UK: Stoves' recipe for becoming a world beater. (3 of 3)

UK: Stoves' recipe for becoming a world beater. (3 of 3) - Central to the cultural revolution is a programme called Zap. It does not mean anything very precise, Crathorne explains, just doing something better: continuous improvement Stoves-style. Skills

by
Last Updated: 31 Aug 2010

Central to the cultural revolution is a programme called Zap. It does not mean anything very precise, Crathorne explains, just doing something better: continuous improvement Stoves-style. Skills training is an essential ingredient of Zap; so is individual responsibility for quality; so are just-in-time (JIT) methods.

Real progress has been made with JIT. The supplier base is down from around 180 to 63, and the company is building long-term partnerships. There is now one supplier of steel, for example - and the press shop manager reorders as required. Steel stocks, said to have tied up £700,000 at one time, are worth only £40,000 today. Crathorne says that partnerships have helped to stabilise prices. Stoves' reputation for on-time delivery has gone from worst to best.

It could not be claimed that the former Valor Stove Works, employing 500 people at Prescot, is the best factory in Britain. But it would be a strong contender for the title of most improved factory over the past couple of years. And three new production lines are being installed, at a cost of well over £3 million, to create what Crathorne promises will be "the most flexible system for manufacturing cookers in Europe".

At the heart of the factory will be the hydroforming plant, which will mould steel into shape by water pressure which will make it possible to produce ovens ("cavities" in the trade) of almost any size out of a single piece of steel so that the company will be able to manufacture cookers in huge variety using the modular principle. The customer will be free to specify exact requirements and off the line the cooker will roll. The "new technology" should bring further quality improvements, since it will greatly reduce the number of unique parts going into the product.

Other novelties concern only the product, not the process - like the glass oven door, cool to the touch even with a cake baking behind it. Stoves is seeking patent protection for this. But then the R and D department, headed by Gostelow, who has been designing domestic appliances for 30 years and is as near to the slightly odd but brilliant boffin of popular mythology as the industry can show, has lately been filing patent applications at the rate of one a month.

All of these developments suggest that O'Connor's conception of the quality-driven company might not be mistaken after all. Recession or not, Stoves is very much alive, and there are few signs of impending sickness. True, the business has not yet made a profit. But by the end of year one (May 1990) the £4 million loss of the previous regime had shrivelled to £1.6 million before extraordinary items. Last year, reports Crathorne, the loss was "more than halved again".

Moreover, despite exceptional spending, Stoves is not yet strapped for cash. "We are only now beginning to take down the medium-term borrowings," says Crathorne. The only "incremental financing" has been the result of buying a small bankrupt shower manufacturer, which will fill some of the newly vacant space at Prescot, and may help to open up continental markets.

What has not yet been shown is whether Stoves can create the essential strong brand image. The company has spent £300,000 on market research during the past two years - more than the rest of the industry combined, Crathorne believes. One finding has been that brands mean little in the appliance business. Among households planning to replace their cooker within three years, 92% had no preference for a particular brand. And no brand had the loyalty of 2%.

Stoves will continue to make cookers carrying the Valor name. But Valor (like all of its competitors, Stoves men would contend) is a "retail push" brand: it sells because it is in the showroom and the salesman can point to characteristics which might suit certain customers. Products with the Stoves name began appearing at the end of last year, and will be launched thick and fast. They will be different: premium priced, high quality, with a number of innovative features. They will sell because they are desirable (ie. by consumer pull), because guests will notice them, just as they note the Miele fridge and the BMW outside. That is the idea anyway. "The proof of the pudding was always going to be Phase Three," says Crathorne.

So everything could depend on the state of the economy, even now. But so far so good.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today