In the high-pressure world of business journalism, subject to the authority of the smartphone and the inflexible tyranny of the presses, seldom do we hacks wish for our contacts to arrive late. Lorenzo Spoerry finds that at the Thorntons factory in Derby however, visitors – even journalists – soon find themselves wishing precisely that.
The lobby of the largest premium chocolate manufacturer in the country is, like its signature boxes of chocolate, replete with the best this country has to offer in the way of sugary treats. Chocolate ganaches infused with Marc de Champagne and bite-sized Valencia chocolates are piled high among the low tables. Plates of bright white vanilla truffles compete with small mountains of hazelnut slices for our attention.
Sadly for this reporter, David Proctor, Thorntons’ head of operations, was right on cue for our interview. Ushering me past the sales section (itself amply stocked with plates of chocolate) and into his office, he explains how Thorntons has succeeded in weathering the recession to maintain its position as the UK’s favourite boxed chocolate manufacturer, with a growing market share of 50%.
“It’s not easy for a manufacturer to make a truly excellent range of boxed chocolates. Our ability to get that right puts us apart from the crowd. We have a huge range of products. One of our typical boxes will have milk, plain and white chocolates. It’ll have a huge range of decorations.
“It’ll have moulded chocolates and enrobed chocolates requiring different manufacturing techniques” “Each chocolate will have a different centre, too. Some will have pralines, mousse, nougat or fudge. Some will be foiled. We use the very best ingredients, excellent craftsmanship and well-proven recipes. It’s a complex process; it takes a great deal of experience, expertise and technology to be able to do what we do here.” he said Founded in 1911 by Joseph Thornton, the company started life as a small chocolate shop in Sheffield. His vision – to create the best chocolate in town – has served the company well for 99 years. Thornton senior eventually left the company to his two sons, Norman and Stanley (the two main facilities at Thornton’s Derby site are called Norman House and Stanley House). Today Thorntons owns 377 of its own stores and sells its products through 200 franchisees, through its thorntons.co.uk website, through supermarkets and duty-free shops for a net turnover of £215m.
“We try and remind ourselves that what worked for Joseph Thornton is more or less what works now,” explains Proctor. “We focus on our core values and what our customers expect from a box of chocolates with the Thorntons name on it. We want to give our customers that ‘Wow!’ factor when they walk into one of our stores. What we can provide through our branded stores is one-to-one time with someone who’s an expert on chocolate. We can provide a bigger range and a personalised service and personalised products.” In the late 1980s, Thorntons moved production to Alfreton, Derbyshire, where the company produces, packages, stores and from which it distributes its products.
“We have all of our business functions here too, our own fleet of vehicles and our own drivers. We’re a highly vertically integrated company,” says Proctor; “We want to make sure we always have our products in our stores, at the right times and in the right condition – agility is key.
Having control over every aspect of the business is the best way to do that.” Six years ago, the company bought a new robotic packing line and brought in another one a year ago. This has helped ensure a much greater level of quality control. “These robots pack around 900 chocolates a minute. They automatically sense the chocolate, measure it to make sure it’s the right size, pick it up and place it the box at the correct orientation.
That’s one of the ways we’ve managed to differentiate ourselves from other manufacturers.” Thorntons has also recently invested in a new £2m moulding line which allows it to make moulded chocolates and hollow spun products like Easter eggs and models.
Recent fluctuations in the price of cocoa have put many chocolate manufacturers in a very precarious position. Thortons has, by and large, successfully weathered the storm, something that Proctor credits with a focus on keeping control of costs.
“A lot of the rise in the price of cocoa was driven purely by speculation rather than underlying factors. This year’s harvest has been good, so we hope that the price will return to a more stable, lower level.”
Innovation and tradition
Faced with the challenge of declining sales on the high street, Thorntons has sought to preserve its market share through constant innovation whilst keeping its core customer base loyal.
Lean programmes, communication and training
The company has focussed in a few key areas in its lean improvement programmes and has sought to overhaul its communications strategy. Hanging on the wall of David Proctor’s office is a massive board detailing the owner of every single process undertaken in the factory. It looks a bit like an eye testing chart. “It looks a bit strange, but it’s been very valuable to us in improving quality and driving waste out of the business. We examine how much waste we’re created in each four-week calendar period,” says Proctor; “and then compare it with the same four-week period in the previous year, which focuses us on improving performance year-on-year. We go through this each month and it helps us drive other projects. For example, in our enrobing area, we’re working on a weight-control project. In our packing area, we have a project team looking at reducing the amount of waste created by damaged packaging.” Thorntons has engaged in a number of training and continuous improvement programmes and currently has almost 100 staff undertaking Level II NVQs in Business Improvement Techniques. In October 2009, in association with delivery partners CQM Training & Consultancy, the company also invested in a significant 24 month programme involving groups of cross functional teams working on specific improvement projects. Three projects involving improvements to the Enrobing Line, the Robotics Packaging Line and the Flow of Packaging material have so far identified potential savings of over £700,000 of which over £200,000 of savings have been embedded during the project activity.
The teams involved in these first projects will continue to embed their improvements and lock in the savings with CQM’s and the operations management support, whilst the three more teams are prepared for the commencement of three more improvement projects in May 2010.
“Another area that we’re trying to concentrate on at the moment is improving communications between all areas of the business. This was something that emerged as an obvious gap when we spoke to our employees. Now, we’ve introduced daily cell reviews where we look at key performance metrics like safety, cost, quality, delivery performance and new products. These reviews, although not unusual in a business like ours, have been absolutely crucial in driving Thorntons forward.” Thorntons also conducts quaterly plant briefings and distributes a fortnightly newsletter.
