Getting operations dead solid perfect

Source: Technology Digital

Date :16/07/2007 15:15:12

The world’s oldest golf club manufacturer, MacGregor Golf has totally transformed itself to be a leaner, meaner, mass-customization manufacturer

By David Weldon

While the adage that it may be hard to teach old dog new tricks is often true, in business that is a lesson that can’t often afford to be missed.

It is certainly a lesson taken close to heart by MacGregor Golf, currently the oldest manufacturer of gold clubs in the world, headquartered in Albany, GA. Despite its 110-year-old heritage, the company has completely transformed its operations in the past few years, just acquired a new complimentary golf apparel line, and is emerging as a leaner and meaner company, ready to expand its market presence.

MacGregor’s market strategy is to use the world’s most advanced technologies to create golf equipment that makes the game easier and more fun, especially for golfers that don’t wow crowds with their performance on a course. At the heart of their product line is a technology platform called Cup Face 360º, which promotes enhanced performance on off-center contact.

The club is certainly state-of-the art in terms of materials used in its assembly, but it is in the combination of high grade materials and forgiving design that golfers truly notice its performance differential. According to company President Reid Gorman, MacGregor equipment is designed for “golfers that don’t hit the ball on the sweet spot consistently, which encompasses just about any recreational golfer out there.”

By sweet spot, Gorman means the exact center of the club face. In golf, an ideal strike on the ball by the club is known as dead solid perfect. Miss that exact central point and the club face doesn’t transfer as much energy to the golf ball, thus decreasing ball velocity and increasing the potential for dispersion (club head twisting).

In other words, off center shots hit off the toe on conventional club designs typically end up short and right of the intended target. Shots that are hit on the heel of the club generally have the opposite impact directionally.

That is certainly what separates the amateurs from the pros — the ability to hit the ball squarely on a consistent basis to achieve optimal accuracy and distance.

That is also where MacGregor distinguishes itself from virtually all other golf club lines — with a club face that enhances performance almost anywhere the golfer makes contact … so that off-center shots have more pleasing results for all skill levels of golfers.

While this would seem to make the MacGregor a hot commodity, in fact, its market share in the United States has shrunk considerably over the past 20 years. Its largest market share is currently in Europe and Japan, where the brand was managed independently for a large portion of recent history.

The Cup Face 360º technology platform was introduced to the U.S. market in March, 2006, putting MacGregor in a position to compete head to head with many of the “Wall Street” brands such as Callaway Golf, Taylor Made-adidas Golf and Titleist/Cobra (Fortune Brands).

Many of the larger golf companies pioneered new technologies and innovation to the golf industry during the 1990’s, while MacGregor had continued down a more traditional path. Read says that now that MacGregor is back on the leading edge of performance and innovation, their products are competitively priced to many of the larger golf brands, with Drivers retailing around $300 and Irons sets in the $600-700 range.

The average golfer may not appreciate what goes into those technologies, “until they hit it,” Gorman says. The key to creating this consumer trial is to have its retailer network equipped with an ample supply of demo equipment.

“Once the retailer or golf professional understands how MacGregor products can help consumers lower their handicap and have more fun, it becomes a lot easier for them to recommend it.”

In addition, the company has reinvented its operational processes to be more operational and cost efficient, and faster to market. It also recently acquired the Greg Norman Collection apparel line from Taylor Made-adidas AG, in a move aimed at leveraging the strong U.S. market presence of the Greg Norman brand with the strong foreign markets of MacGregor.

MacGregor will operate the Greg Norman Collection brand as a separate company, Gorman says. The acquisition wasn’t about combining operational similarities, but diversifying its product portfolio in a consolidating industry. The Greg Norman Collection had been previously owned by Reebok and most recently German based Taylor Made-adidas AG.

Prior to the acquisition, Greg Norman had been an active endorser of MacGregor products. The transaction provided Greg an opportunity to buy into the MacGregor organization in an ownership capacity, thus acquiring a significant controlling interest in his namesake brand and the overall MacGregor Golf business.

“Greg Norman is a golf legend and business icon,” says Gorman. “Greg is now an owner of our business, board member and will have significant input on our golf club R&D. It is truly exciting and an honor for Greg Norman to be actively involved in our business.”

Every club a custom order

Where MacGregor is beating the competition is with rapid order fulfillment, and with mass customization.

According to Sr. VP of Operations and Manufacturing Joe Rocco, “our goal is to fill every order within two days. It could be for one custom club, or for several hundred, or several thousand.”

Add to that, a unique approach in golf equipment manufacturing where “every order is made to order,” Rocco says.

The sales advantages are obvious — golfers that know the unique performance features of a MacGregor golf club will already seek it out. Those less familiar with the brand may be lured by the faster delivery of a new club and a club custom fit to their specifications. Additionally, many retail outlets that have rapid inventory replenishment systems can be well served by the company’s ability to fill new orders promptly, Rocco says.

