Case Study Concept Design Services

Topics: Manufacturing Pages: 7 (3677 words) Published: December 13, 2014
Case Study; Concept Design Services

Introduction
“Over a 10-year period we have totally transformed our outlook, our resources and our prospects. From being and inward-looking manufacturing company, we have become a customer-focused, integrated service provider. From a large commodity supplier, we have become known for our value-added and innovative designs. Most importantly, our performance as a company has been little short of spectacular, and I see no reason why we cannot continue on this upward path [table 5.1]. I know that the Group board is very impressed with our achievements, and uses this subsidiary as its best example of successful innovation.”

James Thompson, the CEO of Concept Design Services (CDS), knew his confidence was shared by his colleagues. After all, CDS was believed to be one of Europe’s most profitable plastic household products (home-ware) businesses. Originally founded in the 1960s as Focus Plastics, the company’s growth had come initially from the manufacture of complex injection-moulded plastic components for large industrial customers. Following the acquisition of the company by a large consumer products group, it had rapidly extended its range to include popular household items such as washing up bowls, pedal bins, baby baths, buckets and dustpans. These were sold under the Focus brand name, initially through wholesale distributors and then increasingly to large national do-it-yourself (DIY) stores, often referred to as “sheds”. By the early 1990’s the home-ware business had grown to account for over 80% of turnover, which had itself more than doubled in 10 years. Additional large injection-moulding machines had been purchased to cope with the rapidly growing volumes of products. These machines provided many economies of scale that enabled the company to compete aggressively in a market where barriers to entry were low. However, competition was increasing, mainly from small, specialised manufacturers with low overheads. The range of products supplied by these companies was often quite limited (just buckets and bowls, for example), largely because of the high costs of moulds, which would be up to £50,000 each.

The products
By 1989 the company produced around 200 home-ware stock –keeping units (SKUs), and had developed a reputation as a reliable source of supply of consistently high-quality products. It was then decided to withdraw from the complex and cyclical industrial mouldings market in order to concentrate on developing the more profitable household products business. James Thompson explained:

Table 5.1 CDS Selected financial information (3 years ending 31 December)

All figures in £000
 
1989
1991
1993
1995
1997
1999
2001
Fixed Assets
3366
3312
2394
2520
3672
5028
5880
Plant & equipment
612
780
1020
1080
1920
3504
3720
Moulds

Total
3978
4092
3414
3600
5592
8532
9600
Current Assets
2898
4464
5052
4902
7926
5778
8238
Debtors Inventory
1572
3516
6174
7554
9354
13458
15402

Total
4470
7980
11226
12456
17280
19236
23640
Total Assets
8448
12072
14640
16056
22872
27768
33240
Financed by;
 
 
 
 
 
 
 
Share capital retained
300
300
300
300
300
300
300
Profits
1680
3180
4920
5280
6720
10560
15960
Loans from Group
2700
2520
3180
3420
4980
4740
2940

Total
4680
6000
8400
9000
12000
15600
19200
Current liabilities
3756
3192
3768
6804
10644
10464
10590
Creditors bank
12
2880
2472
252
228
1704
3450

Total
3768
6072
6240
7056
10872
12168
14040
Total Liabilities
8448
12072
14640
16056
22872
27768
33240
Sales and profits
15132
17232
25272
26796
30648
32364
48126
Net sales, net profits
876
1110
1644
2172
3372
4248
6300
before tax
 
 
 
 
 
 
 
Sales by market
3020
17232
18450
17480
15560
13244
13066
Industrial Focus...
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