Question: Fabulous Footwear produces a line of women’
Fabulous Footwear produces a line of women’s shoes that sell in the lower-price market for $27.99 to $29.99 per pair. Profits averaged 30 cents to 50 cents per pair 10 years ago, but according to the president and the controller, labor and materials costs have risen so much in the intervening period that profits today average only 25 cents to 30 cents per pair.
Production at both the company’s plants totals 12,500 pairs per day. The two factories are located within a radius of 60 miles of Chicago: one at Centerville, which produces 4,500 pairs per day, and the other at Meadowvale, which produces 8,000 pairs per day. Company headquarters is located in a building adjacent to the Centerville plant.
It is difficult to give an accurate picture of the number of items in the company’s product line. Shoes change in style perhaps more rapidly than any other style product, including garments. This is chiefly because it is possi- ble to change production processes quickly and because, historically, each company, in attempting to get ahead of competitors, gradually made style changes more frequently. At present, including both major and minor style changes, Fabulous Footwear offers 100 to 120 different products to customers each year.
A partial organizational chart, showing the departments involved in this case, appears in Exhibit 12.9
Competitive Structure of the Industry
Very large general shoe houses, such as International and Brown, carry a line of women’s shoes and are able to undercut prices charged by Fabulous Footwear, principally because of the policy in the big companies of producing large numbers of “stable†shoes, such as the plain pump and the loafer. They do not attempt to change styles as rap- idly as their smaller competitors. Thus, without constant changes in production processes and sales presentations, they are able to keep costs substantially lower.
Charles F. Allison, the president of Fabulous Footwear, feels that the only way for a small independent company to be competitive is to change styles frequently, taking advantage of the flexibility of a small organization to cre- ate designs that appeal to customers. Thus, demand can be created and a price set high enough to make a profit. Allison, incidentally, appears to have an artistic talent in styling and a record of successful judgments in approving high-volume styles over the years.
Regarding how Fabulous Footwear differs from its large competitors, Allison has said:
You see, Brown and International Shoe Company both pro- duce hundreds of thousands of the same pair of shoes. They store them in inventory at their factories. Their customers, the large wholesalers and retailers, simply know their line and send in orders. They do not have to change styles nearly as often as we do. Sometimes I wish we could do that, too. It makes for a much more stable and orderly system. There is also less friction between people inside the company. The salespeople always know what they’re selling; the production people know what is expected of them. The plant personnel are not shook up so often by someone coming in one morning and tampering with their machine lines or their schedules. The styling people are not shook up so often by the plant saying, “We can’t do your new style the way you want it.â€
To help Fabulous Footwear be more competitive against larger firms, Allison recently created an e-commerce and social media department. Although his main interest was in marketing over the Internet, he also hoped new technology would help reduce some of the internal fric- tion by giving people an easier way to communicate. He invested in sophisticated new information technology and hired consultants to set up a company intranet and pro- vide a few days’ training to upper and middle managers. Katherine Olsen came on board as director of e-commerce, charged primarily with coordinating Internet marketing and sales. When she took the job, she had visions of one day offering consumers the option of customized shoe designs. However, Olsen was somewhat surprised to learn that most employees still refused to use the intranet even for internal communication and coordination. The process for deciding on new styles, for example, had not changed since the 1980s.
EXHIBIT 12.9
Partial Organization Chart of Fabulous Footwear
![Fabulous Footwear produces a line of women’s shoes that sell in the lower-price market for $27.99 to $29.99 per pair. Profits averaged 30 cents to 50 cents per pair 10 years ago, but according to the president and the controller, labor and materials costs have risen so much in the intervening period that profits today average only 25 cents to 30 cents per pair.
Production at both the company’s plants totals 12,500 pairs per day. The two factories are located within a radius of 60 miles of Chicago: one at Centerville, which produces 4,500 pairs per day, and the other at Meadowvale, which produces 8,000 pairs per day. Company headquarters is located in a building adjacent to the Centerville plant.
It is difficult to give an accurate picture of the number of items in the company’s product line. Shoes change in style perhaps more rapidly than any other style product, including garments. This is chiefly because it is possi- ble to change production processes quickly and because, historically, each company, in attempting to get ahead of competitors, gradually made style changes more frequently. At present, including both major and minor style changes, Fabulous Footwear offers 100 to 120 different products to customers each year.
A partial organizational chart, showing the departments involved in this case, appears in Exhibit 12.9
Competitive Structure of the Industry
Very large general shoe houses, such as International and Brown, carry a line of women’s shoes and are able to undercut prices charged by Fabulous Footwear, principally because of the policy in the big companies of producing large numbers of “stable” shoes, such as the plain pump and the loafer. They do not attempt to change styles as rap- idly as their smaller competitors. Thus, without constant changes in production processes and sales presentations, they are able to keep costs substantially lower.
Charles F. Allison, the president of Fabulous Footwear, feels that the only way for a small independent company to be competitive is to change styles frequently, taking advantage of the flexibility of a small organization to cre- ate designs that appeal to customers. Thus, demand can be created and a price set high enough to make a profit. Allison, incidentally, appears to have an artistic talent in styling and a record of successful judgments in approving high-volume styles over the years.
