ARCHBOLD, Ohio–Sauder Woodworking, North America’s largest manufacturer of ready-to-assemble furniture, said today it would scale down its domestic RTA operations.
By midyear, Sauder will reduce the number of products the company makes in its plant here and automate several functions, including order entry and delivery verification, which will primarily affect smaller and non-North American retail customers. This will allow the company to streamline its operations, run more efficiently and serve its core customers more effectively, Sauder officials said.
“The last six months we have been focusing on top-line sales growth,” Kevin Sauder, president and chief executive officer, told HFN. “We were up to 1,100 SKUs, but 700 of them represented 90 percent of the business. If we simplified, we could increase our [production] run size, decrease down time, improve service levels and improve profitability,” Sauder said.
Cut from the line will be some kitchen and bath products, sewing cabinets and some storage pieces. Certain high-end office and entertainment pieces that didn’t represent strong dollars-per-SKU will also be edited, Sauder said. Meanwhile, the company “had too many domestic SKUs in bedroom, so we converted many of them to imports through our Sauder Global Sourcing division,” Sauder said. “We’re still trying to provide options for our retailers, but you’ve got to do it right and you’ve got to do it for profit.”
Sauder’s new Sustainable Business Plan calls for increased automation of certain back office functions, which requires some restructuring in its management and staff areas. This will result in 70 to 80 positions being eliminated, plus a number of internal transfers and reassignments. The areas are across the board, affecting directors, analysts, engineers and clerical staff, Sauder said.
Another component of Sauder’s strategy, business simplification, provides for continued efforts of the last few years to transform the entire operation into a lean enterprise. Sauder said the company’s lean focus will enhance the quality, cost and delivery of products and services to its customers.
“As the business has grown and become more complex, we have seen our fixed cost structure get out of alignment with the realities of this competitive marketplace,” Sauder said. “It hurts us deeply to make these cuts, but the business needs to get back to a sustainable level of profitability.”
Production levels have remained steady in the first quarter of 2008 and sales are up slightly over 2007, but again it’s bottom-line growth the company is seeking, the executive said.