"I looked around and saw a world of change taking place," Erwin says. The big retailers were no longer buying locally, and the mom-and-pop stores were being squeezed out. However, interior designers were looking for a residential upholstery manufacturer that could be flexible, so his company, Pacific Mfg., decided to fill that need.
The Phoenix-based manufacturer gradually phased out its remaining retail accounts and courted interior designers. The change required a shift from mass-producing quantities of identical pieces to mass-customizing individual special orders.
At first, Pacific was able to devote the necessary time, effort and energy to ensure that every product was perfect. As its business and customer base grew, however, the company became overwhelmed by the complexities of the process. It started to let orders slip through the cracks, miss deadlines and disappoint customers.
Erwin believed computer software was the solution. "When I started operating the company, we lived by (Microsoft) Excel spreadsheets doing almost everything," he says. The first spreadsheet was used to print the law labels attached to each upholstered piece. Then Erwin began working with FileMaker Pro. "It's very simple to use, very robust and powerful," he says. "It took me down this journey of I wonder if . . . I wonder if . . . I wonder if . . .' "
A data management software program began to take shape. "It wasn't some master plan of I think I'll write software that will run a furniture factory,' " Erwin says. "It was, We really need to be able to manage this aspect of it.' " He first solved the problem of fabric inventory management, then tackled meeting deadlines and establishing a pricing structure. The software evolved through three iterations before becoming the current FurnitureMaker Pro version, which encompasses the entire process, from order entry to final inspection.
Erwin says the advantages of the software are that it is flexible, inexpensive to run on a local server network, easy to use and modify, and designed specifically for furniture manufacturing.
Interior designers place orders at Pacific's showrooms at the factory and the Arizona Design Center in Scottsdale. They also can order through the Web site, www.furnituremakerpro.com. "We find that it's still a tactile industry, so designers like to go to our showrooms; make appointments with clients; have them sit in different pieces, different depths and cushion fills; and feel the fabric," Erwin says. "The order is entered into the computer system from there."
The software guides the designer through the process. For example, when she selects the Choices product line, she's able to custom-build the entire piece. "Choices allows designers to make 3.5 million possible combinations within our parameters," Erwin says. "They're designing the one piece that's right for their client versus what's on the retail floor."
The designer first selects the piece's standard width, then follows the cues through each successive screen and its options, such as seat depth, arm shapes, arm treatments, backs, trims, back filling, seats, seat cushion fills, bottoms, exposed wood finishes, nailheads and fabrics.
The software saves each choice, but also allows the designer to change her mind. "At any time you can go back, just like you can in a browser," Erwin says. "It saves all the information it has so far, and you click on one specific thing to modify it."
As the designer makes selections, the software calculates Pacific's manufacturing costs in materials and labor. "What we love as a factory is the bottoms-up pricing," Erwin says. "This breaks down all of my costs, even down to the gross margin."
For example, when the designer selects an in-stock fabric for a sofa style, the software identifies the number of yards needed, the cost per yard and if the fabric needs a pattern match. "I pay my cutters, seamstresses and upholsterers more for a pattern match," Erwin says. "All of my labor and piecework is captured."
A minimum gross margin of 33 percent is factored into the price. "You've always got margin shrinkage, from repair, overhead," Erwin says. "I call it a rough margin because I know there's going to be ranges from the 33 percent, but it will not be below 33."
The designer also can reselect a less-expensive option, such as fiber instead of down. "Instead of cutting your margin to save the sale, we allow their choices to reduce the price," Erwin says. "When I look at my costing, I haven't affected my margin. All I've done is give the client the choice to reduce the price by taking out the expense of the down."
The system also incorporates material cost increases. The accounting department notifies Erwin of all increases, and he enters them into the system. "I can change the cost in the system, so the price goes up on any pending orders that haven't been confirmed. Any order entered from today forward will reflect the new price." Because designers customize the product and never order the same piece twice, there are no price comparisons and therefore no resistance to price increases.
Order confirmation is the final step before production. "What do the designer's clients have to say No' to? They made every choice up to building the piece, and they can see it and print it out," says Erwin. A confirmed order, with a 50 percent deposit and signed work order, places the order on the production list and initiates the process.
The first step is to print a label for every confirmed order that has a deposit and a signed work order. The label includes information such as order number and design elements; space for initialing by the cutter, seamstress and upholsterer, who cut off and keep part of the label as a record of completed work, and the quality control inspector; and a tag that gets attached to the frame. The label and work order follow the piece through production.
The production manager tracks the status of each order on the production list. Orders are prioritized by deadline and/or order date. Each order has a checklist for all steps in the process, from fabric cutting and sewing to upholstering and quality control. As each step is completed, the corresponding box is checked and the order moves to the next step until the piece is finished.
The production manager also uses the list to troubleshoot. For example, if a customer's own material (COM) hasn't arrived at the factory and the order is moving up the list, he can ask the designer to check the status to make sure the deadline can be met.
The system allows for real-time status reports on each order. This information can be accessed through any of 10 workstations on the server network; designers also can get real-time updates through the Web site. Real-time reports on stocked fabrics and leather also are available, as are management reports showing completed orders, work in progress, the number of orders at each production step and other information.
Quality control is the final step. When the inspector signs off, the order is removed from the production list and the next order is pulled into production. The work order goes to the accounting department, headed by Erwin's wife Beth, which creates an invoice and faxes it to the designer. Most designers come in to inspect the finished product and arrange for delivery by a professional shipping company.
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