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Select Comfort Sleep Systems

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  1. Select Comfort Sleep Systems Conner B. Jones James A. Middleton

  2. Project Overview • Company History • Market Strategy • Vendors and Suppliers • Inventory • Distribution Channels • Information Systems • Transportation • Summary

  3. Company History • Manufacturers of sleep air mattress systems • Founded in 1987 • Headquarters in Minneapolis, MN • Production and Distribution facilities in Minnesota, South Carolina, and Utah • 360 Retail Stores located in Shopping Malls and Bed Bath and Beyond stores • 2500 Employees, including 400 Delivery Technicians

  4. Company History • Net Sales of $458 Million • Provide all the beds for the Ronald McDonald House Charities • Radisson Hotels are currently installing Select Comfort Sleep Systems in new locations and remodeling projects • Annual Revenue growth averages 20-25%

  5. Market Strategy • Select Comfort markets to consumers who desire excellent customer service, superior quality and innovative products at a reasonable price • To fulfill the needs of its consumers, Select Comfort has established distribution channels and a supply chain system to support these goals

  6. Market Strategy • The Supply Chain is managed to increase customer value, by significantly reducing inventory costs • Through more efficient supply chain management, Select Comfort reduced lead time from 3-4 weeks to 10-15 days • This change, implemented in the mid 90’s and continued today, contributes greatly to their annual growth

  7. Vendors and Suppliers • Select Comfort uses over 20 vendors and suppliers in the manufacturing, marketing, and distributing of their sleep systems • A supplier managed inventory agreement is maintained with each of the vendors and suppliers • Typically, 2 weeks of inventory is maintained at production facilities in Minneapolis, MN, Salt Lake City, UT, and Irmo, SC

  8. Inventory Management • Select Comfort uses Just-in-Time inventory management for the final product and vendor managed inventory for raw materials • Reduction in WIPI (work in process inventory) was responsible for much of the company’s growth • Inventory requirements are based on a rolling 8 week forecast

  9. Distribution Channels • Select Comfort distributes its products through retail locations, direct delivery by service technicians, and by agreements with 3rd parties (Bed Bath and Beyond and QVC) • Production and distribution facilities are located in Minneapolis, MN, Irmo, SC and Salt Lake City, UT

  10. Distribution Channels • Retail locations are placed in high traffic, high profile malls to ensure foot traffic and a high level of visibility • In addition to Select Comfort owned retail locations, agreements with Bed Bath and Beyond and QVC have allowed for further expansion of the company and increased profits

  11. Distribution Channels • Continued growth and expansion have fueled changes in Select Comfort’s supply chain management strategy • Through modifications in their supply chain management, production and distribution centers have increased efficiency and dramatically reduced costs

  12. Information Systems • Select Comfort uses technology from several suppliers to stay at the forefront of the “Sleep Revolution” • Supply chain management software is acquired through Oracle • Observer is Select Comfort’s WLAN provider • All facilities, suppliers and management share real time information

  13. Transportation • Transportation of raw materials is coordinated by the supplier • Suppliers use a combination of deferred air freight carriers and trucking companies to transport raw materials to the production facilities in Minnesota, Utah and South Carolina

  14. Transportation • Transportation of the finished product is coordinated by Select Comfort and executed in one of the following ways: • 1) Forward Air, an annual pick for Forbes Top 200 small businesses, takes finished goods and transports them through their network to airport facilities at or near the final destination • From there, the area Service Technician will transport the bed to the customer and complete final assembly

  15. Transportation • 2) UPS picks up the parts for final assembly, consolidates the shipment, and executes final delivery • An area Service Technician will be contacted and a date will be scheduled for assembly of the bed

  16. Summary • Through an effective supply chain management strategy, Select Comfort has reduced lead time by more than half, cut inventory costs and increased customer service levels (internally and externally) while maintaining their position as a leading innovator in sleep system technology