| Brown Jordan International: Recreating a Legacy |
| Manufacturing | |||
| Written by Eric Slack | |||
| Sunday, 01 June 2008 | |||
 Gene Moriarty tells us how leadership turned around a falling giant in furniture design and manufacturing.
From 2002 to 2004, the company known as the first manufacturer of full-time outdoor furniture was drowning in debt. According to Gene Moriarty, president and CEO, it took a leadership and process overhaul to put BJI on a solid path.  Gene Moriarty, President and CEO “These things caused the company to miss revenue targets month after month. The company restructured its debt into high debt-bearing bonds and ended up in a continual three-year erosion of earnings while interest costs skyrocketed,” said Moriarty. “This put an enormous amount of debt in interest on the company, with operating income at two-thirds where it had been.” Simplicity rules To right the ship, BJI brought in some new blood, including Moriarty, and defined its core competencies. First, the company realized to be successful it needed low-cost manufacturing that provided it with redundancy on a domestic, Mexican, and Chinese basis. BJI then tried to determine where it would get the lowest cost, without sacrificing quality and service, depending on its respective business lines. With its national account business, which supplies big box retailers, the company went with a direct import model from China. Domestic and Mexican supply chains with company-controlled manufacturing were the most efficient means of manufacturing for its specialty retail business, which is highlighted by Brown Jordan and Winston Furniture brands. “By focusing on low-cost manufacturing per business line, we could do a complete portfolio assessment of all SKUs in each business,” said Moriarty. “We could examine everything from a volume and profit standpoint to determine what lines we wanted to keep as we reduced brands.” As part of this assessment, the company focused on two key strengths—its national account business as a private label manufacturer and its specialty business and two major brands. With two of the strongest brands in the industry, the creation of so many sub-brands was counterproductive. BJI eliminated half its SKUs to focus on building Brown Jordan and Winston. The national account business entered into a licensed manufacturing agreement with La-Z-Boy to differentiate from private label operations, giving it the strength to target key retailers. Next, the company looked to improve quality and service. As a seasonal-based business, timely service and reduced lead times are critical. The faster a company gets products to the retailer at desired inventory levels, the better it can expose its brands and sell products. Streamlining SKUs and simplifying its supply chain improved lead times. With Brown Jordan and Winston, lead times taking eight to 14 weeks reduced to four. Customers were now confident that orders would be complete, on time, and to high quality standards. The company also returned to the successful decentralized model and improved talent at each respective business. This meant less corporate control by focusing on individual business units. Key people were also assigned to crucial positions. The company hired from the outside for a new specialty retail business leader, while it promoted internally for a new national account leader. “We filled ourselves in with talent top to bottom, which was upgraded over where we were,” Moriarty said. “We created a strong management team with disciplined business practices and focused our energies on our core competencies.” So far, we’ve looked at three of the four competencies—low cost manufacturing, quality and service, and brand building. The fourth is new product development. This is what built Brown Jordan’s reputation in the first place, something that was forgotten during the downturn. To win in this industry, companies need first-class design and aesthetics. Service and quality, brand awareness, and low-cost manufacturing only go so far. Therefore, BJI created a new product development process from the ground up. It starts with understanding needs in the market, soliciting input from designers and retailers, and using regular cross-functional meetings and metrics to determine if projects are meeting milestones, such as volume estimates. If a project misses the mark, it gets shelved. “The discipline to say a project isn’t meeting targets so we’re not going to launch was lacking before, as was cross-functional input,” said Moriarty. “The focus was on designs from China, rather than designing from our strong heritage. Design became one of our failures, but bringing it back had a positive impact on our growth.” Furniture companies struggle in down markets, but BJI is still growing through the first quarter of the year. Cost increases in China due to wage and raw material hikes are impacting BJI’s national accounts business. The company stayed ahead of that by looking for new, large suppliers in China with disciplined lean principles. In the long term, BJI may diversify into other developing countries. Increases in raw material costs from US suppliers and growing freight charges due to rising fuel costs are also troubling. The question is how much will be passed to consumers versus how much can be controlled through improved processes. With the marketplace likely to become less fragmented, economic shrinkage of the field will give BJI opportunities to gain marketshare, making product design more important. After acquiring casting and aluminum facilities last year, design houses are now high on Moriarty’s list. “We need to expand internationally, so we’re looking to Europe for a potential design acquisition,” Moriarty said. |
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© 2008 American Executive - RedCoat Publishing. All rights reserved.
American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