Regarding how Fabulous Footwear differs from its large competitors, Allison has said:
You see, Brown and International Shoe Company both pro- duce hundreds of thousands of the same pair of shoes. They store them in inventory at their factories. Their customers, the large wholesalers and retailers, simply know their line and send in orders. They do not have to change styles nearly as often as we do. Sometimes I wish we could do that, too. It makes for a much more stable and orderly system. There is also less friction between people inside the company. The salespeople always know what they’re selling; the production people know what is expected of them. The plant personnel are not shook up so often by someone coming in one morning and tampering with their machine lines or their schedules. The styling people are not shook up so often by the plant saying, “We can’t do your new style the way you want it.”
To help Fabulous Footwear be more competitive against larger firms, Allison recently created an e-commerce and social media department. Although his main interest was in marketing over the Internet, he also hoped new technology would help reduce some of the internal fric- tion by giving people an easier way to communicate. He invested in sophisticated new information technology and hired consultants to set up a company intranet and pro- vide a few days’ training to upper and middle managers. Katherine Olsen came on board as director of e-commerce, charged primarily with coordinating Internet marketing and sales. When she took the job, she had visions of one day offering consumers the option of customized shoe designs. However, Olsen was somewhat surprised to learn that most employees still refused to use the intranet even for internal communication and coordination. The process for deciding on new styles, for example, had not changed since the 1980s.
EXHIBIT 12.9
Partial Organization Chart of Fabulous Footwear
Major Style Changes
The decision about whether to put a certain style into production requires information from a number of different people. Here is what typically happens in the company. It may be helpful to follow the organization chart (see Exhibit 12.9) tracing the procedure.
M. T. Lawson, the styling manager, and his designer, John Flynn, originate most of the ideas about shape, size of heel, use of flat sole or heels, and findings (the term used for ornaments attached to, but not part of, the shoes— bows, straps, and so forth). They get their ideas principally from reading style and trade magazines or by copying top- flight designers. Lawson corresponds with publications and friends in large stores in New York, Rome, and Paris to obtain pictures and samples of up-to-the-minute style innovations. Although he uses e-mail occasionally, Lawson prefers telephone contact and receiving drawings or samples by overnight mail. Then, he and Flynn discuss various ideas and come up with design options.
When Lawson decides on a design, he takes a sketch to Allison, who either approves or disapproves it. If Allison approves, he (Allison) then passes the sketch on to L. K. Shipton, the sales manager, to find out what lasts (widths) should be chosen. Shipton, in turn, forwards the design to Martin Freeman, a statistician in the sales department, who maintains summary information on customer demand for colors and lasts.
To compile this information, Freeman visits salespeople twice a year to get their opinions on the colors and lasts that are selling best, and he keeps records of shipments by color and by last. For these needs, he simply totals data that are sent to him by the shipping foreman in each of the two plants. When Freeman has decided on the lasts and colors, he sends Allison a form that lists the colors and lasts in which the shoe should be produced. Allison, if he approves this list, forwards the information to Lawson, who passes it on to Jenna Richards, an expert pattern maker. Richards makes a paper pattern and then constructs a prototype in leather and paper. She sends this to Lawson, who in turn approves or disapproves it. He forwards any approved prototype to Allison. Allison, if he, too, approves, notifies Lawson, who takes the prototype to Paul Robbins, assistant to the superintendent of the Centerville plant. Only this plant produces small quantities of new or experimental shoe styles. This is referred to as a “pilot run” by executives at the plant.
Robbins then literally carries the prototype through the six production departments of the plant—from cutting to finishing—discussing it with each foreman, who in turn works with employees on the machines in having a sam- ple lot of several thousand pairs made. When the finished lot is delivered by the finishing foreman to the shipping foreman (because of the importance of styling, Allison has directed that each foreman personally deliver styling good in process to the foreman of the next department), the latter holds the inventory in storage and sends one pair each to Allison and Lawson. If they approve of the finished product, Allison instructs the shipping foreman to mail samples to each of the company’s twenty-two salespeople throughout the country. Olsen also receives samples, photos, and drawings to post on the web page and gauge customer interest.
Salespeople have instructions to take the samples immediately (within one week) to at least 10 customers. Orders for already established shoes are normally sent to Ralph Ferguson, a clerk in Shipton’s office, who records them and forwards them to the plant superintendents for production. However, salespeople have found by experience that Martin Freeman has a greater interest in the success of new “trials,” so they rush these orders to him by overnight mail, and he in turn places the first orders for a new style in the interoffice mail to the plant superintendents. He then sends off a duplicate of the order, mailed in by the salespeople, to Ferguson for entering in his statistical record of all orders received by the company.
Three weeks after the salespeople receive samples, Allison requires Ralph Ferguson to give him a tabulation of orders. At that time, he decides whether the salespeople and the web page should push the item and the superintendents should produce large quantities, or whether he will tell them that although existing orders will be produced, the item will be discontinued in a short time.
According to Allison, the procedures outlined here have worked reasonably well.
The average time from when Lawson decides on a design until we notify the Centerville plant to produce the pilot run is two weeks to a month. Of course, if we could speed that up, it would make the company just that much more secure in staying in the game against the big companies, and in taking sales away from our competitors. There seems to be endless bickering among people around here involved in the styling phase of the business. That’s to be expected when you have to move fast—there isn’t much time to stop and observe all of the social amenities. I have never thought that a formal organization chart would be good in this company—we’ve worked out a customary system here that functions well.
