"We've always been an innovative company," says Dan Sauder. "And what we do well is cut board and put paper on board."
Dan Sauder is part of the third generation of innovators at Sauder Woodworking Co., a family-owned company in Archbold, Ohio. Founded in 1934 by Dan's grandfather, Erie, the company is now North America’s leading producer of ready-to-assemble (RTA) furniture and the nation’s fifth largest residential furniture manufacturer. The company maintains 4 million sq. ft. of manufacturing facilities and 2,100 employees in Archbold.
The "board" Sauder mentions is a combination of high quality hard-wood and soft-wood materials that are bonded together with a synthetic resin, then processed under high heat and pressure. The result is an environmentally friendly, dense, strong panel. High-quality paper-based laminates are applied to these panels to create the dozens of beautiful and durable finishes available to Sauder Furniture customers.
Flat Growth Squeezes Profits
Despite a long history of technological innovation, and a healthy growth rate for most of its existence, by the early 2000s Dan Sauder says the company found itself struggling with the phenomenon of flat growth. And with dwindling profits, the company had to put off investing in innovation.
"We just got squeezed when the price of imported, already-assembled furniture dropped so dramatically," recalls Sauder. "After we got through some painful restructuring, we decided we needed to look at diversifying into something other than RTA. That's when I knew the time was right to take our company's proven technology into some new markets."
Since its founding, Sauder Woodworking had depended on the innovation skills of its founder and his progeny, including Dan's father, Myrl. Even today, Myrl is chairman of the board and unofficial "tinkerer-in-chief."
"As our company grew bigger and bigger, it got harder and harder to identify and implement new ideas," says Dan Sauder. "When finances stabilized and we were ready to invest in innovation again, we knew we needed to try something different."
Engaging with MAGNET
In 2005, Sauder and one of his designers made the three-hour drive from Archbold to MAGNET's Manufacturing Innovation Center in downtown Cleveland to attend a seminar on the Eureka Winning Ways (EWW) innovation process (now called the Innovation Engineering Management System). The seminar opened Sauder's eyes to a new possibility: innovation could be a self-sustaining process that would draw ideas and enthusiasm from a cross-functional team. The company would no longer have to depend on just a few people in the ranks of top management.
"MAGNET was different from other consulting companies we looked at," Sauder says. "Instead of promising to come up with new ideas for us, MAGNET promised to teach us how to develop and implement new ideas ourselves."
"We introduced the Sauder team to the Eureka Winning Ways (EWW) process," recalls Bob Schmidt, senior business consultant for MAGNET. "With the EWW process, after we've gone through it once or twice, the team learns how to repeat the process on their own and manage their own ideation sessions."
For the first time, the company assembled a 15-person, cross-functional team that included the heads of accounting, human resources, sales, marketing, engineering and operations.
During a two-day ideation session, the Sauder innovation team defined its success target: a new product that could generate $20 million in annual sales. Then it began a lightning-fast new product idea generation process. MAGNET consultants Bob Schmidt and Charlie Alter challenged them to write down 50 new products on a yellow index cards. To the team's astonishment, at the end of the day, there were 85 yellow cards spread out on the table.
The process called for the team to vote and quickly narrow the field down to 12 ideas. Then team members were assigned to research and make presentations to the group on the potential for the remaining 12. After another vote, the field narrowed to four; then to only two. By the time the ideation session was over, everyone on the team had had a chance to be heard. Everyone had voted.
The choice: a distinct, affordable drop-ceiling system unlike anything else on the market. Unattractive white drop-ceilings could be transformed into elegant and attractive wood-paneled ceilings with clip-on moldings and laminated panels made with the company's existing process. Eventually, the company dubbed its first entry into the building-products marketplace the WoodTrac Ceiling System.
"One of the key things I learned was how much easier it is to implement a new idea when you work as a team like this," says Sauder. "By the end of the process, everyone is on board. No one is wondering why their idea wasn't chosen. You get a lot more support for new projects when you do it like this."
The ideation process was finished by late 2008. Then the real work of development and implementation began.
