The value chain map outlines the traditional process for the furniture industry from design to after-sales service. A disrupted model is proposed that allows customers to customize furniture design based on recycled materials. This reduces costs by skipping wholesale and retail, and implements a pull inventory system driven by customer orders. While increasing customer satisfaction, risks include potential health issues from sawdust and formaldehyde, as well as structural weakness from recycled materials.

1. Business design and planning
Value chain map: the furniture industry

2. Value chain map
Design idea
Supplier
Production
WholesaleRetail
Customers
After-sales
service
Trend research, market
research, prototyping, sample
making, pricing, development
Sourcing materials (i.e.,
wood, metal, fabric,
specialty materials),
diversifying suppliers
Signing contracts with contractors,
locating factories, lean production
and quality management,
transportation management
Showroom set-up, wholesale pricing,
ordering inventory, forming
relationships with buyers,
tradeshows, distribution, inventory
and storage management
Forming relationships with
wholesalers, visual
merchandising retail
environments, customer
service, sales, advertising
Installation,
product care,
product use
and feedback
Customer service,
repairs or
maintenance,
communicating
feedback from reviews
(Offshore)
(Onshore / Offshore)

3. Value chain matrix
Component Risk Location Information Quality Lean mgmt
Design idea
- High cost of designers
- Insufficient market research
or customer data
Onshore
- Types: design aesthetic, trends,
functionality
- Sources: architects, interior
designers, customers
- Hiring good and
experienced designers and
product managers
- Prototyping & testing
- Market research
- Outsourcing freelance
designers
- Streamlining sample-
making process
Suppliers
- Volatility of material prices
(esp. wood, steel, etc.)
- Unreliability of suppliers
- Sustainability certifications
Offshore
- Types: costs, material type &
durability, sustainability (FSC/WWF
Timber score), quantity available
- Sources: supply networks
- Finding reliable suppliers
- Sourcing durable,
sustainable materials
- Efficient ordering systems
(IT)
- Partnerships and
contracts with suppliers
Production
- Production limitations
- Risk of poor quality with
outsourced labor
- High costs of craftsmen
Onshore /
Offshore
- Types: production costs, efficiency,
quality
- Sources: production managers,
employees
- Hiring experienced
craftsmen
- Quality control
- Communicating design
- Reducing delivery times
- Implementing batch
production processes
- Reducing lead times
Wholesale
- Change in industry structure
- High fixed costs
- Over / under forecasting
sales
Onshore
- Types: storage costs, distribution
channels
- Sources: wholesalers, agents
- Inventory and storage
management
- Reducing storage costs by
cutting inventory
- Using “pull” ordering
instead of “push” ordering
Retail
- High fixed costs and cost of
sales
- Over / under selling
- Damage to brand image
Onshore
- Types: cost of rent, location, total
sales, market research, consumer
taste, competitors
- Sources: retail managers, customers
- Retail / sales floor
management
- Customer service
- Efficient use of sales floor
square footage
- Reducing number of
points of sales (e.g., online
or better locations)
After-sales
Service
- High cost of customer service
staff / personal selling
- Poor after-sales service
Onshore
- Types: quality of products and
services, cost of repairs
- Sources: customer service reps,
customers
- Customer service
- Communicating feedback
to design and production
- Outsourcing after-sales
care services, including
efficient transportation and
call centers / offices

4. Industry disruption

5. Disrupted value chain map
Supplier + Design idea
ProductionCustomers (Onshore / Offshore)
Customers send back furniture direct to supplier
The design idea is determined by the customer via several
available options based on the quantity and type of wood
recycled. Design options are predetermined by experts
whilst the customer has the option to customize
Pull inventory control system
determined by customer orders
Packaged recycled materials are
sent to production centers with
the P.O. and design configuration
to be batch produced
Production costs are higher but
balanced out by lower cost of
materials
Post-production skips the need
for wholesale and retail and goes
direct to consumer, reducing
costs
Customer satisfaction increases
greatly due to ability to customize
designs and reduce cost of
redecorating spaces or
transforming furniture
Customization occurs remotely or
online which reduces the time
and resources spent shopping
and browsing in retail stores

6. Reasoning
● customer satisfaction
● Reduced cost
● sustainability
● Pull inventory
● wholesale and retail
Risks & challenges
● Formaldehyde →
● sawdust
→
● Weakness →
Reasoning, risks and challenges
Current Waste Situation
● 9.8 million tons
● 3
million tons
● Furniture
● 34% of the generated
weight of materials
●
●