How good strategy paired continual preparation and planning, made longevity more possible for Little Tikes
The Company’s Situation
Rubbermaid was content with the founder, Tom Murdough, running their Little Tikes acquisition. Until a disagreement on channel sales caused Murdough to leave. That transition, compounded with a series of safety incidents that continued to be a problem as well the cost/price squeeze of oil prices AND Big Box pressure, created layers of complexity.
Adding to that complexity was Rubbermaid implementing a strategy of a new product introduced every day of the year, increasing the Little Tikes’ duties. It was part of a larger initiative – the corporation was expanding its global footprint and looking for participation in its Global Leadership Development Program. Rubbermaid also had more profitable companies circling looking for an acquisition of their own.
HOW LITTLE TIKES PLAYED INTO RUBBERMAID’S CHALLENGES
More specific to the Little Tikes division were unionization efforts, production issues as well as sales and operations planning misses. The peak holiday season was a significant portion of annual sales. Unfortunately, what would be popular each year wasn’t determined until late summer, early autumn. Production would have to start based on sales’ guesstimations. Often, many of the less demanded products would remain in the warehouse until deals were made.
This also drove labor needs during peak season to nearly double, from about 400 to more than 800 associates. As a significant revenue source, Little Tikes woes were beginning to have a negative effect on Rubbermaid.
Little Tikes had been using corporate resources and a well-known Lean consulting firm to drive improvement efforts. Their initial efforts yielded some positive results – but it wasn’t nearly enough.
THE OPPORTUNITY
Little Tikes needed to act quickly with significant effort across the entire division. They needed to stop reacting and take over their destiny once more.
STRATEGY, PREPARATION, PLANNING
Little Tikes hired a VP of operations with experience in operational excellence who in turn hired me as their improvement expert. Using techniques including multi-functional teams, improvement initiatives started in production, gradually moving to maintenance, engineering, and warehousing. After one year, purchasing and sales were included in the scope of what could be improved. In addition, plant management throughout the division were required participants, following the ‘train the trainer’ methodology. Lastly, suppliers and vendors were either a focus or in some cases participants in making improvements.
Within 18 months I facilitated or championed over 110 events with verified cost savings of over $2.6M:
- Inventory in the form of WIP was reduced by 75% with changeover improvements giving production the ability to make every sku every cycle;
- Little Tikes gained the ability to respond to whatever the ‘hot’ toy would be for the season;
- Flexible layouts and standard work allowed production to run machining centers according to demand. This allowed not only the flexible use of labor across machining centers to changing demand, but also the ability to move towards a fixed labor model;
- Manufacturing and design engineers were able to reduce part weight, creating a more profitable cost basis;
- Along with vendor participation, the move to customer assembly was engineered so that every product shipped had every part necessary to build;
- This further improved price point attractiveness.
OUTCOME: LONGEVITY
With Little Tikes new agility, it gained the ability to maintain or improve sales. Pressure from the ‘Big Box’ customers shrank shelf space because a Barbie product sold for as much as the Cozy Coup with 1/20th the space required. Little Tikes gained the ability to restock the shelves more often at the same cost.
Little Tikes not only secured its viability through productivity strategy but also gave it the ability to much more easily prepare for whatever may come its way. While the company isn’t at the level it once was in its glory days, it has a solid future. Today Little Tikes is part of MGA Entertainment and doing well. Revenue is above $100M with $20.5M coming from eCommerce.
THE RESULTS:
- Realized actual cost savings of $2.6M within 18 months;
- Reduced machine downtime by 50% and equipment changeovers by 40%;
- Eliminated 2% material waste and 15% excess inventory;
- Implemented a more flexible manufacturing practice which allowed customers’ orders to be made closer to the shipping date reducing finished goods on hand by over 25%;
- Created a team-based culture trained in productivity techniques with an emphasis on efficiency and effectiveness.
For more on Little Tikes history see: Little Tikes history