That ambitious goal is only possible by having completely redesigned production, bringing all steps in the process into self-contained cells. The company started with individual custom orders, and quickly turned to revamping its entire operations.

This was a completely new process for the company, but one that was critical to get it right, in order to take the market lead on custom orders. “We needed to have an additional point of differentiation with the customer,” Rocco says.

To dramatically improve efficiencies and get leaner in the production process, MacGregor had to customize a lot of equipment. The initial efforts worked.

Success made sustainable

Once the company proved it could reduce production cycle times dramatically for custom orders, it then set to work reviewing every facet of its operations.

“We said, if we can do it for custom orders, why can’t we do it for all of our orders?” Rocco explains.

Getting to that point involved reevaluating every step of the production and distribution process, looking for better efficiencies. The key was the creation of the single-cell production process.

Under the new process, each cell does it all — from handling raw materials, to manufacturing finished stock, to cutting club shafts to desired length, to matching and joining the shaft to the head, putting the grip on the shaft, to cleaning the finished club, to packaging, labeling, and shipping.

“We had to be able to design all products to be assembled in one manufacturing cell,” Rocco says, so that a process that had taken as long as seven to ten days to fill in the past, could now be reduced to less than 48 hours.

The company adds or reduces the number of cells operating at any given time, based on the volume of orders being filled and number of clubs in those orders, Rocco explains. Normally, two or three cells are operating, expect at peak seasons. Historical sales data aids in the process, enabling the company to estimate when more cells will be needed at specific months.

The efforts are already paying off, Rocco says. “For our new Face-Off DCT putters, sales have been much stronger than forecasted,” he notes.

Also key to making the new processes work has been getting the company’s materials suppliers to keep up. “We were able to get our vendors to ramp up quickly,” Rocco says.

With the rush to reduce lead times, that has put added pressure on the company to bring all of its suppliers into a streamlined supply chain system. MacGregor also had to install an automatic replenishment system, to ensure that the raw materials and parts needed for assembly were always on hand.

“We have to consider the impact on our suppliers,” Rocco says. “We look at certain materials, and the time it takes to get all the various elements that go into a club design, and make sure they can deliver as needed.” Sometimes that required suppliers to put their crews on overtime to meet MacGregor’s rapid order/delivery system, and sometimes it forces suppliers to readjust their manufacturing schedules all together.

One trend that has helped MacGregor with materials ordering is the currently strong aerospace industry. “A lot of the materials used in the shaft of the clubs are also used in the aerospace industry,” Rocco says.

Where the company is experiencing challenges with raw materials is with the rising costs of cobalt, copper and aluminum.

“The prices of all of those are going up, as are the costs to us as a result,” Rocco says. “But so far we’ve been able to hold our costs in check”

That, of course, reduces the company’s profit margins accordingly, and is another reason why it is so critical that the company improve its efficiencies in the actual production processes.

Keeping control of quality

With all of this focus on getting goods manufactured and shipped in a fraction of the time, it would be understandable that MacGregor would worry about maintaining quality levels.

Instead of quality suffering, however, Rocco says that there have been no significant quality returns since the company switched to the new production process.

Indeed, “everyone is basically turned into an inspector,” Rocco says of quality control efforts. With all steps of the process now contained within each cell, the employees working within that cell are able to assume full ownership of all phases of the process.

Equally important, Rocco says the new process has encouraged employees to assume nothing, and question everything.

“The impact of the whole thing was to stress that nothing is cast in concrete,” Rocco explains. “It taught us how to look at every step in our operations, and to ask ‘why do we do it this way’?”

“There was no step in the process that wasn’t examined,” Rocco says. “Management stressed the message that nothing is sacred, and gave people the ability to make changes.”

Most importantly, according to Rocco, the reengineering of the company created an environment in which “they encouraged people to think, and gave people the opportunity to fail.”

A little help along the way

As good a job as MacGregor employees did at making the transition to the new processes, Gorman says the company also brought in outside help. MacGregor worked with SAP to install a new IT system, and with Georgia Tech’s highly respected Lean Manufacturing specialists, in Atlanta, for aspects of the new manufacturing systems.

The most important lessons that MacGregor management learned from the experience of implementing the new systems was how critical is was to have a common vision and mission throughout the organization, Gorman says.

“The whole organization has to be focused on the same vision, and all of your systems have to be in place to support the shared goals,” Gorman says. “Otherwise, the effort will take too long, or fail.”

The process outlined above of giving employees more involvement in the project was also key to this, Gorman says.

“You’ve got to get all of your people involved in the process,” Gorman advises. “They have to feel like they have some ownership in the process, so that as we change, they’ll grow with it.”