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|  | | | | SMILEY'S FOOTWEAR SUCCESS STORY
Background Information
Smiley’s Footwear C.C. is a family-run footwear business that has been in operation since 2000. The company manufactures high-end ladies shoes .The company is one of the largest independent suppliers of footwear to the Edcon Group. Historically, approximately 90% of its output was distributed to the Edcon Group, while remaining sales were to independents. The annual turnover for the company for 2007 and 2008 was between R21 million and R25 million. The company has a current staff complement of 100 staff.
The current global economic environment, coupled with the competitive nature of the leather industry ,the company endures the tremendous pressure on the footwear industry in South Africa. Low cost producers in countries such as China, India, Vietnam and low-cost producing African countries (such as Malawi) have increased the stakes making it vital for Smileys to streamline operations in order to survive the in the cut throat industry.
The company was forced to retrench approximately 50 workers in 2005 as part of a cost-cutting exercise, with further retrenchments almost likely. This move emphasized the need for Smiley’s Footwear to review their operations. Consequently, the entire value-chain of the organization needed to be reviewed with a view to maximizing the value-add of the existing spend of resources and encouraging access to alternative sales origination channels.
NPI/ Productivity SA Approach : Building a Nation at Work
Smiley’s Footwear approached the NPI (now Productivity SA) Social Plan to remedy the problem, with a combination of interventions being introduced to help turn around the company and focus on productivity. Through the NPI programme, Smiley’s established a Future Forum, in which both Managers and workers were committed to changing old practices and attitudes and moving to a ‘best practice’ mentality, through effective communication and cooperation.
The following primary outcomes have been recorded:
Deliverable: The starting block was the development and implementation of a sound business plan incorporating an effective marketing strategy for the company,
Outcome: Diversifying the company’s operational and market risk (i.e. being too reliant on one large customer, as well as the general business pressures placed on the local footwear industry), with established goal alignment and business focus
Deliverable: Another goal was to introduce a bill of materials costing and inventory management system integrated with their existing accounting and inventory recording system.
Outcome: Helping to save costs and creation of a more efficient cost management and inventory management system, respectively. By focusing on profitable products, the company has a greater chance to succeed.
Deliverable: Capacity development initiatives were offered to staff at all levels in the form of trainings (business sense, management, production staff, recruitment, administration). Structured and formal staff meetings held on a regular basis have also been introduced
Outcome: Enhanced communication with greater interaction between departments. Staff feel a sense of ownership in the company. Training of staff in he respective areas has resulted in a improvement in productivity and quality of output. Staff are much more aware of the company and its goals, as well as the importance of quality and reducing wastage.
Deliverable: Facilities were upgraded as well as a staff canteen
Outcome: Working conditions were improved and staff morale uplifted.
Deliverable: A Quality Management System was developed for the company to raise the standards of quality and create a best practice approach to working
Outcome: Staff are currently undergoing process-specific training thereof, and ensuring they are able to work in a ‘standard-operating’ mentality.
Deliverable: A staff rewards and recognition program was developed and introduced to recognize efforts of staff and assist in making a difference to the company
Outcome: Staff are much more motivated to go the extra mile with improved staff morale.
Results and Impact
- Since the introduction of the Social Plan Programme, the company has seen a 36 percent increase in staff.Â
- At the start of the Social Plan intervention (February 2006) Smiley’s staff complement was approximately 80 employees. To date, there are approximately 100 employees at Smiley’s (20% increase).
- Annual turnover for the company has increased by R3.6 million in the last financial year)
- Job security has improved with new customer contracts having being secured. As a result, the risk of being too dependant on one customer has been removed. Heavy reliance on Edcon sales has been reduced with sales from the Edcon Group reduced from 90% in 2006 to 57% (current), with the remaining sales being sought from independents. This includes new contracts being secured from customer brands such as Makro and Shoe City.
- The owner is currently reviewing the option of opening a retail store in Montclair
- Plans are being developed to focus on high-volume products
- Communication has also improved through initiatives such as the Future Forum, Management Communication Training and employee rewards and recognition program.
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