Select Comfort Sleep Systems

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 90s 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 companys 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 Comforts 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 Comforts 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