Every week we seek expert guidance to aid a small or medium-sized business overcome a crucial matter.
When Victor Tam purchased a condo in 2010, he wanted to furnish it in Scandinavian fashion without falling for the familiar trappings of IKEA. Looking about, he discovered that many retailers were “amazingly priced,” with couches so pricey he thought he could otherwise furnish an entire room.
Analyzing the marketplace, he discovered that a world of markups as furniture goes through the control of producers, importers, distributors and retailers. So he partnered with some old friends in the e-commerce sector to launch a company that cuts out the middlemen.
The result was Rove Concepts, found in 2011, a mainly Web-focused furniture business that distinguishes everything from design to delivery. The Vancouver-based business tends to have generated $20-million (U.S.) in sales in its last financial year, purchasing Scandinavian-inspired, mid-century furniture at a comparatively low cost over North America.
The company attempts for price points that could make them the fast-fashion of their furniture universe — even Mr. Tam invokes fashionable clothes retailer Zara — however, with all the flair of a enviable boutique. To achieve this, Mr. Tam and his partners say they have to focus on creating its small-firm customer service consistent across the huge continent.
“There’s no point in believing that one day we will be another Crate and Barrel,” says Mr. Tam, the firm’s chief marketing officer. “They’re doing well in their own space. We view ourselves as flying under the radar and capturing the audience that doesn’t need to conduct with the masses .”
Mr. Tam and co-founders Arthur Lee and Brendan Burscough started by manufacturing replicas of high-demand furniture, such as the traditional Eames Lounge Chair. The company has rolled out its very own exclusive merchandise lines. Rove functions using co-operative factories in China and Vietnam and origins handmade carpets from India, ” Mr. Tam says. They have recruited designers that partner directly with the factories.
Rove imports its products to market over North America — mainly online, even though they do have a showroom in Vancouver. The company has four warehouses, two in Canada and 2 in the United States, and functions using a third-party logistics company that has over a half-dozen warehouses of its very own.
Improving distribution and logistics is another frontier to get Rove, Mr. Tam says. Some past customers would be inclined to concur; the business has coped with adverse feedback on sites such as Yelp.
Working with a third party distributor is necessary for a business the size of Rove, the co-founder considers, to be able to get its comparatively few of commands to far-flung cities. But improving the delivery process is top of head.
“The last mile is the point where the customer is truly getting that last encounter with your business — the men showing up to the doorway, supplying it and unpacking it and supplying that service,” Mr. Tam says. “That is the challenge: providing that consistency of service throughout the continent .”
The Challenge: How does a small business like Rove Concepts enhance its supply chain to guarantee high-quality delivery no matter where the customer is?
Gal Raz, associate professor of operations management, Ivey Business School, University of Western Ontario, London, Ont.
The furniture supply chain is unique in its own challenges and causes of defects, due to a lot of supply-chain touch points, the bulkiness of the things and the string’s complexity. The crucial issue for Rove is supply cord control. There are two ways they could approach this.
Right now their furniture is constructed to purchase elsewhere. However, if rather Rove could get raw materials to construct in their own warehouses, then they’d have more control, resulting in less damaged or incorrect goods. Holding raw materials is cheaper, too.
An alternative is to maintain the current supply chain but align its goals and incentives about quality and standardization. Possessing multiple superior checkpoints (at the vent and the warehouses) is far more expensive, but achieves more accountability connected to the issues’ origin. You have to align incentives with all the string for all of the threats and the revenues. Revenue-sharing contracts can ensure partners guarantee quality.
Rick Cleveland, director of education and accreditation, Supply Chain Management Association, Toronto
The first rule of supply chain is to understand how you add value to the customer. Rove has discovered a market with Scandinavian styling priced for the online-savvy industry. They need to guarantee the members of the supply chain are selected for the value they add through responsiveness, quality or cost, but it has to be considered from the impact to the customer, not another step in the string.
There can be problems with customer delivery requests, as shipments from Asia, where low-cost labour is available, require long lead times. But depending on when replenishment orders are triggered from customer Web browsing or commands, this delay may be mitigated somewhat.
The “last mile” becomes the crucial differentiator. The customer experience of setup and delivery can improve or detract from the feeling of having created the ideal purchase — purchaser’s satisfaction vs. buyer’s remorse. With the usage of a third party (or even fourth-party) logistics spouse, the outbound delivery teams should be contracted to get coaching from Rove or at least an overview of the business position and expectations.
I’m uncertain what their core competency is: distribution or manufacturing? In retail sector every one of those two need various metrics to evaluate business achievement. What about service level? Is there an assessment system to show you the proportion of customer satisfaction?
A tighter focus can provide help. What kind of competitive edge are they focusing on? Low price? High quality? Luxury goods? Each customer category has its own definition of anticipation.
Concerning distribution and logistics, they have to discover the tradeoff in regards to centralized or decentralized warehousing. Have they ever completed a process analysis to recognize deficiencies and gaps? They might or might not require a new warehouse place or new sources but might need to review their string and discover the bottleneck in their procedures, people and systems.
THREE THINGS THE COMPANY CAN DO NOW
Rove can include quality checkpoints in regions such as ports and warehouses to assure quality.
Constructing an incentive program with suppliers and partners will motivate them to guarantee quality.
Since Rove can not handle delivery themselves, they could enact a training program for the people representing their brand throughout the supply chain.
Interviews have been edited and condensed.