Metro Biz

Saturday, 10 January 2015

Adaptability adds a boost to company’s bottomline

Impressive: Some of the furniture that the company supplies to wholesalers and hypermarkets.

Impressive: Some of the furniture that the company supplies to wholesalers and hypermarkets.

The GREEK philosopher Heraclitus is generally credited with the aphorism, “The only thing that is constant is change.”

More than two thousand years later, former US Army chief of staff General Eric Shinseki said, “If you don’t like change, you will like irrelevance even less.”

All of which is to say everything evolves and businesses need to adapt to stay relevant.

For cousins Elon Teh Yee Luen and Tan Eu Tah, directors of children’s bedroom furniture maker Synergy House Furniture Sdn Bhd, this is particularly true.

Synergy House Furniture, set up by Teh and Tan’s uncles and aunts in 1985, was initially a maker of wooden toys.

“The company started as a maker of wooden toys. As the competitive landscape changed, we had to as well,” Teh tells Metrobiz.

In its earlier incarnation the company required significant amounts of manpower.

By 1997, the company began exploring the need to change its focus as it noticed customers were seeking different kinds of wood products — furniture.

“As responsible managers of the company at that time, we had to also plan for the companies survival in the years to come as the financial climate also became more challenging,” Teh says.

After deciding to focus on manufacturing furniture, Teh says the company started by allocating over RM1mil to automate the factory with machinery and tooling, and to acquire raw material.

The company spent RM1mil in the late 1990s to acquire the machinery and tooling to make furniture.
The company spent RM1mil in the late 1990s to acquire the machinery and tooling to make furniture.

They began by manufacturing and selling things like wardrobes and bookcases to local hypermarkets and furniture wholesalers in South-East Asia.

This eventually grew to become shipments of 10 to 20 containers a month worth RM9mil to RM10mil to customers in the US, Middle East and other regions.

“Nobody will tell you how to design furniture that meets the tastes of consumer, so we went through trial and error, while quickly observing other manufacturers and learning from our mistakes,” Teh says.

It wasn’t always smooth sailing. Teh says he remembers displaying furniture designs that he thought were marvellous at international furniture exhibitions only to receive absolutely no orders even as other exhibitors bragged about the number of deals they had sealed at the same event.

Even so, the company did well, until 2004, when another wake-up call came in the form of declining profits.

Teh says they realised that, for the company to remain relevant to customer’s who were demanding more unique designer goods, it had to diversify again to include making children’s furniture and building its own brand while maintaining the manufacturing of ordinary furniture.

“When business is challenging, we have to ask ourselves who we are. As a company that started out manufacturing toys for children, we believed that even after shifting to the furniture business, we should start to align the furniture business to serve children,” he says.

The decision proved to be timely even as other furniture manufacturers were still very focused on furniture like sofa sets and dining tables. Thanks to rising affluence, more people were looking for furniture designed specifically to appeal to children, which opened up a new market.

“Business is about managing time, people and capital. We may have many years of experience in furniture manufacturing, but there are people who are better than us out there. Also, people generally prefer to invest in building factories but not many do the same with design and R&D. That is where we differ,” Teh says.

Having bought out the shares in the company still held by their relatives, Teh and Tan now have a freer hand to steer the company and focus more on design and marketing activities, which they refer to as higher value-added activities.

Extensive choices: Examples of the company’s products in their showroom in Klang.
Extensive choices: Examples of the company’s products in their showroom in Klang.

The company, which started in factory on a two acre site in Kapar, Klang, with a staff of 60 has since moved to a commercial building in Port Klang with similar number of employees working in the prototype manufacturing facility, warehouse, management office and showroom. With a workforce that now includes marketing executives, designers and engineers, most of the manufacturing is outsourced. The prototype manufacturing facility is only used to manufacture samples in limited volume to test consumers tastes.

Also, instead of focusing on wholesalers, the company is now working with retailers with large retail networks and also online mail order companies in the European Union and the US.

“In these markets, when adults buy houses, they plan for their children’s furniture as well, just as they would plan for their dining table or sofas,” Teh says.

In some of these markets, the company also serve as a original equipment manufacturer, making furniture for other companies. Being an OEM can be challenging as the company has to comply with the requirements of clients for everything from the colour to sizing.

In 2011, the company again had to evolve when its sales to developed countries were hit as a result of the global financial crisis. The company set out to take control of how children’s furniture was made and sold.

Banking on the rise of e-commerce, it launched the Tomato KidZ brand of children’s furniture with the aim to become a premium online furniture store in South-East Asia.

From adjustable ergonomic study chairs to beds shaped like houses and race cars, Teh says the company’s products will continue to evolve with customers’ tastes and safety requirements.

Tags / Keywords: Central Region , tomatokidx , children furniture , export market , continuous improvement

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