M. T. Lawson, manager of styling, said that within his department all work seems to get out in minimum time; he also stated that both Flynn and Richards are good employ- ees and skilled in their work. He mentioned that Flynn had been in to see him twice in the last year:
To inquire about his [Flynn’s] future in the company. He is 33 years old and has three children. I know that he is eager to make money, and I assured him that over the years we can raise him right along from the $65,000 we are now paying. Actually, he has learned a lot about shoe styles since we hired him from the design department of a fabric company six years ago.
John Flynn revealed:
I was actually becoming dissatisfied with this job. All shoe companies copy styles—it’s a generally accepted practice within the industry. But I’ve picked up a real feel for de- signs, and several times I’ve suggested that the company make all its own original styles. We could make Fabulous Footwear a style leader and also increase our volume. When I ask Lawson about this, he says it takes too much time for the designer to create originals—that we have all we can handle to do research in trade magazines and maintain con- tracts feeding us the results of experts. Besides, he says our styles are standing the test of the marketplace.
Projects X and Y
Flynn also said that he and Martin Freeman had frequently talked about the styling problem. They felt that:
Allison is really a great president, and the company sure- ly would be lost without him. However, we’ve seen times when he lost a lot of money on bad judgments in styles. Not many times—perhaps six or seven times in the last eighteen months. Also, he is, of course, extremely busy as president of the corporation. He must look after everything from financing from the banks to bargaining with the union. The result is that he is sometimes unavailable to do his styling approvals for several days, or even two weeks. In a business like this, that kind of delay can cost money. It also makes him slightly edgy. It tends, at times when he has many other things to do, to make him look quickly at the styles we submit, or the prototypes Richards makes, or even the finished shoes that are sent for approval by the shipping foreman. Sometimes I worry that he makes two kinds of errors. He simply rubber-stamps what we’ve done, which makes sending these things to him a waste of time. At other times he makes snap judgments of his own, overruling those of us who have spent so much time and expertise on the shoe. We do think he has good judgment, but he himself has said at times that he wishes he had more time to concentrate on styling and approval of prototypes and final products.
Flynn further explained (and this was corroborated by Freeman) that the two had worked out two plans, which they referred to as “project X” and “project Y.” In the first, Flynn created an original design that was not copied from existing styles. Freeman then gave special attention to color and last research for the shoe and recommended a color line that didn’t exactly fit past records on consumer purchases—but one he and Flynn thought would have “great consumer appeal.” This design and color recommendation was accepted by Lawson and Allison; the shoe went into production and was one of the three top sellers during the calendar year. The latter two men did not know that the shoe was styled in a different way from the usual procedure.
The result of a second, similar project (Y) was put into production the next year, but this time sales were discontinued after three weeks.
Problem Between Lawson and Robbins
Frequently, perhaps 10 to 12 times a year, disagreement arises between Mel Lawson, manager of styling, and Paul Robbins, assistant to the superintendent of the Centerville plant. Robbins said:
The styling people don’t understand what it means to pro- duce a shoe in the quantities that we do, and to make the changes in production that we have to. They dream up a style quickly, out of thin air. They do not realize that we have a lot of machines that have to be adjusted and that some things they dream up take much longer on certain machines than others, thus creating a bottleneck in the production line. If they put a bow or strap in one position rather than another, it may mean we have to keep people idle on later machines while there is a pileup on the sewing machines on which this complicated little operation is performed. This costs the plant money. Furthermore, there are times when they get the prototype here late, and either the foremen and I work overtime or the trial run won’t get through in time to have new production runs on new styles, to take the plant capacity liberated by our stopping production on old styles. Lawson doesn’t know much about production and sales and the whole company. I think all he does is to bring shoes down here to the plant, sort of like a messenger boy. Why should he be so hard to get along with? He isn’t getting paid any more than I am, and my position in the plant is just as important as his.
Lawson, in turn, said that he has a difficult time get- ting along with Robbins:
There are many times when Robbins is just unreasonable. I take prototypes to him five or six times a month, and other minor style changes to him six or eight times. I tell him every time that we have problems in getting these ready, but he knows only about the plant, and telling him doesn’t seem to do any good. When we first joined the company, we got along all right, but he has gotten harder and harder to get along with.
Other Problems
Ralph Ferguson, the clerk in the sales department who receives orders from salespeople and forwards totals for production schedules to the two plant superintendents, has complained that the salespeople and Freeman are bypassing him in their practice of sending experimental shoe orders to Freeman. He insisted that his job description (one of only two written descriptions in the company) gives him responsibility for receiving all orders throughout the company and for maintaining historical statistics on shipments.
Both the salespeople and Freeman, on the other hand, said that before they started the new practice (that is, when Ferguson still received the experimental shoe orders), there were at least 8 or 10 instances a year when these were delayed from 1 to 3 days on Ferguson’s desk. They reported that Ferguson just wasn’t interested in new styles, so the salespeople “just started sending them to Freeman.” Ferguson acknowledged that there were times of short delay, but said that there were good reasons for them:
They [the salespeople and Freeman] are so interested in new designs, colors, and lasts that they can’t understand the importance of a systematic handling of the whole order procedure, including both old and new shoe styles. There must be accuracy. Sure, I give some priority to experimental orders, but sometimes when rush orders for existing company products are piling up, and when there’s a lot of planning I have to do to allocate production between Centerville and Meadowvale, I decide which comes first— processing of these, or processing the experimental shoe orders. Shipton is my boss, not the salespeople or Freeman. I’m going to insist that these orders come to me.