From Innovation to Implementation
A handful of Sauder employees agreed to put the new WoodTrac system in their own homes so the company could work out installation kinks as well as capture before-and-after pictures for marketing. At Sauder's on-campus Technology Center, interior designers installed four small "suites" showing the product in different environments: a kid's bedroom, a corporate board room, a family room.
Progress continued by fits and starts, with MAGNET consultants coming back in 2010 for some further brainstorming on how to refine the product and bring it to market.
"Our relationship with Sauder did not end with the ideation sessions," says Schmidt. "The company called us back to facilitate their efforts to hear the voice of the customer and refine the product into what it is today."
The company eventually took a small booth to a number of home and garden shows, and was overwhelmed by the positive consumer response.
"Doing the home shows to get customer feedback was really smart," says Dan Sauder. "We got to really talk to the end consumer. We were used to talking to retailers. Talking to the consumer was huge and it gave us confidence that we really had something good."
The home shows also brought the WoodTrac system to the attention of contractors, who were eager to start offering the product to their clients. Sauder was nimble enough to quickly develop a sample pack that it could ship to contractors so they could sell the product to their clients.
While WoodTrac had always been aimed at the residential market, Dan Sauder says the management team always knew the bigger market was in commercial drop-ceilings. In 2010, MAGNET helped Sauder secure a grant from the federally funded Manufacturing Extension Partnership program.
"That research helped us understand how to approach the commercial market," says Dan Sauder. "We needed to know who makes buying decisions, what was the size of the market. This helped us understand the potential."
The research showed that commercial facilities like banquet halls would need panels made from a fire-retardant material so the ceilings would receive a Class-A fire-proof rating. Once again, Sauder's nimble process allowed it to quickly begin developing a new panel that would fit that channel's needs.
While the WoodTrac product line is still in the early development stage, Dan Sauder says the company is pleased that it has hit all its targets so far. The company has exceeded $110,000 in annual sales, and is selling WoodTrac in 13 Midwest states. An innovative web site, YouTube channel and Facebook page are continued evidence of the innovative corporate culture at Sauder Woodworking Co.
Economic Impact as of January 2012
- Increased sales: $110,000
- Jobs created: 2
- Jobs retained: 2
- Investment in New Products or Processes: $200,000
- Additional Investment Plant/Equipment: $10,000
"What MAGNET really did for us was help us come up with a way to look at all the ideas we had and pare them down. That helped us select just a couple to focus on instead of flailing around."
—Marv Burnett, WoodTrac Product Manager, Sauder Woodworking Co.
"We came up with 85 ideas, but we settled on just two. And since the entire team was involved in the whole process, everyone was on board for those two. It's much easier to implement a new project this way."
—Dan Sauder, EVP New Markets and Engineering, Sauder Woodworking Co.
About Sauder Woodworking Co.
In 1934, Erie Sauder started a woodworking business in a barn behind his Archbold, Ohio home. He built custom cabinets and church pews. Not wanting to waste scraps from expensive fine woods, the frugal businessman also began producing inexpensive occasional tables. In 1940, these tables caught the attention of a traveling salesman who placed an order for 25,000 tables – a seemingly daunting quantity for the fledgling company. Using ingenuity and sheer determination, Sauder Woodworking Co. incorporated and production began.
In 1951, Sauder introduced an entirely new concept – a patented table that could be assembled in the home. This snap-together table marked the beginning of the ready to assemble furniture industry.
Today, Sauder Woodworking Co. is a privately-held, third generation, family-run business. Subsidiaries include: Progressive Furniture Inc., a manufacturer and importer of traditional solid wood, veneered and laminate furniture; and Sauder Manufacturing Company, a leader in church, educational, and health care seating.
Sauder operates some of the most technologically advanced furniture-making facilities in the world. Approximately 4 million-sq.-ft. of manufacturing and warehouse space, including the 1.4 million-sq.-ft. state-of-the-art Erie J. Sauder Distribution Center, are located in Archbold. Sauder ships more than 48,000 cartons a day.
With its 2,100 employees, the Sauder family of companies generates sales of nearly $450 million annually.