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OPERATIONS

In a Former Life: Ed Lilly

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Ed Lilly, 56

Present life: CEO and president of Serta Inc., the $760-million-plus maker of mattresses based in Itasca, Ill.

Former life: A buyer for a department store in Philadelphia called Strawbridge & Clothier, part of a family-owned chain. In 1970, when he was 26, Lilly began as an assistant buyer in the toy department; he left the chain eight years later. "If, as a buyer, you wanted to put a new vendor on the floor, you couldn't just do it," Lilly says. "You had to do your homework about how the product would affect everything large and small -- distribution costs, floor space, sales, profits. That meant creating a program and having a clear rationale that could sell management on why the vendor would improve the total store picture."

Lessons learned: When trying to change the status quo, master the minor details and use hard facts to build consensus. "Today we do about $200 million in national accounts," Lilly says. "When I got to Serta, it was only about $8 million. One reason was that our pricing was too high, because of our raw materials costs and labor rates. Things had to change, but in dealing with 27 manufacturing plants we felt there'd be initial resistance. So we commissioned a group to do a time-motion study. The study gave objective numbers of what our labor costs should have been. It became easier to persuade the managers that we needed to get better."

Lilly encouraged each plant to follow its own plan for optimizing production. "The Serta plants were independent from each other, and each was different," he says. "Their cost structures varied depending on unionization and what they made. Plus historically, they were fairly autonomous anyway. They might have resisted another centralized plan from the corporate office."

Copyright © 2000 G+J USA Publishing




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