Royal Décor Furniture

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Distribution

To maintain a low level of finished goods inventory we ship room packages and piece packages daily to our Distribution partners. This requires collaboration between us, our logistics shipping partner and the retailers to ensure that product arrives at the correct distribution site on time. We also want to prevent excess inventory from building up at any one distribution center, so it is important that the retailers provide accurate information on the current product levels and current point of sales data. Initially, we relied on this information solely to keep track of inventory levels at our Distribution centers both externally and internally. Working closely with our external and internal distribution teams we developed an IQR score to help us maintain and reduce excess inventories at our distribution centers. What we’ve found is that certain items sold very quick and needed to be replenished at the DSC’s more quickly than others. Using the data from our existing MRP system, the IQR logic first divides inventory into three groups: items with future requirements, items with no future requirements but with recent past usage, and items with neither. The items in these groups are then stratified into typical ABC-type classifications based on their future dollar requirements, their past dollar usage, or their current dollar balances, respectively. A target inventory level expressed in days' supply is set for each item based on its classification. The balance on hand of each item is compared to the target, and the dollars of each item are categorized as either Active, Excess, Slow Moving or Obsolete. These are called the inventory quality categories. The Inventory Quality Ratio is the ratio of the active inventory dollars to total inventory dollars. In a theoretically perfect situation (i.e., with no excess, slow moving or obsolete inventories) the IQR would be 100%. Our goal is to reach 90% by 2018. When we implemented this strategy we were at a 50% IQR score. Through strong relationships and commitments with our distributors, we’ve been able to improve this score to over 70%.

We use ground freight with our shipping partners to send product to any one of the distribution centers in the continental United States. Delivery times range from two to three days in the pacific time zone and roughly four to five days for sites in the central and eastern time zones. We try to prevent shipping priority or overnight because of the high cost of transit, so it is crucial that our production output and our shipments are timed to deliver our product on time and service levels are maintained.

We have two main forms of distribution for our products. Our Standard line is our top seller and is distributed through distributor owned retail outlets such as Ashley furniture, Rooms-to-Go, and Aetna Furniture stores. The majority of these stores have warehouses attached to the retail part of the store and thus our standard line is shipped directly to these outlets. Ashley Furniture is a bit unique in that it has three distribution centers, one in Texas, North Carolina, and Florida. From these distribution centers, our product is then distributed to their retail stores and ultimately to the end consumer. For our Deluxe line we have found that quality control is crucial. This line is sold to the upper class population located in the Southwest. We maintain and control the distribution of this line internally and we deliver to the end consumer. Our internal distribution centers are in San Diego, Phoenix, and Dallas. From these Distribution sites, we maintain a flow of MTO receipts. We build these orders at our sites and deliver and install them in the homes of our end consumers. We are able to establish a first-hand relationship with our clientele and ensure their happiness with their purchase. This creates invaluable, positive buzz that leads to customer referrals. By delivering and installing our deluxe line ourselves, it allows for maximum quality control and ensures that our brand image is maintained throughout the entire supply chain.

Shipments

- Modes

- Carriers

- Shipment sizes

- Transit and cycle times

- Costs/values of shipments

Marketing & Sales

For the standard bedroom set, our customer target demographic will be middle class individuals ages 25-54. Traditional advertising via radio and television commercials will be used to promote the bedroom set. Online promotion via the Royal Décor Furniture website and targeted social media banner ads will be utilized too. Royal Décor Furniture will work with third-party retailers to have the set highlighted through weekly ads as well as offer discount coupons and markdown pricing.

For our luxury model, television and radio media ads will be placed, targeting an upper middle class demographic of individuals ages 25-54. Royal Décor Furniture will sell the high-end model directly from Royal Décor Furniture stores. Additionally, we will sponsor targeted events including home shows, jazz and wine events, museum openings, etc. to sell directly to the target market. We are currently in talks to enlist celebrities such as The Property Brothers, Jonathon and Drew Scott, to sponsor our luxury line.

Finally, we will take a non-traditional approach to marketing and work directly with home builders of million dollar homes. In exchange for furnishing a model bedroom, the home builder will allow signage throughout model homes and will provide marketing materials to home buyers who have an interest in the product.

- Sales roles and activities

Customer Service

At Royal Décor Furniture, our customers are not just numbers on a spreadsheet. We have dedicated call centers, with agents available 24/7 for any customer inquiries. We also have a chat client built into the website, accessible via our website, for customers who prefer not to call in.

We offer a 3-year warranty for our standard set, and a 5-year warranty for our luxury set. The warranty protects against any manufacturing defects in the furniture and damages caused by reasonable use.

We gather data on customer satisfaction with surveys. Upon completing the survey, a customer receives a 15% off coupon for any future additional purchase. This can be used either by themselves, or given to a friend or family member to use.

We also have ongoing promotions via our partnerships with hotel chains that use our bed sets.

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