Value Chain - Ashley Furniture Industries - Term Paper Example

?Value Chain Table of Contents Table of Contents 2 Introduction 3 Thesis ment 4 Value Chain and Ashley Furniture 4 Primary Activities 5 Support Activities 9 Recommendations for Further Improvement 11 Conclusion 12 Works Cited 13 Introduction Ashley Furniture Industries, Inc (Ashley Furniture) was established by Carlyle Weinberger in the year 1945. The company is headquartered at Arcadia, Wisconsin which is considered to be the core manufacturing along with distribution center of the company (Ashley Furniture Industries Inc, “A Proud History and Poised for a Formidable Future”). After the completion of 60 years of excellent innovation in the furniture industry, the company has become one of the successful industry leaders in terms of manufacturing of quality and innovative furniture products. The company aims to achieve its mission and vision by fulfilling the needs of varied customers spread at different locations globally. The company ensures that it provides the best quality products at the best and affordable prices which are further accompanied with best services within the industry (Ashley Furniture Industries Inc, “A Proud History and Poised for a Formidable Future”). Thesis Statement The paper critically identifies the value chain activities practiced by Ashley Furniture Industries, Inc and briefly recommends on various core areas of the company in relation to value chain. Value Chain and Ashley Furniture The term ‘Value Chain’ was first coined by Michel Porter in his famous book ‘Competitive Advantage’ in 1985. The analysis of value chain identifies the activities performed by an organization and further relates them with the organization’s competitive strengths. Porter identifies primary and secondary activities as the two major activities essential for value chain analysis. He further grouped the primary activities into five sub-heads including inbound logistics, operations, outbound logistics, marketing and sales and services which are concerned with the value creation as well as delivery of products. Similarly, secondary activities are also grouped into four sub-heads namely, human resource management, technology development, infrastructure and procurement. The secondary activities help organizations to enhance the efficiency and the effectiveness of the overall organizational operations (Food and Agriculture organization of the United Nations, “The Value Chain”). The basic model of value chain is being represented below: Source: (Food and Agriculture organization of the United Nations, “The Value Chain”) Primary Activities Inbound Logistics Ashley Furniture aims to produce world class durable furniture in attractive designs and affordable prices. Furthermore, the company ensures that by no means are its product qualities compromised; and customers receive value for their investment made in terms of durable and finished products. The company has partnered with best class suppliers for the supply of a variety of components required for the manufacturing of the furniture products. In addition to this, the company has the largest air-ride truck fleet in the industry which can be evident on the highways of Wisconsin (Wisconsin Manufactures and Commerce, “BPES-Ashley Furniture”). The tractors involved in the transportation of required components for the manufacturing process are equipped with auxiliary power units that result in less consumption of fuel almost by 10 percent. Additionally, the company is also striving to procure materials locally in order to reduce the cost of transportation and thereby offer its products at affordable prices to its discriminating customers (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Operations Ashley Furniture has more than 250 acres operating space for manufacturing and distribution throughout the world. It has the biggest casegoods production related plant in the United States. The company sells furniture in more than 123 countries around the globe. The major regional manufacturing and distribution centers within the country are located in Wisconsin, Florida, Mississippi, Pennsylvania and California. Furthermore, it has internationally located offices and manufacturing as well as distribution centers located in India, China, Vietnam, Malaysia, Indonesia and Taiwan. The company has efficient warehouse system that enables it to store both raw materials and finished goods efficiently with minimum risk of deterioration (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Source: (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”) Outbound Logistics Ashley Furniture manufactures furnishing products both nationally and internationally. It aims to reduce its operating expenses by delivering products at minimum time and at minimum cost involved for the delivering of its products throughout North America and around the world. The company has more than 800 tractors and over 2000 trailers that makes the company the possessor of the largest fleet in the industry which further enhances the carrier network of the company. It also has intermodal rail yards in the US. The company also manages to transport 70000 containers annually around the globe. The air-ride suspension installed in the trucks used for transportation of products minimizes any risk associated with product damages in the course of transportation which result in deterring any contingency losses that may be incurred while transportation of finished goods (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Marketing and Sales Ashley Furniture offers various products line to its discriminating customers ranging from office furniture to household furniture in variety of designs with outstanding finishes. The company aims to provide quality of products at much affordable price to its diverse range of customers by reducing its operating expenses. At the same time, the company appears to be very careful in delivering of products to its dispersedly located customers. The company ensures that its products are designed according to the changing needs of the customers which enables to yield the highest degree of satisfaction among the different