4/24/2012 Pu Gong Corentin Lazarus Denis Satria Ralf Schoenherr Fan Yu

2 Overview Company Background1 Analysis2 Initial Problem3 Strategy4 Future Initiative5

3 Introduction Halstead-Vertex is a manufacturer of a high quality flooring and other products. A QUICK FACT: Over 120 employees in office and over 3,000 in partner factories Total Sales: $ Millions Annual Growth: approx. 40% (2012)

4 Product Types Luxury Vinyl Tile (LVT) and Commercial Sheet Vinyl –MetroFlor and Allure Do It Yourself (DIY) Vinyl Tile –TrafficMaster (HD Proprietary brand) Prefabricated Stone and Granite

5 Business Segment  Business: Stock item - 80% Special order - 20% Distributor business < 1%

6 Stock Item & Distributor Stock Item Ship directly to The Home Depot’s DC from our plants in China No inventory cost No transportation cost Distributor Commercial product No inventory cost No transportation cost

7 Special Order Brand: Allure Transportation cost –From China to United States –From US port to our facilities Inventory cost –Items stored at our facilities Home Depot is responsible for outbound fee (FOB) –From our facilities to their DC Stores

8 Distribution Network China Compton, CA (3PL) Calhoun, GA Secaucus, NJ

9 Sustainability Georgia’s Tenth LEED Platinum Project –LEED: Leadership in Energy and Environmental Design –90% Less energy use –89% Less water use –66% Construction waste diverted from the landfill

10 Analysis

11 Current Supply Chain Structure in the US Local DC Order ~ 3% Feedback Feedback /Customer Service ~ 97%

12 Analysis SWOT S.W.O.T. ANALYSIS Strengths Opportunities Weaknesses Threats

13 Strengths Good relationship with HD No real competitors in the business Quality and product variety Prestigious brand name Weaknesses Supply Chain is highly dependent on HD No flexibility for changes (dictated by HD) No real control over the speed of order delivery Opportunities Expected high future growth Innovation Threats HD‘s interests dominate our supplychain structure Limited capacity Loosing business and/or market share by not being able to meet future capacity or interests of the customers Analysis

14 Initial Problem

15 Initial Problem The optimal quantity of the SKU Which DCs shall carry which SKUs Mismatch delivery from the DCs Shipment history of SKUs from 3 DCs

16 Initial Problem We know, the problem settings and constraints: –No outbound fees –Fast delivery constraint, 2 weeks is what’s required by HD –3 DCs –… What are we trying to do? BUT

17 Analysis What are we trying to do? –Minimize cost? –Satisfy customer? Which customer? –Home Depot? –End Customer? We need to take one step back What are we trying to do with this segment of our business?

18 Strategy

19 Strategy 1Statement of the Vision / Mission of the company 2 How can our special order business support this Vision? 3 Who should our target customer be? 4 What do this customers want? 5 What does this mean for our supply-chain in this business? Mission of this part of our supply-chain6

20 Vision Statement Halstead Vertex aims to be the world leader in engineered flooring products through a high quality brand name and sustainability. World Leader in engineered flooring products High quality brand name Sustainable

21 Mission Statement We want to capture bigger market shares in each of our current business channels with a highly reputed brand name. We want to go beyond customer expectation in quality and delivery through continuous process improvement, direct customer relationship and promote more livable and sustainable communities.

22 Mission Statement To build a high quality brand name Go beyond customer expectation Have a direct customer relationship Through sustainability Promote more livable and sustainable communities To be the world leader Capture bigger market shares Continuous process improvement

23 Strategy 1. Vision / Mission 2. What makes the business successful in achieving the Vision? Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products and identifying potential top- sellers Build a closer relationship with the customer Attracts customers that care about sustainability World Leader Quality Brand Name Sustainability …

24 Strategy 1. Vision / Mission 2. What makes the business successful in achieving the Vision? Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products and identifying potential top- sellers Build a closer relationship with the customer Attract customers that care about sustainability World Leader Quality Brand Name Sustainability …

25 Strategy 1. Vision / Mission 2. What makes the business successful in achieving the Vision? Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products and identifying potential top- sellers Build a closer relationship with the customer Attract customers that care about sustainability World Leader Quality Brand Name Sustainability …

26 Strategy 1. Vision / Mission Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products and identifying potential top- sellers Build a closer relationship with the customer Attract customers that care about sustainability World Leader Quality Brand Name Sustainability … 2. What makes the business successful in achieving the Vision?

