Springs in sweeping business realignment

Don Hogsett, July 14, 2003

In a sweeping reinvention of the way it does business — and as part of a broad cost-cutting regimen imposed by a difficult sales environment — Springs Industries, the nation's largest home fashions producer, has created a new, decentralized business model, built up of nine separate business units, each headed by a president and each reporting to Tom O'Connor, executive vp of Springs.

Under the organization, the head of each new business unit will have ultimate responsibility the combined manufacturing, merchandising, scheduling, distribution, design and other key support functions for his business. Under the previous organizational set up, most business managers directly controlled only merchandising and sales, dipping into a broad corporate support network for other functions.

"The biggest change is the way we bring together the merchandising and operating functions within each business unit to create accountability and bring a tight focus to each single business unit," said O'Connor.

Cost savings, he acknowledged, play a role in the reorganization, "but it's not driving the process," he emphasized. "This will help by eliminating, at some point, duplicative functions. But that's not why we're doing it. We're doing it to make this company more effective, competitive and tightly focused by creating accountability within each business unit."

The business units and their heads:

  • Bedding and soft windows: Tom Gaffney, who had been president for all Springs merchandising and marketing, is president of this new business unit, which combines Springs' core bedding business, its largest single operation, and the Burlington House drapery business acquired last year.

  • Bath Fashions: Dean Riggs, who currently leads all Springs manufacturing operations, will take over as head of the growing bath business.

  • Baby Products: Headed by Lucia Fitzgerald, who had been vp of the division with responsibility for sales and merchandising. She now adds full operational responsibility, including manufacturing and distribution.

  • Basic Bedding: Randy Spence adds distribution and manufacturing to his existing sales and merchandising functions.

  • Creative Products: Derek Close will continue to head this business, which brings together retail fabrics, home sewing and crafts.

  • Decorative Floor Coverings: Kris Honeyman, who joined Springs when it acquired the Beaulieu Rugs business last year, heads this new division, which combines accent and area rugs.

  • Owen Blankets: The newly acquired blanket business will be headed by Charles D. Owen III, who remains president of the operation headquartered in Swannanoa, NC.

  • Springs Canada: Brings together sales, merchandising, design and distribution for the large Canadian marketplace, headed by John de la Roche.

  • Springs Window Fashions: The company's hard window business, including the Graber, Nanik and Bali brands, will continue to be led by Ron Zabel.

Coming only days after Springs announced the shutdown of two manufacturing plants (see article on page 2) the overhaul of the company's organizational structure raises questions about Springs' need to control costs and bolster profits, especially after taking on debt, and a new business partner, financier David Stockman, as the company went private.

"The economy certainly accelerates the process," O'Connor said. "But you can't let the economy dictate your strategic thinking."

Instead, said O'Connor, a key driver behind the reorganization is the need to compete more effectively with smaller, often more nimble, competitors that produce single products.

"We have a very broad portfolio of products, with a sometimes cumbersome operation, that has to compete against a number of people who manufacture just one product, and who target that product very effectively," he said. "This will help us to become more like them by creating very tightly focused divisions which can operate almost autonomously.

"It should help each of our product units to compete more effectively by operating the way these single-product competitors do. We don't need 10 different marketing perspectives, or 10 different account management teams, sometimes tripping all over each other."

Ted Matthews, vp of communications, said: "We found, every day, more frustrating things in terms of the way we do business because of the way we were put together. We had lots of people in each business who had pieces of the puzzle, but it wasn't always clear who had the responsibility. Nobody knew just where the buck stopped. So the purpose is to create accountability, clean up a lot of over-lapping responsibilities, eliminate a lot of confusion, and create a very tight strategic focus for each business unit."

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