1) Introduction This is an introduction to the case study of Somerset Furniture. The main talk of the event would be about global supply chain and its impact towards Somerset furniture. In this case study we reverse the history, background, and anatomy of Somerset Furniture. From the introduction of the company we learn about the journey needed in developing and manufacturing the product lines. The journey of Somerset Furniture will dictate on why the company started to outsource and also learn about the time frame involving in planning, processing, developing, shipment and manufacturing of the product lines. In the next phase we learn of the constraints of problematic issues faced by Somerset Furniture. One of the major …show more content…
The breaking point started in the mid 1990’s where Somerset Company was faced a few major overwhelming issues such increasing foreign competitions, high labor rates, and diminishing profits as time proceeded into the new dawn of the furniture business. Somerset Furniture then took the initiative of outsourcing several of its furniture product lines to manufactures in China and at the same time reducing the size of its domestic manufacturing facility and labor force. It was initially successful because the measure taken was able to reduce costs and increased profits. Then by year 2000, Somerset Furniture decided to close down all of its local manufacturing facilities in the United States and completely outsource all its product line to China where by a global supply chain was setup by Somerset Furniture that arranges for shipments of wood from United States and South America to manufacturing plants in China where the product lines where produced by hand of Chinese laborers. The pro’s involved with the China handling the product lines offered by Somerset Furniture were firstly the labor incurred during the process of making the furniture. In the United States, labor cost ranging from the rate of $9 to $20 per hour and but in China the average labor rate for furniture manufacturers are $2 per day. Now that is a very large gap to fill in. Secondly, the China manufactures were very good at copying the Somerset ornate furniture designs by hand
In IKEA, the Unsolicited Proposal came from many directions. Firstly, in 1952 the boycott by Swedish retailers to IKEA, obliged to IKEA to seek new sources of furniture. Second, the Swedish furniture market demand fall by the early 1970s. Third, IKEA had identified as we said before two big markets to
Despite being well-established, over the last three years, sales at Atherley Furniture Company have remained the same while profits have declined by almost 24%. Their chair division produces three different types of chairs, the Atherley, the Caledonia and the Parkdale. Each model has its own production plan and production costs. The increasing production costs, alongside the intense competition the company faces, have become a great cause of concern for John Atherley.
The household wood furniture industry is healthy and growing. Total industry sales in 2007 were estimated to be $31 billion at manufactures prices. Three categories of furniture divide the industry. First upholstered furniture which makes up 50% of sales, Secondly wood furniture at 40% of the industry market share which has grown 2.5% in 2007 and is projected another 4% in 2008, this second category includes dining room and bedroom furniture. Third and last is the other category at 10% this includes ready to assemble and casual furniture. Haverwood has established themselves as a medium to high priced furniture company through 1,000 carefully selected high
Today’s world is facing strong influence of globalization in each and every aspect of our lives. It is expressed through: free trade agreements, foreign direct investments, international trade, facilitated movement of labour, capital and resources, as well as a strong competition that eventually gives more power to customers. In addition, it resulted in the economic boom of the developing countries, with substantial dominance of China that mainly benefit from their massive labour force, its low cost and high comparative efficiency. This phenomenon has impacted all industries around the world. In particular, furniture production is going through a trend of moving to China that “in 2002
Furniture is considered in economic terms as an ‘elastic commodity’ and is very sensitive to economic changes. It is an export oriented industry with 53% of production being shipped outside Canada and 95% of exports going to the US. Canada is the 5th largest exporter of furniture in the world operating at various
The services and products offered by IKEA provide value to its customers in various ways. For one, the products and services are very affordable. The products and services are not priced highly and therefore, the average customer can enjoy them. At the same time, the products are of high quality. From IKEA’s slogan “low prices but not at any price”, it is clear that the company prices its products lowly but that does not mean that the quality is compromised. IKEA satisfying its customer’s needs through providing them value for their money as they provide quality products that will last for a long time, and at affordable costs. The fact that the company has set the minimum acceptable standards for its wood, implies that it is also keen on quality and on the environmental impact of its action of making furniture ( Edvardsson, Enquist & Hay, 2006).
Chad Thomas needs to make sure daily manufacturing schedules are aligned with the current orders. The fact that the same set of employees and the same set of tools are being used to manufacture both the custom and the standard pieces of furniture is definitely problematic. In order to meet the demands of each product, it is critical that scheduling be created in the most efficient of manners given the current constraints. Allocating all the resources properly is a key along with scheduling and layout. In regards to long term decisions, Mr. Thomas is going to have to decide
Gioe Melaney is the general director of Southern Toro – a subsidiary company included in the distribution system of Toron Coporation in Galveston, Taxas.
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3.1 For each hotel, what is the role of technology and the role of operations
The Canadian furniture market has brought success to IKEA Canada due to the high quality and low priced “quick-assembly” furniture designed by IKEA’s European engineers. However, this success brought many imitators. Sears Canada has recently published a new catalogue that includes a new line of furniture called “Elements”. The new line of furniture very much resembles IKEA’s knock-down, self-assembled line. IKEA is facing an imitation threat and should tactically respond to minimize its effects.
As I entered the remaining classes in my concentration, Operations Management, I realized how each particular class subject had all come together, and how each was interrelated. Each class, each subject became more important to me as I realized their importance in the role of an operations manager.
the China market IKEA China has been allowed to exceed and expand its sourcing of
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Since Somerset has the machinery to make the custom furniture, part of the agreement should include requiring their Chinese manufacturers to use them. They also need to find other manufacturers so that they can mitigate the risk if their primary manufacturer experiences a problem meeting the deadline or there is a problem with the shipping deadlines.