During my visit to The Netherlands, I had the pleasure to spend a couple of hours with Dennis Goethals, Managing Director and CEO of DesignOnStock, a furniture manufacturer in Tilburg, The Netherlands. What I saw and heard were all of the critical elements I have seen in organizations that pull this off in a spectacular fashion.
It starts, as always, with leadership. DesignOnStock, like every other success story I have experienced, has a leader who dedicated to his personal learning and understanding – at a level way beyond the common, but hollow, statements of “committed.” He is down on his shop floor, exploring the flow, looking for the next problem, and working the organization through a solution.
The results? He can deliver a custom order in 1/10 the time of his competitors. In these hard times, his business is increasing because he can offer quick turn-arounds to his customers who don’t want to keep a lot of inventory in anticipation of sales. They can sell one, order one, and have the replacement in a few days.
Rather than trying to recall the details myself, I asked Dennis to share his story as an interview.
How did you first get into the furniture manufacturing business, and what was your experience there?
Dennis: I studied Economics at Erasmus University in Rotterdam. My father had a small upholstery company. When he got sick, we agreed I would come and we would work together. My experience was that the furniture making industry is very traditional. No real partnership between companies. Very small companies in the whole industry. (the biggest in Holland is 350 people, on average 10-20 people per company). As I am an entrepreneur I thought this is the perfect industry to work in. High prices, some volume and not so much really strong competition. We worked like crazy and in 4 years time we grew from 5 to 25 people and from 300.000 usd to 6.000.000 usd. Sales was not our problem, we had great difficulty organizing our production. So much difficulty that at some stage I decided to sell the company and move the factory to Turkey.
Ed. Note: To fill in a gap in the timeline here, Dennis formed a partnership and opened another factory in Tilburg which was being set up traditionally when he then encountered “lean manufacturing.”
When did you first encounter “lean manufacturing?”
What was your initial reaction?
Dennis: Steven Blom introduced Lean manufacturing to me on 6th of December 2006 at 11.30 in the morning. I thought it was the most brilliant thing I had ever seen in my life! I realized I knew nothing about production, only what I had seen at other companies. And I was amazed not everybody is doing this.
What kind of problems did you have to overcome as you tried to implement flow?
How did you go about solving those problems?
Dennis: We had 2 big problems implementing flow:
First, when you implement flow it becomes very clear what everybody in the production line is doing. We had to replace some operators who didn’t like the idea of the ‘flow’ of their work to be visible. We ended up replacing almost 1/3 of the workforce because they didn’t want to leave the idea of batch production. This was very hard to do, letting people go is always difficult. But for us this was the only way.
And second, when you implement flow you have to make sure that the supply of parts is well organized, otherwise your line is down most of the time. We started to use kanban to order our parts to solve this. In ordering materials for your production line, kanban is the most brilliant thing I have ever seen.
What has this done for your business and your competitiveness up to this point?
How have you been effected by the global economic conditions?
Dennis: It has been an amazing experience. We reduced our lead time from 30 days to 3 days. We reduced inventory 60%. Our product quality has increased, our profit has tripled. We are the only company in the Netherlands who can ship a custom build sofa within the week! Due to the economic crisis a lot of our customers have cash flow issues. We are the only player in the market who can generate cash within 2 weeks. A lot of customers focus on selling designonstock.com products to improve their cash position. We increased turnover by 10% and due to further cost reductions we increased revenue by 60%.
Where do you think you are now on the “lean journey?”
What are your next steps?
Dennis: We have just begun our lean journey. The first thing we did was to implement one piece flow. This was the big breakthrough. Now we are fine tuning the tools you need to do one piece flow. I think we can double the output without increasing our workforce. We will do a lot of work ‘upstream.’ In his visit Mark explained this to me and this has brought a lot of new energy to us. We will try to further reduce inventory, simplify our system and we will have a very big focus on visualization and standardization in the months to come.
Do you have any advice for people who are wondering if this will work for them?
Dennis: I would use the Nike slogan: Just do it! When you first start to hear about lean, WCM (World Class Manufacturing), one piece flow, kanban etc. it all sounds a bit strange. Start with something really small. Like buy your groceries with a kanban system. That is how I learned it. This is a way of thinking, not a system you implement and then go back to business as usual. When you really get this, it will change all!
To conclude I would like to quote Lao Tze: Show me and I will look. Tell me and I will listen. Let me experience and I will learn.
I would like to offer thanks, again, to Dennis for taking his valuable time both to show me around his plant, and to respond with his own words for the story of his experience. What I appreciate most, I think, is that he is not resting on his accomplishments. Rather, he sees what he has done so far only as a foundation.