Lied’s, a Sussex-based garden center, nursery and landscaping company, will begin a dramatic transformation this fall by using lean manufacturing techniques.
By next spring, Lied’s plans to sell about 90 percent of the real estate and garden stock it owns, change its operating model and remodel the building it currently uses for retail sales, said Rob Lied, president of the company.
Lean manufacturing principles were invented in the manufacturing field, but they’re increasingly being adopted by other industries. One of the central tenets of lean manufacturing is a greatly reduced inventory because it takes up space and is not necessarily used right away.
Lean techniques rely on constant replenishing of inventory as it is used.
“Inventory is waste,” Lied said.
Starting in the spring, Lied’s will make greater use of suppliers for inventory, instead of growing as many plants itself, Lied said. Because it will grow less material, the company will be able to sell about 90 percent of the 250 acres that Lied’s farms.
Inventory grown in the nursery and landscape design business can be particularly wasteful because of how long it takes to grow, and it is vulnerable to drought, disease and changing trends.
“Two years is the turnaround on the shortest crop, and the longest is 20 years,” Lied said. “The investment in inventory could be speculation for as long as 20 years. That’s not the bread and butter of the business and what I’m looking at to drive the company forward.”
Lied’s land will be sold through an auction, along with much of the plant stock growing there.
In the future, Lied’s will rely much more on regional and national growers to supply it with plant stock. A greater emphasis on suppliers will give Lied’s less risk, because the business will be able to order the plants its customers want instead of growing them itself.
Many of the plants that Lied’s grows now will be ordered from suppliers in future years, Lied said.
“It’s no different than looking at (plant stock) like produce or animals,” he said.
After its land sale in September, Lied’s will retain 20 to 25 acres for growing some inventory it needs, Lied said. The types of plants that the company grows itself will be determined by customers’ needs and current trends.
Lied’s will likely grow unusual and hard-to-find plants, as well as some plants it uses on a day-to-day basis.
“We’ll learn our way through that,” Lied said. “We need to balance (the stock) when we pull it all together.”
Lied’s has 160 to 170 employees now, Lied said. While the company is planning to reinvent itself through lean manufacturing principles, it’s not planning a significant reduction of employees.
“The numbers won’t change dramatically,” he said.
Lied’s has been in the landscaping and nursery business in Sussex for more than 60 years. The landscape architecture, design, nursery and garden center business has changed much in recent years.
“The nursery industry has been changing significantly over the last number of years,” Lied said. “We haven’t necessarily changed with it. The industry has changed from a huge network of small local growers and a few regional or national growers to a big reduction in local growers and significant growth in consolidation of big growers. The regionals became nationals.”
In addition to the land and garden stock sale, Lied’s will reconfigure the space currently used as its retail store. The first floor of that building will be used as design areas for landscape architects and areas for them to meet with clients. The lower level of the building also may be redesigned as a sample room, Lied said, and some areas of the second floor may be remodeled, as well.
The redesign is reflective of how Lied sees his company growing in the future.
“Where I see future growth is landscape architecture, design and the development angle, both residential and commercial,” Lied said. “Our forte is working on high-end residential work. We will come up with a design and work with the homeowner from the beginning.”
Some of the landscape and residential landscapes Lied’s has worked on cost as much as $500,000 to $1 million, Lied said.
Lied’s will have about $12.5 million in revenues this year, a slight increase over 2006. Sales have been slowly climbing in recent years, but going through a lean transformation should help improve Lied’s margins, he said.
“We’re trying to improve the value we bring to clients,” Lied said. “We want to lower our price. If we need to increase, we want to see them being lower than our industry in general, and increase our margins through the elimination of waste.”
By growing a greatly reduced amount of its inventory, focusing more on higher-priced services like landscape architecture and eliminating waste, Lied believes his company can increase revenues in coming years.
“From an ongoing standpoint, we’re looking to grow in a controlled manner,” he said. “We’re looking in the five to 10 percent range. That’s what we’re shooting for right now.”
Address: N36 W22039 Highway 74, Sussex
Web site: www.lieds.com
Annual revenue: about $12.5 million