Mayline Group, a contract furniture manufacturer based in Sheboygan, Wis., doesn't dwell on past successes. It prefers to move forward, shift with the market and take advantage of new product niches and new distribution channels.
This approach has paid off. Sales improved from $58 million in 2004 to $75 million in 2005, pushing the company from 127 to 111 in the FDM 300 rankings. And the growth has continued in 2006. Through the first six months, sales were up 18 percent over the same 2005 period.
Paul Simons, president and CEO, attributes part of the success to an easing of the economic downturn that had undercut the contract market. "There was an opportunity for significant upside once the economy started springing back," he says.
Another reason is distribution diversity. "One of the things that is different with us is that we go through about 10 different channels," he says. Roughly one-third of its sales come from the "power channel" of wholesale contract stationers and catalogs, one-third from the A-level dealer network and one-third from various smaller distribution segments.
A niche manufacturer
Mayline defines itself as a niche manufacturer. Simons says that about 80 percent of the non-majors are "me, too" players. "They are offering products that are for the most part the same as the big guys desk, file, chair, panel," he says. "We, for all intents and purposes, don't go there."
The growth in this country has been in the mid-market companies the smaller, under-the-radar companies, says Simons, and that's a market Mayline serves well.
"Our niche is a pure niche, which allows us to be viewed as non-competitive within the A-level dealer network," he says. "We're viewed as someone who is complementary to the core products they're selling, not competitive."
New needs, new products
Changes in product offerings illustrate how the company adapts to marketplace needs. Ten years ago the VariTask line of computer work stations was the number one product by sales volume. "They were sit-to-stand, press a button up they go, press a button down they go," Simons says.
"Five years ago, our number one product line by sales volume was a line we didn't have 10 years ago," he says. That was the Network product line of computer racking and storage that coincided with the Internet bubble.
Last year the number one seller was a product line that didn't exist for Mayline two years ago wood veneer desks and casegoods. This product line is imported. "We collaborated on the design and brought the line in," Simons says. "In two years it's gone from zero sales to being our largest volume product segment." Mayline imports roughly 25 percent of its sales volume, he says.
Mayline doesn't engage in traditional strategic planning. "The vast majority of our senior managers have come out of very large, multi-billion dollar corporations, and frankly were kind of fed up with it," says Simons. "So they wanted a much more entrepreneurial organization, and I think we've provided a culture and an environment that lets their skills shine."
Every 90 days these managers review a business plan and report to each other about their progress. They look at what's changed in the past 90 days and decide how the plan needs to be revised. "It's always fresh, it's always 90 days that's the longest we go and I think that's been very key to our overall success," says Simons.
The company's primary challenge is the cost of doing business. "You name it and it's gone up," says Simons. The increases range from health care and raw materials to transportation and energy. "What I'm very proud to say, though, is that we've been able to basically offset significant portions of that through our ongoing lean manufacturing activities."
Mayline has applied lean principles to its entire organization. "It's identifying and driving waste out of your system," Simons says. "It's just continuous improvement. At any given point in time there are myriad changes going on."
Lean teams form, address the issues at hand, then disband until the next threat or opportunity arises. The number changes with the need, says Simons. One month there may be eight lean teams; two months later there may be 16. "Being nimble or flexible is just so key to us," he says.
"We have only 230 employees," Simons adds. "If you take that 230 and divide it into nominally $80 million-plus in sales for this coming year, I'll put our sales-per-associate up against most anybody in this business."
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