performance in production, capacity, and sales is strong. There are opportunities to enhance production and facility effectiveness by implementing potentially expensive changes that will ultimately result in long-term returns. For instance, a popular upgrade is a digital product manufacturing system, which improves product tracking efficiency compared to the previous barcode method.
This will streamline the tracking process by using entered information instead of physically scanning barcodes, resulting in more efficient inventory management. Additionally, they could optimize their level production policy to reduce costs during fluctuations in demand. By being able to quickly adjust production to meet demand, they can better control inventory and material expenses.
Inventory costs can pose a significant threat during unfavorable economic conditions or shifts from outmoded to emerging products. Reducing these costs paves the way for enhanced working capital, allowing vital investments in operational efficiency, which in turn presents opportunities for advancement instead of merely maintaining the current state. The resultant surplus cash flow, previously locked up in storage expenses, can be utilized to enhance marketing efforts during off-peak seasons or sluggish demand periods. Allocating funds towards advertising proves to be a superior alternative, compared to allotting them for retaining inventory that may or may not be sold shortly.
Another way to cut costs is by hiring seasonal employees during slow periods, among other measures to accommodate changes in demand. Stickley has challenges ahead in order to stay relevant in this industry, but they are taking the necessary steps to maintain operational relevance.
Stickley will continue to face the challenge of capitalism as they strive to enhance operational efficiency, minimize costs, maintain competitiveness based on economies of scale, and stay ahead of technological advancements in the industry. According to Beireleing (1992), a plant must have low processing costs and a strategic location to minimize overall processing and transportation expenses in order to be part of an efficient system.
As management of Stickley, it is crucial to enhance process flows and maintain the relevance of employee skill sets. Additionally, it is important to ensure competitive hiring in the future. Stickley has successfully managed to maintain operations at a high level without compromising demand. However, it is necessary to remain mindful of the increasing long-term challenges ahead.
References
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- Horacio Soriano-Meier, Paul L. Forrester, Sibi Markose, & Jose Arturo Garza-Reyes. 2011). The role of the physical layout in the implementation of lean management initiatives. International Journal of Lean Six Sigma, 2(3), 254-269.
- Stevenson, W. J. (2009). Operations Management (10th ed. ). New York: McGraw Hill/Irwin.
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- Shahram Taj, & Cristian Morosan. (2011). The impact of lean operations on the Chinese manufacturing performance. Journal of Manufacturing Technology Management, 22(2), 223-240.
