Chad's Concepts

In: Business and Management

Submitted By kfernanders
Words 1318
Pages 6
To: Chad Thomas, President, Chad’s Creative Concepts
From: Consultant

Chad’s Creative Concepts located on the banks of Lake Erie in Sandusky, Ohio, designs and manufactures wood furniture. The company developed a solid reputation for creative designs and high-quality workmanship. They focused entirely on custom made furniture. Their customers specify the kind of wood that’s used to create the pieces they want. As the company’s reputation grew and sales increased, the Chad’s Creative Concepts began to sell some of its more popular pieces to retail furniture stores. This has allowed the company to produce a more standard line of furniture. These buyers however, are much more price-sensitive and impose a more stringent delivery requirement. Over the past few months sales for the standard line furniture has increased, however custom made furniture has continued to dominate their sales. Although the company’s sales for the standard line has increased, scheduling trade-offs have to be made to meet the demand of the custom made products because of the higher profit margin from the custom sales. This has led to a delay in shipping of the standard line furniture, a lack of warehouse space and increased lead times for the standard line of furniture.

Significant issues have been identified with the company’s standard line of furniture. Although sales have increased, the custom made line has taken precedence, leading to customers who are not able to receive the standard line in a timely manner. This has created long lead times as well has because a backlog in the warehouse space. Sales have indicated that there is a steady increase in the standard line furniture, but because the profit margin is much greater with the custom line, these customers are being pushed behind the custom orders. The company is now using expensive rented…...

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