An agile business model

An agile business model

Palliser Furniture has maintained best-in-class status through integrating technology under CEO Peter Tielmann.

When Peter Tielmann took over as president and CEO of Canada-based Palliser Furniture in 2015, he inherited the responsibility of leading a 75-year-old company with a tremendous legacy, but he was well aware that legacy alone meant little if the organization could not keep up with changing trends in technology, manufacturing, and logistics to maintain its dominant position in the North American marketplace.

“With all the disruptors out there and so many changes going on, the integration of technology, and the changing dynamics of international markets, speed and agile adaptation is such a critical thing,” Tielmann told CEO Magazine. “Without being quick in adapting, there’s no way to survive, so we need to structure our supply chains and broader operations in such a way that we are able to do it.”

Palliser Furniture Upholstery Ltd. is a family-owned furniture manufacturing company founded in 1944 and headquartered in Winnipeg, Canada, which manufactures and distributes upholstery furniture as well as wood and composite products in Canada, Mexico, Indonesia, Vietnam, China and the US. Palliser manufactures a variety of seating products including stationary sofas, sectionals, reclining sofas, with and without automation; recliners, home theater, luxury cinema seating, and chairs. In the wood category Palliser manufactures bedroom furniture, dining furniture, coffee tables, and home office products.

Yet for all its rich history, Palliser is currently looking towards the future, entering new business categories and adapting to change within both the furniture industry and the wider world.

“Palliser is a really interesting company with a great legacy, but that alone doesn’t give you a competitive advantage,” Tielmann said. “That’s what intrigued me about taking on the role. We’re a great brand, but of equal importance is how we’ve positioned our manufacturing and supply chain locations to serve our market. These elements have helped position Palliser Furniture as best-in-class in North America.”

A personalized experience

Palliser may have a celebrated legacy, but as market demands have changed, Tielmann sees increasingly exciting opportunities ahead for the company and none greater than the desire from the consumer for personalized furniture products that are specified to their individual tastes and needs.

“Right now, there is a move in the marketplace towards what we call customization,” he explained. “Consumers today just don’t want to buy what’s being presented to them the way it is. Maybe you walk into a store and you like a particular sofa, but you don’t like the shape or the cover. We’ll give you the chance to select a different shape and hundreds of options of covers, we’ll make them within about four weeks, and we’ll ship them directly to your door.”

At the same time, Palliser Furniture is branching out into new business categories, aiming for a mix of new investments and an organic continuous growth forecast in excess of 20% for 2019.

“We’re primarily positioned in the residential furniture market, which means we make products for people’s homes, but we’ve also started a few companies that operate in the commercial space and are quite successful,” Tielmann illustrated. “Furthermore, we have a growing OEM business, meaning we also produce for established brands in the market.”

Remaining best in class

From employing new technologies to honing its manufacturing and logistics capabilities and deepening its relationships with a handful of key partners and suppliers, Tielmann believes that Palliser is well-positioned to fend off competition from other regions of the world and continue to enhance the individual experience of its customers.

“There’s plenty of competition from the Far East and Europe, but as you can imagine, to move a bed or sofa is not inexpensive, so logistics play a big role,” he outlined. “We try to keep the final assembly of our products as close as possible to the markets we deliver to. We do a lot of sub-manufacturing of components in the Far East, Europe, and Central America, then we ship them to the assembly facility that most makes sense so that the final shipment is kept to a minimum.”

“The other thing we’re doing right now is integrating with our consumers, and not only retailers, but all the way to the end consumer,” Tielmann highlighted. “We have integrated technological portals that allow the consumer to select the product and then check with our manufacturing schedule, so they can get a reliable delivery date before they place an order. Technology is helpful in so many ways to circumvent or remove steps in the process that not only save money but give a better customer experience and reduce the time span of the whole process.”

Supply chain excellence

Palliser Furniture’s largest market is naturally the US, but Tielmann believes that being positioned in Canada and Mexico gives the company the advantage of being able to deliver products quickly anywhere within the markets they serve. In terms of supply chain excellence, he believes that Palliser has been a trendsetter in the furniture industry by being the first company to emulate the complex yet agile supply chain practices of other major industries.

“We consider ourselves a leader in the sense that we’ve brought in practices from the automotive world and set up our supply chain in such a way that it’s agile and capable of maintaining our core principles, which are value and speed,” Tielmann elaborated. “If you look at the core materials we use, like foam and certain covers, we integrate our technology with our suppliers in such a way that they see our production process and scheduling, and can deliver on time.”

“Nevertheless, in our industry there are many key materials where we don’t have those industries locally, so that’s where we go vertical and set up our own sub-supply,” he added. “We have a number of verticals in Mexico that supply our plants across Canada and the US, so we’re solving many of these problems by ourselves. When we started along those lines, we were a little bit worried because you can’t be good at everything, but in many ways, it gives us a clear competitive advantage.”

Given the immense variety of products Palliser offers, this supply chain is highly varied and is only likely to grow stronger and more flexible as the company expands into new business categories.

“For seating, for example, we procure a wide variety of materials, whether it’s leather from South America, or fabrics from Europe and the Far East, particularly China,” Tielmann explained. “Then you look at the other side of the business where we make bedrooms or dining tables through a factory we own in Indonesia. In areas where we don’t have core competence—but do have the brand and the marketplace to sell to—such as office equipment, we will outsource our manufacturing completely.”

Competitive advantage

Tielmann says that Palliser Furniture possesses relationships with around a dozen key or critical suppliers whom they work with closely on new product ideas, permitting head office to focus on the core business, as well as saving on time, money, and enabling that much sought-after agility he believes is crucial to today’s business model.

“The difference with our key, or strategic suppliers is that with them we go into more depth,” he said. “We’ll spend time and money on integrating with them technologically and synchronizing our business systems. It’s a more intense working relationship, and in many ways, it’s become the lifeblood of our company.”

“Partners also bring ideas,” Tielmann added. “We don’t pretend to have all the best ideas, and that collaborative approach also gives us an edge in the marketplace.”

Ultimately, Tielmann sees Palliser Furniture as an old-fashioned company that has maintained is reputation for excellence by constantly embracing the future, a future that looks more promising every day.

“Whatever slows you down needs to be outsourced or needs to be adjusted to technology, so you can eliminate that weakness,” he stressed on the changes sweeping the furniture industry and the business world more generally today. “We look at the integration process all the way from the materials to the end consumer to determine where we can squeeze waste out. For a company like ours, it’s been a real learning process and eye opener for the current generation of management to adapt to that.”


About the Author:

Paul Imison
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