The Push for New Technology
Katherine Olsen believes many of these problems could be solved through better use of technology. She has approached Charles Allison several times about the need to make greater use of the expensive and sophisticated computer information systems he had installed. Although Allison always agrees with her, he has so far done nothing to help solve the problem. Olsen thinks the new technology could dramatically improve coordination at Fabulous Footwear.
Everyone needs to be working from the same data at the same time. As soon as Lawson and Flynn come up with a new design, it should be posted on the intranet so all of us can be informed. And everyone needs access to sales and order information, production schedules, and shipping deadlines. If everyone—from Allison down to the people in the production plants—was kept up to date throughout the entire process, we wouldn’t have all this confusion and bickering. But no one around here wants to give up any control—they all have their own little operations and don’t want to share information with anyone else. For example, I sometimes don’t even know there’s a new style in the works until I get finished samples and photos. No one seems to recognize that one of the biggest advantages of the Internet is to help stay ahead of changing styles. I know that Flynn has a good feel for design, and we’re not taking advantage of his abilities. But I also have information and ideas that could help this company keep pace with changes and re- ally stand out from the crowd. I don’t know how long we expect to remain competitive using this cumbersome, slow-moving process and putting out shoes that are al- ready behind the times.
Questions
1. How would you characterize the structure of Fabulous Footwear? Explain.
2. In what ways is the structure appropriate or inappropriate for frequent changes in shoe styles? What structure changes would you recommend?
3. If you were the CEO, how would you get employees to use the new information technology available within Fabulous Footwear?](../images/fabulous-footwear-produces-a-line-of-womens-shoes-that-sell-in-the-256953-1.jpg)
![Fabulous Footwear produces a line of women’s shoes that sell in the lower-price market for $27.99 to $29.99 per pair. Profits averaged 30 cents to 50 cents per pair 10 years ago, but according to the president and the controller, labor and materials costs have risen so much in the intervening period that profits today average only 25 cents to 30 cents per pair.
Production at both the company’s plants totals 12,500 pairs per day. The two factories are located within a radius of 60 miles of Chicago: one at Centerville, which produces 4,500 pairs per day, and the other at Meadowvale, which produces 8,000 pairs per day. Company headquarters is located in a building adjacent to the Centerville plant.
It is difficult to give an accurate picture of the number of items in the company’s product line. Shoes change in style perhaps more rapidly than any other style product, including garments. This is chiefly because it is possi- ble to change production processes quickly and because, historically, each company, in attempting to get ahead of competitors, gradually made style changes more frequently. At present, including both major and minor style changes, Fabulous Footwear offers 100 to 120 different products to customers each year.
A partial organizational chart, showing the departments involved in this case, appears in Exhibit 12.9
Competitive Structure of the Industry
Very large general shoe houses, such as International and Brown, carry a line of women’s shoes and are able to undercut prices charged by Fabulous Footwear, principally because of the policy in the big companies of producing large numbers of “stable” shoes, such as the plain pump and the loafer. They do not attempt to change styles as rap- idly as their smaller competitors. Thus, without constant changes in production processes and sales presentations, they are able to keep costs substantially lower.
Charles F. Allison, the president of Fabulous Footwear, feels that the only way for a small independent company to be competitive is to change styles frequently, taking advantage of the flexibility of a small organization to cre- ate designs that appeal to customers. Thus, demand can be created and a price set high enough to make a profit. Allison, incidentally, appears to have an artistic talent in styling and a record of successful judgments in approving high-volume styles over the years.
Regarding how Fabulous Footwear differs from its large competitors, Allison has said:
You see, Brown and International Shoe Company both pro- duce hundreds of thousands of the same pair of shoes. They store them in inventory at their factories. Their customers, the large wholesalers and retailers, simply know their line and send in orders. They do not have to change styles nearly as often as we do. Sometimes I wish we could do that, too. It makes for a much more stable and orderly system. There is also less friction between people inside the company. The salespeople always know what they’re selling; the production people know what is expected of them. The plant personnel are not shook up so often by someone coming in one morning and tampering with their machine lines or their schedules. The styling people are not shook up so often by the plant saying, “We can’t do your new style the way you want it.”
To help Fabulous Footwear be more competitive against larger firms, Allison recently created an e-commerce and social media department. Although his main interest was in marketing over the Internet, he also hoped new technology would help reduce some of the internal fric- tion by giving people an easier way to communicate. He invested in sophisticated new information technology and hired consultants to set up a company intranet and pro- vide a few days’ training to upper and middle managers. Katherine Olsen came on board as director of e-commerce, charged primarily with coordinating Internet marketing and sales. When she took the job, she had visions of one day offering consumers the option of customized shoe designs. However, Olsen was somewhat surprised to learn that most employees still refused to use the intranet even for internal communication and coordination. The process for deciding on new styles, for example, had not changed since the 1980s.
EXHIBIT 12.9
Partial Organization Chart of Fabulous Footwear
Major Style Changes
The decision about whether to put a certain style into production requires information from a number of different people. Here is what typically happens in the company. It may be helpful to follow the organization chart (see Exhibit 12.9) tracing the procedure.
M. T. Lawson, the styling manager, and his designer, John Flynn, originate most of the ideas about shape, size of heel, use of flat sole or heels, and findings (the term used for ornaments attached to, but not part of, the shoes— bows, straps, and so forth). They get their ideas principally from reading style and trade magazines or by copying top- flight designers. Lawson corresponds with publications and friends in large stores in New York, Rome, and Paris to obtain pictures and samples of up-to-the-minute style innovations. Although he uses e-mail occasionally, Lawson prefers telephone contact and receiving drawings or samples by overnight mail. Then, he and Flynn discuss various ideas and come up with design options.
