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A Quality Experience - Part 1
Keeping the brogue in vogue
The economics of shoes is not a subject that necessarily sets the pulse racing. But it is central to the life John Church, the chairman of the shoe company whose classic brogues adorn the feet of many of the world's great and good. The continued existence of Church and Co, the family-controlled shoe maker and retailer, depends on it.
Shoe economics are simple - on the surface at least. You match supply to demand, and produce the highest quality for the lowest price. Big deal, you might think. Anyone can do that.
John Church smiles. "The problem with making shoes in this country is the cost of labour. Nowadays most shoe manufacturing takes place in countries with low labour costs like South Korea and mainland China", he says. "It means that only upmarket brands such as ourselves can survive in England".
The factory is labour intensive, uses high-quality raw materials, and takes an inordinately long time to produce the goods. The production cycle for a pair of shoes can take up to seven weeks. The tanned calf hides are cut, stitched and shaped. Then they are put on "lasts", plastic shoe trees which stretch the leather into a shoe shape. This part of the process lasts for
two weeks, before the shoes get their soles, a polish and a box ready for delivery to retailers. The time spent on the lasts - and the shape of it - are trade secrets, and expensive, says John Church. "We cannot compromise the lasting process - it is the reason our shoes keep their shape and the reason our customers will pay up to £200 for our shoes".
During the early 1990s recession when many people faced falling spending power, Church's experienced some problems. By 1993 demand was picking up but then the company began to face stiffer competition from upmarket Italian shoemakers. The underlying difficulty, that the company was relying on high cost labour, remained. It had to find some way to cut costs and recover its
competitive position. Otherwise, its market would shrink.
Source: Independent on Sunday 13.4.1997
Manufacturers still behind the competition
A recent study of the UK, Japan, the US, France and Germany has concluded that productivity in the UK has grown significantly since the late 1980s, but still remains behind that of other countries.
The research by the Organisation for Economic Co-operation and Development uses value added per hour worked in manufacturing industries to measure industrial performance. The biggest improvements in productivity in the UK have been in chemicals, which has always been one of the UK's most efficient industries. Also performing well are those industries, such as vehicles, where
companies have learnt new management and production skills from Japanese competitors.
Manufacturing productivity growth 1987-93 (%)
| |
US |
Japan |
Germany |
France |
UK |
| Metal products |
1.7 |
23.4 |
16.6 |
6.3 |
10.3 |
| General machinery |
55.6 |
21.4 |
6.7 |
5.6 |
14.9 |
| Electrical machinery |
43.6 |
92.6 |
25.2 |
32.5 |
41.9 |
| Transport equipment |
4.4 |
14.3 |
16.4 |
13.8 |
29.0 |
| Food, beverages, tobacco |
-3.7 |
6.0 |
6.7 |
28.5 |
-12.7 |
| Chemicals (including oil) |
1.3 |
21.7 |
5.0 |
21.0 |
65.1 |
Source: OECD
Compare UK performance with that of a) Japan and b) France. Does a clear picture emerge?
Your task........
Improving efficiency means cutting costs generally. Productivity (output per person employed) increases when labour costs can be cut. In groups of two or three make up a chart with two columns. On the left list all the reasons why productivity may not be growing as fast as it could. On the right list all the ways in which productivity might be increased, showing how an organisation
might implement a plan to cut costs and raise output per person employed.
Which of your proposals might be relevant to Church's? How might the business adapt your suggestions to cut costs? How can Church's maintain the appeal of its product while cutting costs?
Part 1 | Part 2
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