In January 1996, El Monte-based Catalina Lamp & Shade Co. Inc. launched an advertising and trade show campaign to boost its business. The company buys pre-formed lampshade frames and 125-yard bolts of material for its shades and assembles them. The company, which chief executive John Markland founded in 1983, supplies lampshades to Hilton Hotels Corp., Holiday Inn Corp. and others.
Markland said the promotion campaign got results. In fact, it worked too well. After a few months, the company found itself far behind in fulfilling its orders. It hired more and more workers, but still couldn’t get close to catching up.
Markland told interviewer Wade Daniels how the problem was solved.
Most people don’t think about where lampshades come from, but our company is where a lot of them are made. Our employees pleat and form the fabrics and apply them to frames. We don’t exactly have a price list because with all the various sizes and shapes and pleats there are 68,000 variations. To give an idea of their price range, the seven most popular models go wholesale from about $5.32 apiece up to $12.50.
Our production plant has rows of tables more or less laid out like a mess hall. It used to be that all lamp shades were sent from table to table on a single assembly line.
About three months after we started our advertising campaign in early 1996, we started to get so many orders that we couldn’t keep up. We had 36 employees and they were working overtime, and no matter what we did we couldn’t keep up. We started hiring and got up to 52 people, but we were still far behind. By March we had a backlog of 16 weeks, and we started to lose customers.
We tried a few rearrangements of the workers on the assembly line but nothing worked.
One thing I thought of was that the organization of our production needed help, and I knew that aerospace companies used to have engineers specializing in making their production lines more efficient. Some months earlier I had been at a seminar where there was a presentation by the California Manufacturing Technology Center that included a talk on improving efficiency. (The CMTC is a federally administered program to aid small manufacturers to improve their operations.)
I contacted them and they sent two men who took notes on our operations. They then spent a full day watching our production process.
They split up our production into five separate assembly lines according to the complexity of the lampshade. The workers with the most experience were put in charge of making the complex ones with more pleats, and others worked on plainer lampshades according to their skills. This made much more sense than having the skills levels mixed on an assembly line. It sounds like an obvious solution, but I couldn’t see the forest for the trees to come up with it.
After two weeks of doing this we went from making 800 a day to 1,400 a day. Yesterday we made 1,435 lampshades with 38 employees. From the original 52 employees, we laid off two and the rest just weren’t replaced when they left.
Gross profits have gone from about $2,500 a month to about $10,000 a month.