When Lawson decides on a design, he takes a sketch to Allison, who either approves or disapproves it. If Allison approves, he (Allison) then passes the sketch on to L. K. Shipton, the sales manager, to find out what lasts (widths) should be chosen. Shipton, in turn, forwards the design to Martin Freeman, a statistician in the sales department, who maintains summary information on customer demand for colors and lasts.
To compile this information, Freeman visits salespeople twice a year to get their opinions on the colors and lasts that are selling best, and he keeps records of shipments by color and by last. For these needs, he simply totals data that are sent to him by the shipping foreman in each of the two plants. When Freeman has decided on the lasts and colors, he sends Allison a form that lists the colors and lasts in which the shoe should be produced. Allison, if he approves this list, forwards the information to Lawson, who passes it on to Jenna Richards, an expert pattern maker. Richards makes a paper pattern and then constructs a prototype in leather and paper. She sends this to Lawson, who in turn approves or disapproves it. He forwards any approved prototype to Allison. Allison, if he, too, approves, notifies Lawson, who takes the prototype to Paul Robbins, assistant to the superintendent of the Centerville plant. Only this plant produces small quantities of new or experimental shoe styles. This is referred to as a “pilot run” by executives at the plant.
Robbins then literally carries the prototype through the six production departments of the plant—from cutting to finishing—discussing it with each foreman, who in turn works with employees on the machines in having a sam- ple lot of several thousand pairs made. When the finished lot is delivered by the finishing foreman to the shipping foreman (because of the importance of styling, Allison has directed that each foreman personally deliver styling good in process to the foreman of the next department), the latter holds the inventory in storage and sends one pair each to Allison and Lawson. If they approve of the finished product, Allison instructs the shipping foreman to mail samples to each of the company’s twenty-two salespeople throughout the country. Olsen also receives samples, photos, and drawings to post on the web page and gauge customer interest.
Salespeople have instructions to take the samples immediately (within one week) to at least 10 customers. Orders for already established shoes are normally sent to Ralph Ferguson, a clerk in Shipton’s office, who records them and forwards them to the plant superintendents for production. However, salespeople have found by experience that Martin Freeman has a greater interest in the success of new “trials,” so they rush these orders to him by overnight mail, and he in turn places the first orders for a new style in the interoffice mail to the plant superintendents. He then sends off a duplicate of the order, mailed in by the salespeople, to Ferguson for entering in his statistical record of all orders received by the company.
Three weeks after the salespeople receive samples, Allison requires Ralph Ferguson to give him a tabulation of orders. At that time, he decides whether the salespeople and the web page should push the item and the superintendents should produce large quantities, or whether he will tell them that although existing orders will be produced, the item will be discontinued in a short time.
According to Allison, the procedures outlined here have worked reasonably well.
The average time from when Lawson decides on a design until we notify the Centerville plant to produce the pilot run is two weeks to a month. Of course, if we could speed that up, it would make the company just that much more secure in staying in the game against the big companies, and in taking sales away from our competitors. There seems to be endless bickering among people around here involved in the styling phase of the business. That’s to be expected when you have to move fast—there isn’t much time to stop and observe all of the social amenities. I have never thought that a formal organization chart would be good in this company—we’ve worked out a customary system here that functions well.
M. T. Lawson, manager of styling, said that within his department all work seems to get out in minimum time; he also stated that both Flynn and Richards are good employ- ees and skilled in their work. He mentioned that Flynn had been in to see him twice in the last year:
To inquire about his [Flynn’s] future in the company. He is 33 years old and has three children. I know that he is eager to make money, and I assured him that over the years we can raise him right along from the $65,000 we are now paying. Actually, he has learned a lot about shoe styles since we hired him from the design department of a fabric company six years ago.
John Flynn revealed:
I was actually becoming dissatisfied with this job. All shoe companies copy styles—it’s a generally accepted practice within the industry. But I’ve picked up a real feel for de- signs, and several times I’ve suggested that the company make all its own original styles. We could make Fabulous Footwear a style leader and also increase our volume. When I ask Lawson about this, he says it takes too much time for the designer to create originals—that we have all we can handle to do research in trade magazines and maintain con- tracts feeding us the results of experts. Besides, he says our styles are standing the test of the marketplace.
Projects X and Y
Flynn also said that he and Martin Freeman had frequently talked about the styling problem. They felt that:
Allison is really a great president, and the company sure- ly would be lost without him. However, we’ve seen times when he lost a lot of money on bad judgments in styles. Not many times—perhaps six or seven times in the last eighteen months. Also, he is, of course, extremely busy as president of the corporation. He must look after everything from financing from the banks to bargaining with the union. The result is that he is sometimes unavailable to do his styling approvals for several days, or even two weeks. In a business like this, that kind of delay can cost money. It also makes him slightly edgy. It tends, at times when he has many other things to do, to make him look quickly at the styles we submit, or the prototypes Richards makes, or even the finished shoes that are sent for approval by the shipping foreman. Sometimes I worry that he makes two kinds of errors. He simply rubber-stamps what we’ve done, which makes sending these things to him a waste of time. At other times he makes snap judgments of his own, overruling those of us who have spent so much time and expertise on the shoe. We do think he has good judgment, but he himself has said at times that he wishes he had more time to concentrate on styling and approval of prototypes and final products.