27 Strategy … Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products Build a closer relationship with the customer Attract customers that care about sustainability 3. Who should be our target customer? 2. What makes the business successful in achieving the Vision? Designers that lead the fashion Homeowners (DO-IT-YOURSELF) with rare/special tastes Not very price-sensitive Time-sensitive but not urgent

28 Strategy … Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products Build a closer relationship with the customer Attract customers that care about sustainability 3. Who should be our target customer? Designers that lead the fashion Homeowners (DO-IT-YOURSELF) with rare/special tastes Not very price-sensitive Time-sensitive but not urgent 2. What makes the business successful in achieving the Vision?

29 Strategy … Broaden our customer base by capturing customers who have specific special tastes Grow our business by testing new products Build a closer relationship with the customer Attract customers that care about sustainability 3. Who should be our target customer? Designers that lead the fashion Homeowners (DO-IT-YOURSELF) with rare/special tastes Not very price-sensitive Time-sensitive but not urgent 2. What makes the business successful in achieving the Vision?

30 Strategy … 3. Who should be our target customer? 4. What do this customers want? Designers that lead the fashion Homeowners (DO-IT-YOURSELF) with rare/special tastes Not very price-sensitive Time-sensitive but nor urgent Short Lead Times Variety Easy ways of recycling the product

31 Strategy … 3. Who should be our target customer? 4. What do this customers want? Designers that lead the fashion Homeowners (DO-IT-YOURSELF) with rare/special tastes Not very price-sensitive Time-sensitive but nor urgent Short Lead Times Variety Easy ways of recycling the product

32 Strategy … 3. Who should be our target customer? 4. What do this customers want? Designers that lead the fashion Homeowners (DO-IT-YOURSELF) with rare/special tastes Not very price-sensitive Time-sensitive but nor urgent Short Lead Times Variety Easy ways of recycling the product

33 Strategy Home Owner (DIY)VarietyThey want to find exactly the product they have in mind Have rare/special taste Short lead-timesDIY customers No planning long in advance Lead designersVarietyThey want something special/different for the new trends Already have a specific idea of the new design SustainabilityTrended in the industry Government regulation Customer may require it

34 Strategy … 4. What do this customers want? 5. What does this mean for our supply chain? Short Lead Times Variety Easy ways of recycling the product Short transportation routes to the customer Larger capacities Managing inventory efficiently Reverse Supply chain

35 Strategy … 4. What do this customers want? 5. What does this mean for our supply chain? Short Lead Times Variety Easy ways of recycling the product Short transportation routes to the customer Larger capacities Managing inventory efficiently Reverse Supply chain

36 Strategy … 4. What do this customers want? 5. What does this mean for our supply chain? Short Lead Times Variety Easy ways of recycling the product Short transportation routes to the customer Larger capacities Managing inventory efficiently Reverse Supply chain

37 Strategy … 4. What do this customers want? 5. What does this mean for our supply chain? Short Lead Times Variety Easy ways of recycling the product Short transportation routes to the customer Larger capacities Managing inventory efficiently Reverse Supply chain

38 Corresponding Missions for Supply Chain Setting up more recycling locations Holding higher variety of SKUs, lower volume, and in a nearest location Building up efficient reverse supply chain Green Fast Satisfying

39 Future Initiative

40 Initiatives But everything affects the Supply Chain! It is not all about Supply Chain!

41 Customers Relationship Management Collect the information from customers Establish service website Build up the relationship with customers Service phone line Market sustainable idea Flyer with package Provide quality service Tips for installation and maintenance

42 Potential Strategies for the Architects Goals: Actions: Support to the vision: Membership registration Faster shipping Invite to tour the facilities Maintain a good and long- term relationship with them Consult industrial fashion and need Market the product with sustainability Provide the sample of products Learn from them and sell to them Help to build up the brand name Promote the sustainability concepts to the customers Create new sale channel to expand the market

43 Thank You Mr. Brian Greene VP-Global Sourcing VP-Southern Division Halstead Int'l / Vertex Prof. Vande Vate Professor & EMIL Executive Director School of Industrial and Systems Engineering