Supply Chain Strategy for Halstead Project Presentation ISyE 6203 Transportation and Supply Chain Systems Prof. John Va

1. Supply Chain Strategy for Halstead Project Presentation ISyE 6203 Transportation and Supply Chain Systems Prof. John Vande Vate April 24, 2012 Hang Li Naveen Nallappan Ronak Tali Shuting Xu Yanni Ping

2. About the company: • One of the leading players in the flooring business. • Into the flooring business for more than 50 years. • Products include Resilient flooring, Stone Vanity Tops and Kitchen Tiles. • Chief supplier to The Home Depot where its sells the popular “Allure” brand of tiles. • International wing – Vertex • Sister concern – Metroflor : supplies industry grade flooring to geographically based distributors. • Facilities in USA : Calhoun, GA / Compton, CA / Secaucus, NJ • Sales/marketing/supply chain decisions driven from USA offices and production operations driven from Asian offices.

3. THE HALSTEAD-VERTEX GROUP • Home Depot • Stocking • Special Order Business • Metroflor • Vertex International

4. HALSTEAD’S GREEN INITIATIVES • Halstead aims to lead the flooring industry by being the most environmental friendly company by various measures • LEED certified buildings • Green Supply Chain • Cradle to cradle policy – Recycling measures

6. RECYCLING

7. HALSTEAD & HOME DEPOT • Sells Vinyl flooring through The Home Depot (USA & Canada) exclusively. Two channels for sales: • Stocking skus – Products are sold off the shelves of HD. HD acts like an import buyer for these skus. • Special Order Business – Products are ordered by customers who walk into HD or order online at thehomedepot.com

8. SPECIAL ORDER BUSINESS (SOB) What is SOB? • Some products are not sold off the shelves but are displayed for customers to place orders for these. • These orders fetch higher margins but the trade-off is that Halstead pays for inbound shipments and inventor costs for SOB skus. But the Special Order Business is very lucrative and has a great growth potential.

9. SPECIAL ORDER BUSINESS (SOB) Why SOB? • Customer preference changes over time. We need to keep pace. • Influence customer's taste through newer designs. • Higher margins (win-win for both Halstead and HD) • Customer recognition and hence build our brand. • A good avenue to test new products.

10. PROJECT SCOPE Devise strategy for growth of the Special Order Business. • Draft the Vision for company, Vision for SOB, Mission and Goals to achieve them. • Chart out a Supply Chain Strategy to achieve the above.

11. PROJECT PROCESS • Collect information about operations and capabilities. • Understand Halstead’s direction, goals and needs. • Frame Vision for Company. • Develop a Vision for SOB to support company’s vision. • Draft Mission statements on how to achieve the SOB Vision. • Understand what SOB customers look for. • Clearly define the goals on how to satisfy these customers needs while accomplishing the Mission which ultimately does justice to the Vision.

12. VISION FOR COMPANY • Our Version: To be the market leader in the flooring industry by continuously bringing innovative and desirable products to customers, and simultaneously sustain and improve our green-initiatives and environmental friendly processes.

13. VISION FOR SPECIAL ORDER BUSINESS • Our Version: To build a leading brand emphasizing innovation and sustainability to meet changing customer tastes and influence customers’ preferences.

14. UNDERSTANDING THE CUSTOMER’S NEEDS • Evolving customers, varying architects’ tastes and new market trends. • We have so little information about customers’ need, because of the HD tie which restricts us. • Unpredictability increases as tastes of consumers are varied and cannot be quantified. For now, we make some assumptions of what a customer would expect from SOB.

15. WHAT CUSTOMERS REALLY WANT • SOB products are more expensive than Stocking Units and take longer to get. • The products' Fashion >Service Quality> Eco-friendliness > cost

16. MISSION 1 >> Build a customer-centric supply chain with reduced lead time to manage fresh & unique products >> Goals: • Sku Management：Supply customers with desirable SOB products, by introducing a well-defined sku category refreshing system based on life cycle. • Customer Service: Customer Service: In response to customers’ variable requests, build a fast and easy service reflected in lead time reduction and a well-thought-out return policy.

17. MISSION 1 – GOAL #1 SKU MANAGEMENT Mission 1: Build a customer-centric supply chain with reduced lead time to managefresh & unique products. Goal #1 -- Sku Management: Provide customers with desirable SOB products, by introducing a well-defined sku category refreshing system based on life cycle.

18. SKU MANAGEMENT STRATEGY • Same inventory position initially • Adjust the inventory position based on sales performance • By introducing fresh skus – keep fresh • By keeping the skus– keep skus variable • By cutting – reduce inventory

19. PRODUCT LIFE CYCLE FOR THE SOB Sales Upper Bound NP: New Product

20. MISSION 1 – GOAL #2 CUSTOMER SERVICE Mission 1: Build a customer-centric supply chain with reduced lead time to manage fashionable & innovative products. Goal #2 – Customer Service: Customer Service: In response to customers’ variable requests, build a fast and easy service reflected in lead time reduction and a well-thought-out return policy.

21. LEAD TIME REDUCTION Factors for fast delivery:

22. RETURNS POLICY >> A good returns policy will help us in our vision of being the most recognized brand as: More confidence to our buyers when adopting more innovative products in the Special Order Business Help us in customer retention and possibly repeat purchases Creates a great channel to receive customer feedback

23. WHAT MAKES IT GOOD?

24. MISSION 2 Familiarize our customers with our re-cycling initiatives and partner with them to help protect our environment and promote re-cycling. Goals : 1.    Implementing a successful reverse-supply chain to cater to re-cycling initiatives increase the collection points steadily till every customer has easy access to collection point as much as stores.  2. Providing customers with "Re-cycling vinyl floors 101" and a list of collection points where they can bring back used floors. 3.     Send periodic flyers and e-newsletters to customers to update them about new green practices and long term commitment. 4.      Packaging with green material. 5. Social Media: Facebook, Twitter

25. SUMMARY • VISION • To be the market leader in the flooring industry by continuously bringing innovative and desirable products to customers, and simultaneously sustain and improve our green-initiatives and environmental friendly processes. • VISION FOR SOB • To build a leading brand emphasizing innovation and sustainability to meet changing customer tastes and influence customers’ preferences. • MISSIONS • Build a customer-centric supply chain with reduced lead time to manage fresh & unique products . • Goals: Sku Management, Customer Service • Familiarize our customers with our re-cycling initiatives and partner with them to help protect our environment and promote re-cycling. • Goals: Solid Reverse-Supply chain

26. Thank you ! Comments/Questions?