Flynn further explained (and this was corroborated by Freeman) that the two had worked out two plans, which they referred to as “project X” and “project Y.” In the first, Flynn created an original design that was not copied from existing styles. Freeman then gave special attention to color and last research for the shoe and recommended a color line that didn’t exactly fit past records on consumer purchases—but one he and Flynn thought would have “great consumer appeal.” This design and color recommendation was accepted by Lawson and Allison; the shoe went into production and was one of the three top sellers during the calendar year. The latter two men did not know that the shoe was styled in a different way from the usual procedure.
The result of a second, similar project (Y) was put into production the next year, but this time sales were discontinued after three weeks.
Problem Between Lawson and Robbins
Frequently, perhaps 10 to 12 times a year, disagreement arises between Mel Lawson, manager of styling, and Paul Robbins, assistant to the superintendent of the Centerville plant. Robbins said:
The styling people don’t understand what it means to pro- duce a shoe in the quantities that we do, and to make the changes in production that we have to. They dream up a style quickly, out of thin air. They do not realize that we have a lot of machines that have to be adjusted and that some things they dream up take much longer on certain machines than others, thus creating a bottleneck in the production line. If they put a bow or strap in one position rather than another, it may mean we have to keep people idle on later machines while there is a pileup on the sewing machines on which this complicated little operation is performed. This costs the plant money. Furthermore, there are times when they get the prototype here late, and either the foremen and I work overtime or the trial run won’t get through in time to have new production runs on new styles, to take the plant capacity liberated by our stopping production on old styles. Lawson doesn’t know much about production and sales and the whole company. I think all he does is to bring shoes down here to the plant, sort of like a messenger boy. Why should he be so hard to get along with? He isn’t getting paid any more than I am, and my position in the plant is just as important as his.
Lawson, in turn, said that he has a difficult time get- ting along with Robbins:
There are many times when Robbins is just unreasonable. I take prototypes to him five or six times a month, and other minor style changes to him six or eight times. I tell him every time that we have problems in getting these ready, but he knows only about the plant, and telling him doesn’t seem to do any good. When we first joined the company, we got along all right, but he has gotten harder and harder to get along with.
Other Problems
Ralph Ferguson, the clerk in the sales department who receives orders from salespeople and forwards totals for production schedules to the two plant superintendents, has complained that the salespeople and Freeman are bypassing him in their practice of sending experimental shoe orders to Freeman. He insisted that his job description (one of only two written descriptions in the company) gives him responsibility for receiving all orders throughout the company and for maintaining historical statistics on shipments.
Both the salespeople and Freeman, on the other hand, said that before they started the new practice (that is, when Ferguson still received the experimental shoe orders), there were at least 8 or 10 instances a year when these were delayed from 1 to 3 days on Ferguson’s desk. They reported that Ferguson just wasn’t interested in new styles, so the salespeople “just started sending them to Freeman.” Ferguson acknowledged that there were times of short delay, but said that there were good reasons for them:
They [the salespeople and Freeman] are so interested in new designs, colors, and lasts that they can’t understand the importance of a systematic handling of the whole order procedure, including both old and new shoe styles. There must be accuracy. Sure, I give some priority to experimental orders, but sometimes when rush orders for existing company products are piling up, and when there’s a lot of planning I have to do to allocate production between Centerville and Meadowvale, I decide which comes first— processing of these, or processing the experimental shoe orders. Shipton is my boss, not the salespeople or Freeman. I’m going to insist that these orders come to me.
The Push for New Technology
Katherine Olsen believes many of these problems could be solved through better use of technology. She has approached Charles Allison several times about the need to make greater use of the expensive and sophisticated computer information systems he had installed. Although Allison always agrees with her, he has so far done nothing to help solve the problem. Olsen thinks the new technology could dramatically improve coordination at Fabulous Footwear.
Everyone needs to be working from the same data at the same time. As soon as Lawson and Flynn come up with a new design, it should be posted on the intranet so all of us can be informed. And everyone needs access to sales and order information, production schedules, and shipping deadlines. If everyone—from Allison down to the people in the production plants—was kept up to date throughout the entire process, we wouldn’t have all this confusion and bickering. But no one around here wants to give up any control—they all have their own little operations and don’t want to share information with anyone else. For example, I sometimes don’t even know there’s a new style in the works until I get finished samples and photos. No one seems to recognize that one of the biggest advantages of the Internet is to help stay ahead of changing styles. I know that Flynn has a good feel for design, and we’re not taking advantage of his abilities. But I also have information and ideas that could help this company keep pace with changes and re- ally stand out from the crowd. I don’t know how long we expect to remain competitive using this cumbersome, slow-moving process and putting out shoes that are al- ready behind the times.
Questions
1. How would you characterize the structure of Fabulous Footwear? Explain.
2. In what ways is the structure appropriate or inappropriate for frequent changes in shoe styles? What structure changes would you recommend?
3. If you were the CEO, how would you get employees to use the new information technology available within Fabulous Footwear?](../images/fabulous-footwear-produces-a-line-of-womens-shoes-that-sell-in-the-256953-2.jpg)
Major Style Changes
The decision about whether to put a certain style into production requires information from a number of different people. Here is what typically happens in the company. It may be helpful to follow the organization chart (see Exhibit 12.9) tracing the procedure.
