Essay on Outdoor Patio Furniture
Number of words: 1545
In its supply chain, Homecrest combines a diverse history of classic and quality design with modern-day demand for affordable, versatile, and luxury living. The company’s emphasis has widened to incorporate the rising demand for complex style-driven consumers who seek to complement the interior designs of their homes and establish a seamless flow between outdoor and indoor. Homecrest aims to develops its future on consumer needs, global opportunities, and innovative products. The outdoor living market has been evolving rapidly, and in response to such developments, Homecrest redefined with new leaders, supply chain strategies, owners, and focus on marketing and contemporary design (Greenhouse Canada, 2020). Usually, Homecrest was among the first outdoor patio company in the American market, and the popularity of its products enabled sales growth to expand in North America. Due to the rise in retail sales, distribution increased to other new markets, including health care, restaurants, and resorts. Manufacturing is usually done in Wadena, Minnesota, USA.
The outdoor patio furniture industry comprises different activities include supply management, sales, and operations planning, demand planning, product planning, and supply planning. Demand planning in Homecrest entails various parts such as trade promotion planning, merchandise planning, and demand forecasting. Effective demand forecasting involves ensuring the company’s products are reliably delivered to potential customers. Merchandise planning in the supply chain is a systematic methodology to selling, procuring, and planning inventory to maximize ROI, whereas ensuring merchandise is available at quantities, prices, times, and places the market demands (Greenhouse Canada, 2020). Trade promotion planning aims to enhance the industry’s products demand in retail stores on the basis of special pricing, no-obligation gifts, value-added bonuses, demonstrations, and display fixtures. Further, supply management in the industry involves five areas like distribution planning, inventory planning, production planning, supply planning, and capacity planning. The industry’s supply chain is designed to ensure raw materials sourced from suppliers are shipped to various forms and finally reaches the final consumer.
Supply planning in the industry determines how companies like Homecrest and competitors like IKEA can best fulfill developed from the demand plan. Typically, companies aim to create an equilibrium between demand and supply in ways that can aid in achieving service and financial goals for the industry (Cao, Zhang, & Ma, 2019). Further, production planning addresses manufacturing and production modules within the industry. Production planning takes into consideration resource allocation of employees, production capacity, and resources. Moreover, supply and production planning in the outdoor patio furniture industry comprises product scheduling and supplier collaboration and management. Inventory planning ascertains the optimal quantity and timing to ensure inventories are aligned with production and sales needs. Also, in the supply chain, capacity planning ascertains the production equipment and staff are maximized to meet market demand. Network planning and distribution planning oversees goods movement from manufacturer or supplier to the point-of-sale. Managing distribution processes in outdoor patio furniture entails different processes like logistics, supply chain, warehousing, inventory, and packaging.
Sales and operations planning is another activity in the industry which is a monthly integrated business management system designed to empower the management to emphasize on vital supply chain drivers such as new product management, inventory management, production, demand management, sales, and marketing, overall, Homecrest fits on the above discussed supply chain activities with more focus on demand and supply planning to sustain competitiveness. However, major competitors like IKEA focus more on maintaining supplier relationships and integration to ensure quality raw materials are delivered, thus providing enhanced customer satisfaction (Sandybayev, 2017). Also, demand and inventory management are an essential supply chain activity in Homecrest to meet manufacturing schedules and inventory management and hence fulfill consumer demands. IKEA has exhibited similar supply chain activities like Homecrest, but due to well-known global performance and more affordable products, the competitor has managed to outperform Homecrest in the industry.
Homecrest in the industry has demonstrated a through the course of its existence that it was one of the most trustworthy firms in the world. It continuously accomplished things that benefited its employees, suppliers, and consumers while remaining true to its basic beliefs. According to the Furniture Dealer’s Testament, efficiency, responsibility, and success are three of Homecrest’s ideals (Kamprad, 2016). Since its foundation, Homecrest has strived to reduce waste and increase the efficiency of its operations. They have also campaigned against unethical behavior by both their employees and their suppliers, aiming to build a professional reputation and environment. Homecrest also reinvests its revenues back into the business to strengthen it. Homecrest uses its principles to create goals and maintain the same level of service no matter how big the company gets. By keeping a responsible image and focusing on efficiency, they are able to maintain the same level of quality and service for their clients. The company maintains its ideals and treats all stakeholders with respect, which provides them a positive image and encourages customers to return, establishing a business cycle that permits Homecrest to continue to fund and enhance its reputation with stakeholders.
