FoldRite Furniture Company - Essay Example

FoldRite Furniture Company Introduction Thi Nguyen Thanh Xuan FoldRite Furniture Company is a company that deals in a wide variety of furniture and is located in the state of Colorado in aurora. The current management has Mattin Kelsey as the production manager and the vice president of manufacturing being Jose Ramos. In the last year, the demand for FoldRite products was unexpectedly high amid all the turbulences in the market. The management’s main focus is on the optimization of manufacturing resources as well as making sure that the products produced meet the set quality standards as well as making sure that delivery schedules are met. Company Overview FoldRite Furniture Company was started in the year 1986. The company has been operation with the management being involved in a number of initiatives that have been aimed at its continued growth and profitability. The company operated in a very competitive environment and there was always a need to be more innovative in order to stay ahead. In 2006, there was a change in ownership which warranted some changes in management. However, the company had experienced a growth rate of over 3.5% from 1999 to 2006. This is evidenced by the increase in revenues from $47.5M to $60.3M. This recorded growth was well above that of the industry at the time. However, the company had a cyclic nature at this time as there was a growth and decline sort of scenario which was occasioned by a financial turmoil and loss of yields and general decline in productivity occasioned by high staff turnover. The turnover of staff meant that the company was mainly reliant on the inexperienced staff members at most times. There was also an increase in the production lead time and increased margins. Company transformation In 2007, the company began undergoing a transformation that was started when a new CEO was recruited. The new CEO, Marshal Epstein only made two changes to the structure of the organization and these proved to be vital in its rejuvenation. The first major change was that he reduced the number of products that the company offered while at the same time embarked on the consolidation of manufacturing. The other major change was that he reduced the lead time to a maximum of a fortnight and also made sure that the shipping policy was changed to reflect only two days. Despite the recession in the latter years, the company was profitable in 2009. Company markets FoldRite has a very dynamic market structure and although the demand for their products is seasonal, they have managed to spread out and rely on a large market base. Currently, the largest market segment is the hospitality industry. Although this industry is largely seasonal, it has managed to make up 62% of the FoldRite Market. The second largest segment is the corporate sector which makes up to 29% of the FoldRite market. The rest of the market is composed of individuals primarily buying the products for their domestic consumption. The major deterrent to the marketability of FoldRite products is the ongoing recession that has cut spending in many households and reduced profitability of many companies. Research however shows that the market will begin growing steadily after the recession is over since the revenues of the company still are higher than those of their competitors. Operation Process Strategy FoldRite has established the use of certain manufacturing and operation processes that have all been aimed at ensuring that the products produced are of the highest standards in terms of quality and that the delivery of these products is on time. As stated above, the company ensures that it has enough stock of the fully assembled products and partially assembled ones to ensure that they maintain short lead times as well as keeping in line with the two weeks forecasted demand that was introduced in 2007. The maintenance of a strategic inventory that is aimed at ensuring that the stocks of products and parts are adequately done is also a major contributor to the success of the two-week plan. The company has kept a large stock of frames that are unpainted and await customization in order to satisfy specific customer needs. This means that if a customer wants something, only last minute additions are required. The company has additionally introduced purchasing contracts and partnerships with reputable suppliers so that there is no need to increase costs in keeping raw material inventory. This has ensured that the contracts specify a lead time of only three days for suppliers. Other strategies FoldRite has established a working schedule where workers only operate in 10- hour shifts which are only conducted for four days of the week. Furthermore, the company has made sure that its labor relationships have improved over the years as there is no huge turnover of staff. This has further been made possible by the continuous provision of incentives to its workers. The company has also incorporated the idea of lean management where only a small number of employees are required requiring a strong management base for the smooth running of processes. The manufacturing and assembly process has been customized so that there are only a small number of products that use the same raw materials. The consequence of this action has been the reduction in the number of suppliers and also the reduced number of overheads that are encompassed in procurement. Additionally, the improvement of quality has been made possible due to the consistency that has been inevitably achieved. Although the sales of the company have largely been affected by the recession, the major issue has been the tightness of credit which has stood at 12% per annum. Conclusion This course has been largely about the application of theoretical management issues in practice. Particularly, the analysis of a company like FoldRite Furniture has presented an excellent base for analysis. This is because the company started out strongly but lost its footing at some juncture. The incorporation of specific management practices has ensured that the company has returned to profitability. In particular, the reduction in the number of products offered so as respond to the specific demands of a given market segment proved to be the best way forward. The review of the manufacturing and assembly processes also has ensured that the company has acquired shorter lead times for their products meaning that they are able to maintain a good customer base since their delivery schedules are always kept. The management should always remain proactive by utilizing the forecasting techniques that they have established and also conducting research in order to identify changing customer preferences and changing trends in the market in order to always be ahead of the competition (Kotter & Cohen 142). Works cited Kotter, John P. & Dan S. Cohen. The Heart of Change. Boston: Harvard Business School Publishing, 2002. Read More