M. T. Lawson, the styling manager, and his designer, John Flynn, originate most of the ideas about shape, size of heel, use of flat sole or heels, and findings (the term used for ornaments attached to, but not part of, the shoes— bows, straps, and so forth). They get their ideas principally from reading style and trade magazines or by copying top- flight designers. Lawson corresponds with publications and friends in large stores in New York, Rome, and Paris to obtain pictures and samples of up-to-the-minute style innovations. Although he uses e-mail occasionally, Lawson prefers telephone contact and receiving drawings or samples by overnight mail. Then, he and Flynn discuss various ideas and come up with design options.
When Lawson decides on a design, he takes a sketch to Allison, who either approves or disapproves it. If Allison approves, he (Allison) then passes the sketch on to L. K. Shipton, the sales manager, to find out what lasts (widths) should be chosen. Shipton, in turn, forwards the design to Martin Freeman, a statistician in the sales department, who maintains summary information on customer demand for colors and lasts.
To compile this information, Freeman visits salespeople twice a year to get their opinions on the colors and lasts that are selling best, and he keeps records of shipments by color and by last. For these needs, he simply totals data that are sent to him by the shipping foreman in each of the two plants. When Freeman has decided on the lasts and colors, he sends Allison a form that lists the colors and lasts in which the shoe should be produced. Allison, if he approves this list, forwards the information to Lawson, who passes it on to Jenna Richards, an expert pattern maker. Richards makes a paper pattern and then constructs a prototype in leather and paper. She sends this to Lawson, who in turn approves or disapproves it. He forwards any approved prototype to Allison. Allison, if he, too, approves, notifies Lawson, who takes the prototype to Paul Robbins, assistant to the superintendent of the Centerville plant. Only this plant produces small quantities of new or experimental shoe styles. This is referred to as a “pilot run†by executives at the plant.
Robbins then literally carries the prototype through the six production departments of the plant—from cutting to finishing—discussing it with each foreman, who in turn works with employees on the machines in having a sam- ple lot of several thousand pairs made. When the finished lot is delivered by the finishing foreman to the shipping foreman (because of the importance of styling, Allison has directed that each foreman personally deliver styling good in process to the foreman of the next department), the latter holds the inventory in storage and sends one pair each to Allison and Lawson. If they approve of the finished product, Allison instructs the shipping foreman to mail samples to each of the company’s twenty-two salespeople throughout the country. Olsen also receives samples, photos, and drawings to post on the web page and gauge customer interest.
Salespeople have instructions to take the samples immediately (within one week) to at least 10 customers. Orders for already established shoes are normally sent to Ralph Ferguson, a clerk in Shipton’s office, who records them and forwards them to the plant superintendents for production. However, salespeople have found by experience that Martin Freeman has a greater interest in the success of new “trials,†so they rush these orders to him by overnight mail, and he in turn places the first orders for a new style in the interoffice mail to the plant superintendents. He then sends off a duplicate of the order, mailed in by the salespeople, to Ferguson for entering in his statistical record of all orders received by the company.
Three weeks after the salespeople receive samples, Allison requires Ralph Ferguson to give him a tabulation of orders. At that time, he decides whether the salespeople and the web page should push the item and the superintendents should produce large quantities, or whether he will tell them that although existing orders will be produced, the item will be discontinued in a short time.
According to Allison, the procedures outlined here have worked reasonably well.
The average time from when Lawson decides on a design until we notify the Centerville plant to produce the pilot run is two weeks to a month. Of course, if we could speed that up, it would make the company just that much more secure in staying in the game against the big companies, and in taking sales away from our competitors. There seems to be endless bickering among people around here involved in the styling phase of the business. That’s to be expected when you have to move fast—there isn’t much time to stop and observe all of the social amenities. I have never thought that a formal organization chart would be good in this company—we’ve worked out a customary system here that functions well.
M. T. Lawson, manager of styling, said that within his department all work seems to get out in minimum time; he also stated that both Flynn and Richards are good employ- ees and skilled in their work. He mentioned that Flynn had been in to see him twice in the last year:
To inquire about his [Flynn’s] future in the company. He is 33 years old and has three children. I know that he is eager to make money, and I assured him that over the years we can raise him right along from the $65,000 we are now paying. Actually, he has learned a lot about shoe styles since we hired him from the design department of a fabric company six years ago.
John Flynn revealed:
I was actually becoming dissatisfied with this job. All shoe companies copy styles—it’s a generally accepted practice within the industry. But I’ve picked up a real feel for de- signs, and several times I’ve suggested that the company make all its own original styles. We could make Fabulous Footwear a style leader and also increase our volume. When I ask Lawson about this, he says it takes too much time for the designer to create originals—that we have all we can handle to do research in trade magazines and maintain con- tracts feeding us the results of experts. Besides, he says our styles are standing the test of the marketplace.
Projects X and Y
Flynn also said that he and Martin Freeman had frequently talked about the styling problem. They felt that:
Allison is really a great president, and the company sure- ly would be lost without him. However, we’ve seen times when he lost a lot of money on bad judgments in styles. Not many times—perhaps six or seven times in the last eighteen months. Also, he is, of course, extremely busy as president of the corporation. He must look after everything from financing from the banks to bargaining with the union. The result is that he is sometimes unavailable to do his styling approvals for several days, or even two weeks. In a business like this, that kind of delay can cost money. It also makes him slightly edgy. It tends, at times when he has many other things to do, to make him look quickly at the styles we submit, or the prototypes Richards makes, or even the finished shoes that are sent for approval by the shipping foreman. Sometimes I worry that he makes two kinds of errors. He simply rubber-stamps what we’ve done, which makes sending these things to him a waste of time. At other times he makes snap judgments of his own, overruling those of us who have spent so much time and expertise on the shoe. We do think he has good judgment, but he himself has said at times that he wishes he had more time to concentrate on styling and approval of prototypes and final products.