In addition, the company has introduced a fortnightly newsletter and a rumour board. “The rumour board is something which some thought a little controversial at first. The basic rules are as follows: If anyone has a question they might think is of interest to a wider audience, such as whether the company is moving to 24-hour shifts in packing, or whether working hours might change, they can write it up on the board. Our commitment is that, within 24 hours, a senior manager or someone with expertise in that particular field will reply with the answer. It’s a little daunting at first because you don’t know what people will write, but I’ve found that the communication has been very positive.
Experience has taught me that if you leave a void in communications people will fill it, and we’ve worked hard to address that here.”
Energising efforts
In line with the scale of the operation, Thorntons has a considerable energy cost, particularly relating to electricity useage. This consumption takes in to account not only what is used at the factory level but also includes the hundreds of Thorntons stores from around the country. To assist with its energy needs, the company consulted the help of Energy Services Partnership (ESP) to develop an improved buying strategy. Combining its financial, capital markets and energy trading expertise ESP was able to help Thorntons more proactively manage its energy exposures. “Energy is obviously quite a specialised subject so we decided to go outside of the company for some extra help to ensure we were getting the best advice available” says Proctor. “With regards to buying, by pooling some of the knowledge and part of the expenditure with other manufacturers and other organisations, we reduce our costs and get access to important information which assists us in our decision making in this area. We observed that we were not necessarily able to buy electricity and gas cheaper than the next person but that we were able to make better decisions as to what coverage was appropriate to reduce our financial risk and provide more certainty around our budgeting process.
To assist the company to also reduce its energy useage, Thorntons engaged the assistance of energy consultants Camco to provide support on policy, regulations and project development for both clean energy and energy efficiency projects. With a view to generating cost savings while reducing the financial impact of carbon risk and regulations, Camco attended the confectionary manufacturing site to perform an audit.
“The outcome,” says Proctor, “was a range of options in terms of how to improve efficiency. We have converted those suggestions into a project plan and are working our way through it.” Thorntons created a graduate position to assist the company with its energy reduction and sustainable aims.
According to Proctor, the assigned graduate proved to be very passionate about the field, driving the sustainability topic to the top of the company’s agenda. “We are actually doing a lot right now in the environmental field,” says Proctor. “We have scaled up our recycling program, working alongside Biffa, and are currently investigating the implementation of combined heat and power as well as a solar energy program. We see such projects as good business practice even when there is not an immediate financial return.”
A source of relief
Thorntons recognises it has social, ethical and environmental responsibilities arising from its operations and is committed to the welfare not only of its staff and customers but also of its suppliers and the wider community. The company ensures ethical, social and environmental standards are maintained through the supply chain by auditing and visiting over 95% of its suppliers on a regular basis. The primary concern is for food safety but audits are also conducted to review ethics, health and safety, employee pay, employment conditions, use of child labour and environmental policies and practices.
Thorntons buys all of its cocoa from suppliers which actively support the International Cocoa Initiative and World Cocoa Foundation (“WCF”) programmes to improve livelihoods of cocoa farm families and promote responsible labour practices. This ensures the ethical sourcing of cocoa and, in particular, minimises the risk of purchasing cocoa from sources which illegally use abusive or enforced child labour. Thorntons is also itself a member of the WCF which encourages responsible sustainable cocoa farming amongst small family-run farms. In addition, Thorntons has registered as a member of GreenPalm which aims to promote certified sustainable palm oil and prevent the destruction of rainforest.
Thorntons uses over 300 different raw materials, which are sourced from every continent in the world except Antarctica.
“Because Cocoa trees can only be grown 10° either side of the equator, much of our cocoa comes from the Ivory Coast and Ghana but we have ranges coming out of Madagascar, Venezuela, Ecuador and Paupa New Guinea. After Christmas we are about to launch a chocolate bar which is made using Haitian Cocoa. Funds raised from sales of that chocolate will go towards assisting with the Earthquake relief in Haiti and we are hoping to raise in the region of £20,000.” The interest in charitable work is well ingrained in the Thorntons’ culture with staff last year raising in excess of £50,000 for its lead beneficiary, children’s charity NSPCC. Every year the company’s charity committee co-ordinate a range of initiatives including sponsorship from suppliers and staff for runners in the London Marathon, the arranging of collection points in stores and the organisation of a charity football day for Thorntons’ suppliers at Derby County’s football ground. Proctor says the company has also recently had 20 teams from across the country compete in an adventure challenge up in Coniston, in the Lakes District, which raised just over £10,000.
Driving the business forward
Keen to compensate for a seasonal lull in chocolate sales during the summer months, Thorntons has launched a range of ice cream parlours. “We’re very excited about this,” says Proctor; “It builds on our excellent existing range of ice creams. We think there’s a lot more we can do in this area. The other thing that we’re looking at is developing international markets. This year we’ve increased international sales to approximately £4m, which is still quite small by Thorntons’ standards, but we’ve had a good deal of success in Ireland, the Middle East and in Poland.” It’s a fairly cautious, committed approach looking very much towards the longer-term.
At one end of the Derby site’s cafeteria there is a Thorntons shop selling cut-price chocolates to the company’s workforce. It’s identical in every way to one of the company’s high street shops, the italicised Thorntons name cast against the familiar dark-brown background.
Inside, brightly coloured chocolate boxes are stacked from the wall to the floor. Proctor notices my interest and hands me a giant box of Thorntons Continentals. “For the girlfriend,” he says. “She’ll love it.”