customers and ascertains highest profitability in return (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Services Ashley Furniture offers quite a few services to its customers. The company delivers, assembles and sets-up new furniture purchased by the customers at the furniture destination. It also provides limited guarantees on its products purchased by the customers (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Support Activities Infrastructure Ashley Furniture considers its manufacturing system to be the most crucial area for its success and concentrates more on improving its overall manufacturing process. Almost all the manufacturing systems and processes are organized by the company aimed at improving quality, reducing costs and increasing the volume of production in order to promote consistent growth for the company. It uses high speed automated equipments as well as manufacturing systems to produce goods at lowest possible costs. The company also has more than 400 diversified assembly lines that enable quick changeovers of manufacturing operations (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Technology Development Ashley Furniture considers technical innovation to be one of the critical factors for accomplishing its goals and sustaining stable growth. The company has established quality testing labs equipped with latest technology to ensure best quality products are delivered to customers. The company through its website ‘Ashleydirect.com’ is dedicated to provide easy access to the information required by the customers available at 24/ 7. Moreover, the company has also developed Customer Order, Distribution & Inventory system (CODIS) in order to provide customers marketing specialists with immediate information on any order at any time (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). The experienced customers’ service agents provide any valuable information required by the customers through Electronic Data Interchange (EDI), e-mails, fax or through any other combination. Accordingly, the company invests more than US$ 30 million annually in developing its technology systems and in up-gradation processes (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Human Resource Management Ashley Furniture recognizes its employees to be the most important resources who have contributed their significant efforts in the success of the company. Ideas of employees are appreciated by the company and it registers more than 800 employees’ ideas annually which facilitate to save considerable amount of operational costs of the company. It employs more than 3,500 employees in Arcadia, Wisconsin only, while it provides jobs to 9,000 employees nationwide i.e. in the US. Eventually, the company has more than 20,000 employees contributing their efforts for yielding high profitability for the company (Wisconsin Manufactures and Commerce, “BPES-Ashley Furniture”). Procurement Ashley Furniture manufactures its own products within the USA but it also purchases components required for the manufacturing of finished goods from other countries as well. The company is accompanied with more than 4500 vendors in the US only (Ashley Furniture Industries, Inc, “Ashley World Class Furniture Company”). Moreover, the company is constantly seeking ideas to maximize material usage along with reusability of products where possible. Recommendations for Further Improvement Though the company has efficient value chain, it needs to further improve its activities to provide highest satisfaction to its discriminating customers and ensure higher profitability out of their operational activities. Every activity, ranging from procurement to delivery of finished goods to its customers is essential aspects for the successful operations of the company. It must understand the different needs of its various customers through continuous market analysis and it should aim at fulfilling those needs of the customers effectively. Contextually, the company must indulge its employees towards more innovative products along with quality of services such as free delivery of purchased goods by the customers. It should also use energy efficient equipments in its manufacturing process in order to reduce the operational costs and enhance overall productivity of the company. The company is required to show more consolidated efforts in terms of marketing and sales of its variety of its finished products. Furthermore, it should also focus on expansion of its business to other parts of the world especially in European markets as other companies like IKEA, a leading international home products company based in Sweden. The company should seek better cooperation from its suppliers for ensuring quality components required for the manufacturing process. Ashley Furniture needs to further strengthen its human resources by involving talented and skilled workforce for the successful operation of the business. Conclusion Ashley Furniture Industries Inc was established in 1945 by Carlyle Weinberger. Over the last 60 years, the company has been able to achieve many significant milestones. The company with its innovative products has been able to satisfy its discriminating customers and sustain itself as one of the eminent leaders in the furniture industry. Today, it is a house for more than 20000 employees’ spread across the world. Despite its efficiency with respect to value chain activities, it has not been able to penetrate into international market efficiently similar to other leading names in the industry such as IKEA. The company needs to consolidate all its activities relating to its operations such as logistics, manufacturing processes, marketing and sales, and procurement of components required for the manufacturing of finished goods. Works Cited Ashley Furniture Industries, Inc. Ashley World Class Furniture Company, 2012. Web. 16 Oct. 2012. Ashley Furniture Industries Inc. A Proud History and Poised for a Formidable Future, 2012. Web. 16 Oct. 2012. Food and Agriculture organization of the United Nations. The Value Chain, 2001.Web. 16 Oct. 2012. Wisconsin Manufactures and Commerce. BPES-Ashley Furniture, 2012.Web. 16 Oct. 2012. Read More