Flynn further explained (and this was corroborated by Freeman) that the two had worked out two plans, which they referred to as “project X†and “project Y.†In the first, Flynn created an original design that was not copied from existing styles. Freeman then gave special attention to color and last research for the shoe and recommended a color line that didn’t exactly fit past records on consumer purchases—but one he and Flynn thought would have “great consumer appeal.†This design and color recommendation was accepted by Lawson and Allison; the shoe went into production and was one of the three top sellers during the calendar year. The latter two men did not know that the shoe was styled in a different way from the usual procedure.
The result of a second, similar project (Y) was put into production the next year, but this time sales were discontinued after three weeks.
Problem Between Lawson and Robbins
Frequently, perhaps 10 to 12 times a year, disagreement arises between Mel Lawson, manager of styling, and Paul Robbins, assistant to the superintendent of the Centerville plant. Robbins said:
The styling people don’t understand what it means to pro- duce a shoe in the quantities that we do, and to make the changes in production that we have to. They dream up a style quickly, out of thin air. They do not realize that we have a lot of machines that have to be adjusted and that some things they dream up take much longer on certain machines than others, thus creating a bottleneck in the production line. If they put a bow or strap in one position rather than another, it may mean we have to keep people idle on later machines while there is a pileup on the sewing machines on which this complicated little operation is performed. This costs the plant money. Furthermore, there are times when they get the prototype here late, and either the foremen and I work overtime or the trial run won’t get through in time to have new production runs on new styles, to take the plant capacity liberated by our stopping production on old styles. Lawson doesn’t know much about production and sales and the whole company. I think all he does is to bring shoes down here to the plant, sort of like a messenger boy. Why should he be so hard to get along with? He isn’t getting paid any more than I am, and my position in the plant is just as important as his.
Lawson, in turn, said that he has a difficult time get- ting along with Robbins:
There are many times when Robbins is just unreasonable. I take prototypes to him five or six times a month, and other minor style changes to him six or eight times. I tell him every time that we have problems in getting these ready, but he knows only about the plant, and telling him doesn’t seem to do any good. When we first joined the company, we got along all right, but he has gotten harder and harder to get along with.
Other Problems
Ralph Ferguson, the clerk in the sales department who receives orders from salespeople and forwards totals for production schedules to the two plant superintendents, has complained that the salespeople and Freeman are bypassing him in their practice of sending experimental shoe orders to Freeman. He insisted that his job description (one of only two written descriptions in the company) gives him responsibility for receiving all orders throughout the company and for maintaining historical statistics on shipments.
Both the salespeople and Freeman, on the other hand, said that before they started the new practice (that is, when Ferguson still received the experimental shoe orders), there were at least 8 or 10 instances a year when these were delayed from 1 to 3 days on Ferguson’s desk. They reported that Ferguson just wasn’t interested in new styles, so the salespeople “just started sending them to Freeman.†Ferguson acknowledged that there were times of short delay, but said that there were good reasons for them:
They [the salespeople and Freeman] are so interested in new designs, colors, and lasts that they can’t understand the importance of a systematic handling of the whole order procedure, including both old and new shoe styles. There must be accuracy. Sure, I give some priority to experimental orders, but sometimes when rush orders for existing company products are piling up, and when there’s a lot of planning I have to do to allocate production between Centerville and Meadowvale, I decide which comes first— processing of these, or processing the experimental shoe orders. Shipton is my boss, not the salespeople or Freeman. I’m going to insist that these orders come to me.
The Push for New Technology
Katherine Olsen believes many of these problems could be solved through better use of technology. She has approached Charles Allison several times about the need to make greater use of the expensive and sophisticated computer information systems he had installed. Although Allison always agrees with her, he has so far done nothing to help solve the problem. Olsen thinks the new technology could dramatically improve coordination at Fabulous Footwear.
Everyone needs to be working from the same data at the same time. As soon as Lawson and Flynn come up with a new design, it should be posted on the intranet so all of us can be informed. And everyone needs access to sales and order information, production schedules, and shipping deadlines. If everyone—from Allison down to the people in the production plants—was kept up to date throughout the entire process, we wouldn’t have all this confusion and bickering. But no one around here wants to give up any control—they all have their own little operations and don’t want to share information with anyone else. For example, I sometimes don’t even know there’s a new style in the works until I get finished samples and photos. No one seems to recognize that one of the biggest advantages of the Internet is to help stay ahead of changing styles. I know that Flynn has a good feel for design, and we’re not taking advantage of his abilities. But I also have information and ideas that could help this company keep pace with changes and re- ally stand out from the crowd. I don’t know how long we expect to remain competitive using this cumbersome, slow-moving process and putting out shoes that are al- ready behind the times.
Questions
1. How would you characterize the structure of Fabulous Footwear? Explain.
2. In what ways is the structure appropriate or inappropriate for frequent changes in shoe styles? What structure changes would you recommend?
3. If you were the CEO, how would you get employees to use the new information technology available within Fabulous Footwear?
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> Compare the description of the transnational model in this chapter to the elements of organic versus mechanistic organization designs described in Chapter 1. Do you think the transnational model seems workable for a huge global firm? Discuss.
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