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was getting tight. The order should be received before the beginning of October, for delivery by mid-November an unusually short lead-time considering the size and special requirements of the order.

Questions
1 What are the external performance objectives for the M&S business, and how do these differ from those for existing customers? 2 What are the potential risks and rewards of accepting the order from M&S?

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CASE

Case date 2002

Stuart Chambers and Nigel Slack

Introduction

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Table 5.1 CDS Selected financial information (years ending 31 December)


All figures in 000 1989 Fixed assets: Plant and equipment Moulds Total Current assets: Debtors Inventory Total Total assets Financed by: 1991 1993 1995 1997 1999 2001

3366 612 3978

3312 780 4092

2394 1020 3414

2520 1080 3600

3672 1920 5592

5028 3504 8532

5880 3720 9600

2898 1572 4470 8448

4464 3516 7980 12072

5052 6174 11226 14640

4902 7554 12456 16056

7926 9354 17280 22872

5778 13458 19236 27768

8238 15402 23640 33240

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do business with. They were always changing their schedules, but at the same time they would not guarantee long-term continuity of business. In the end, we decided that the industrial business did not fit well and was particularly difficult to plan and control alongside household products. Even in the Sales Office, it was felt that the commercial relationships with household product wholesalers and DIY sheds were clearer and under control, whereas business with the industrial customers was unpredictable and unstable. Schedule changes in quantity and delivery date were an everyday occurrence that disrupted the office and caused most internal communication problems. So, by 1990 all our industrial business had been terminated. But our decision to concentrate on one, relatively new market was recognised as carrying risks, and we were determined to differentiate ourselves from competitors. There were some very competent, smaller manufacturers that could compete in some of the volume business by undercutting our prices, not least because our overheads were higher than theirs! We were using the latest, precision equipment, bought the best-quality moulds, and generally positioned ourselves as technical professionals with a customer-focused service. We knew that we had to exploit these differences, and that we would have to look for new markets that would really value our capabilities.

Market positioning

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add to this. Our research indicated that some customers kept our products on display in their kitchens as objects of beauty, or even as tokens or symbols of their lifestyle, rather than hiding them away in cupboards. We exploited this idea in our advertising, and guarantee to supply retailers any item in any colour for at least four years. To keep ahead, we continue to launch new ranges and colours at regular intervals. We now have the most comprehensive range of designer items in the market: there are now six separate style ranges, and many of these are offered in up to 12 contemporary colours. The Concept ranges are highly profitable, both for us and for the many thousands of retailers throughout Europe that stock our products. In contrast to the success of Concept, we now clearly understand that many of the Focus products have effectively become commodities, as numerous competitors have gradually eroded market prices. Supply Services continues to provide a basic support to Focus customers in terms of routine order processing and production planning, whilst our Sales activity is largely confined to annual bidding for large contracts. I certainly intend that we should continue to replace this declining, low-margin Focus business with the exciting new Concept ranges and other growth opportunities that we have identified. In addition to continuing development of Concept, over the last two 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 continental Europe where the design houses now appreciate our ability to offer a full service. We can develop products in conjunction with their own design staff and offer them a level of manufacturing expertise they cant get elsewhere. Most significantly, we can offer a Europe-wide distribution service that is tailored to their needs. From the customers point of view, the distribution arrangements appear to belong to the design house itself. In reality, they are

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Preface Acknowledgements Introduction to operations management case analysis Introduction to Part 1 CASE Introduction to Part 2 Introduction to Part 3 Introduction to Part 4 Introduction to Part 5 Quality planning and control Introduction to Part 6 Introduction to Part 7

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