From its beginnings in Europe to your local retail store, Waterford Crystal has a lot of traveling to do and transporting pieces of crystal by air, land or sea has the potential to be disastrous. Though the crystal is made durably by some of the best artisans in the world it is still a glass product, and trucks, ships and planes can provide one bumpy ride. Assuring the proper people are handling these fabulous pieces of art from their beginnings in the manufacturing plants is top priority for J.P. Murtagh, director of logistics for Waterford Crystal.
Waterford Crystal hired Murtagh as a business development manager in 1992 and in 1996 he was given the newly created title of director of logistics. His task at Waterford, from the beginning, was to find outsourcing avenues for a brand new line of Waterford endorsed crystal called Marquis.
For years Waterford had only competed in the high-end crystal market, which they dominate, but the middle sector, which was a growing market in the early 1990s was an area that Waterford was interested in tapping into. Market research showed that not only was there a demand for mid-priced crystal, but from a design standpoint, there was also a desire for more contemporary designs, especially in the 25 to 40 age group. The Marquis line would fill that void, but the Waterford plants in Ireland weren’t capable of supporting such a line, so the search began for plants that could.
“And alas the story is good — we found good people,” Murtagh says.
The Search Begins
Murtagh says that Waterford searched the world for manufacturing plants that could carry on the good name of Waterford, to supplement its original plants located in the southeast corner of Ireland. The company had produced crystal in that spot for almost 200 years and the top-end crystal is still made there.
Murtagh explains that a good match consists of, number one, a factory that does quality work. But the plant must also have good customer service, a competitive price, and then there are certain technical capabilities the factory has to have to support the line.
“We visited 300 to 400 crystal producers around the world over the last few years and found a small number that we could work with, in terms that we believed could meet our expectations,” Murtagh says. “The majority of people that suited those criteria were based in Central or Eastern Europe.”†
Most of Waterford’s manufacturing is now outsourced. There are 17 factories in the Waterford system that make crystal. The plants are in countries that include Slovenia, Hungary, Poland, Germany, Austria, the Czech Republic and Portugal; all countries that have a strong tradition of glass making.
Finding Perfect Companions
All vendors that are considered by Waterford must first go through a three to nine month evaluation process that includes trial runs and product inspections. “Our brand recognition is quite incredible and we have to be very careful in ensuring that any product with the Waterford name can stand up to the test that is expected of such a luxurious brand,” he says.
After manufacturers have passed the initial phase, Waterford does what is called a “first production piece inspection.” The crystal company inspects pieces from the first batch and if they pass the test the outsourced plant is allowed to complete the first production run. Once Waterford is comfortable with the source more business is added on and eventually 12-to 15-month open-ended contracts are signed.† These contracts forecast the amount of production that the vendor can expect to see over the specified time frame, and can be closed by either party within certain time constraints.
†”We also have a roving team of quality assurance people who, on a full-time basis, visit these factories and conduct quality audits before anything is shipped to Ireland for worldwide distribution,” Murtagh says.The major challenges in this process are in the communication and control department. Murtagh explains that in order for things to run smoothly there have to be detailed and very precise quality-assurance manuals and manufacturing and packaging instructions that can be easily translated from one language to another.
“We had what was sufficient for our own production, but it wasn’t sufficient for contracting out production, Murtagh said. “From an ongoing communication standpoint it takes a lot of time and effort — you have to have a lot of patience. If there was an issue in the past, all you had to do was walk down to the plants and speak with the managers and they understood immediately — because there is a lot of history behind [Waterford] — and everybody knew the requirements from a quality and technical standpoint. Now it takes a little more work to get the same things accomplished.”
Handle with Care
Murtagh said that finding new manufacturers is a continuous effort as Waterford expands into new product lines that include fine China, linen, Christmas heirlooms, flatware, and writing instruments. Right now, besides the crystal plants, Waterford uses 38 different plants on three continents: Europe, Asia and North America (the United States) for other ventures.
Waterford uses third-party transportation as well. Most of the shippers are delicate product transporters who take special precaution when handling the pieces. The packaging at the factories is where the process begins — to assure there is no breakage.
“A big part of the product development side is specifying the packaging that is used so that products that are delicate in nature and very expensive will be transported safely around the world, no matter where they are going,” Murtagh says.
Waterford has come a long way since the late 80s when it was dealing with the possibility of closure do to industrial strife, an exceedingly high cost base and a collapsing market share. Ten years later they continue to be on top of the crystal market. The one true identifier of their success, of course, is the dollars.
“It took us 200 years to reach $150 million in sales and in the past five years we have doubled that,” Murtagh says. “In 1994 our market share in the United States was 22 percent and in 1998 it was nearly 49 percent, so we have doubled market share as well. Outsourcing has been instrumental in that success.”