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FoldRite Furniture: Demand Surge Strategies

FoldRite Furniture Co. experienced poor performance in 2006 due to high labor turnover, increasing costs of raw materials, and a growing proportion of unskilled labor. This resulted in reduced margins and increased lead times for delivering products. To address these issues, the company plans to focus on retaining skilled workers, training current staff, and improving productivity.

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Ashish Verma
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163 views7 pages

FoldRite Furniture: Demand Surge Strategies

FoldRite Furniture Co. experienced poor performance in 2006 due to high labor turnover, increasing costs of raw materials, and a growing proportion of unskilled labor. This resulted in reduced margins and increased lead times for delivering products. To address these issues, the company plans to focus on retaining skilled workers, training current staff, and improving productivity.

Uploaded by

Ashish Verma
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • Company Overview
  • Good Practices
  • Bad Practices
  • Problems Faced
  • Recommendations

FoldRite

Furniture Co.
PLANNING TO MEET A SURGE IN DEMAND

Background and
Organization

Established in 1987

Developed a reputation for innovation

Throughout 1990s company grew organically

1999-2006 annual growth rate 3.5%. (More than


market growth rate) but one competitor grew
by 6% annually

Background and
Organization

In 2006 companys performance was very bad due to


following concluded reasons

Loss of productivity and yields caused by high


labor turnover

Cost of raw materials was increasing

Increasing proportion of unskilled labor

Continuous acquisition of small firms which


distracted management from their main issues

This thing also generated liquidity shortage

These things resulted in reduced margins as well as


increased lead time from 4 to 6-8 weeks

Good Practices

Trimming product lines enabling customization to


achieve competitive advantage

Consolidated manufacturing

Reducing lead time

Quickest to capitalize on green opportunity by


offering environmentally friendlier products

Opening office and warehouse in Germany to


cater European customer

Strategic inventory

Emphasis on good labor relationship

Bad Practices

Loss of productivity and yields caused by high


labor turnover

Increasing proportion of unskilled workers


resulting in late delivery of products and
increased lead time leading to loss of
productivity

Continuous acquisition of small firms which


distracted management from their main issues

Idle machinery and tools

Problems Faced

Financial issues:

According to their CFO Yung credit situation is


tight.

They have to generate cash from costly resources


as expensive as 12% p.a.

Human resources issues:

Hiring a skilled worker would cost $1500

Supervisor cost for these workers $25 per hour +


33% for benefits

Training of unskilled worker takes 4 weeks during


which full wages are paid

Recommendations

Include overtime

The company should not hire new skilled


laborers; instead they should train unskilled
laborers for the purpose

Retention of a well-trained, stable, and


productive workforce, with reduced turnover

FoldRite Furniture Co. PLANNING TO MEET A SURGE IN DEMAND
Background and Organization Established in 1987 Developed a reputation for innovation Throughout 1990s company grew organ
Background and Organization In 2006 company’s performance was very bad due to following concluded reasons- Loss of produc
Good Practices Trimming product lines enabling customization to achieve competitive advantage Consolidated manufacturing 
Bad Practices Loss of productivity and yields caused by high labor turnover Increasing proportion of unskilled workers re
Problems Faced Financial issues:- According to their CFO Yung credit situation is tight. They have to generate cash from
Recommendations Include overtime The company should not hire new skilled laborers; instead they should train unskilled la

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