Homecrest’s “win-win” strategy with suppliers is maintaining a positive public image by selecting suppliers with stable management and investing and growing the suppliers with their own volume. This is a win-win situation since these suppliers are well-organized and should be able to handle the large orders that Homecrest requires, and Homecrest, in turn, assists them in growing and expanding. Homecrest has a competitive edge since these smaller, well-organized suppliers charge lower pricing, allowing Homecrest to lower their charging costs. The fundamental limitation of working in an international supply chain is that labor and production rules in other nations may differ from those in the company’s home country (Sato, Kogure, & Kudo, 2016). If it is revealed that Homecrest’s suppliers are not treating their employees fairly or producing in accordance with regulations worldwide, this situation could damage the company’s brand. Another issue is that it’s difficult to oversee the suppliers directly because the company’s headquarters are so far away. This implies that Homecrest must trust the suppliers to complete the task according to their specifications, or they risk being held liable for something they were not directly responsible for or even aware of.
On the other hand, the advantages of an international supply chain include that it is more cost-effective than domestic providers. Companies can sell their products at a lower price in other nations due to lower labor and production costs. Another benefit of foreign supply chain is that they save organizations money on storage charges. With suppliers shipping directly to warehouses, storage costs can be saved which can develop over time. It reduces wasted expenditures and improves efficiency, which is one of Homecrest’s core values. Overall, holding international suppliers to the same standards as if they were producing in a firm’s home country is critical since it decreases the possibility of the company being sued for regulatory infractions and other issues (Sato et al., 2016). Selecting suppliers capable of handling this is also critical to the business; Homecrest has done so, giving them a competitive advantage.
Using the similarweb, Homecrest’s online performance is hardly recognized by consumers as opposed to IKEA (See Exhibit 1). Even though the competitors total visits portray a decreasing trend, it shows an exemplary performance in the industry as opposed to Homecrest. Besides, Homecrest is facing more competition from other companies such as Walmart, Target, Ashley Furniture Industries, Wayfair, and Peir 1 Imports. Surprisingly, competitors such as Walmart and Target fit in almost supply chain activities as in the case of Homecrest. Walmart and Target synchronize their expected sales through a replenishment, forecasting, planning, and collaborative system like the case of Homecrest. Further, the competitors supply chain link is associated with a point-of-sale system; however, Walmar has established a centralized database system.
From the information collected between Homecrest and its major competitors in the industry, it can be concluded that Homecrest still needs to inject additional resources in its supply chain to match the competitors. The “win-win” strategy can almost work for most companies in the outdoor patio furniture industry, and leading competitors such as IKEA have huge resources that can enable them thrive in the competitive market.
Cao, Y., Zhang, J. H., & Ma, X. Y. (2019). Optimal financing and production decisions for a supply chain with buyer-backed purchase order financing contract. IEEE Access, 7, 119384-119392.
Greenhouse Canada. (2020). Outdoor Furniture Trends – Greenhouse Canada. Greenhouse Canada. Retrieved 7 June 2021, from https://www.greenhousecanada.com/outdoor-furniture-trends-11220/.
Kamprad, I. (2016). The Testament of a Furniture Dealer. Inter.ikea.com. Retrieved 7 June 2021, from https://www.inter.ikea.com/en/-/media/InterIKEA/IGI/Financial%20Reports/English_The_testament_of_a_dealer_2018.pdf.
Sandybayev, A. (2017). Strategic Supply Chain Management Implementation: Case Study of IKEA. Noble International Journal of Business and Management Research, 1(1), 5-9.
Sato, J., Kogure, A., & Kudo, K. (2016). Outdoor Garden Patio Furniture American Style Knock Down Rattan Sofa. Journal of Pharmaceutical Health Care and Sciences, 2.
Exhibit 1: Homecrest comparison with major competitor IKEA