WA Furniture is a producer of high-quality home furniture Australia wide. It is a long-standing family business which prides itself on the quality and individuality of its pieces. T

Case Scenario

WA Furniture is a producer of high-quality home furniture Australia wide. It is a long-standing family

business which prides itself on the quality and individuality of its pieces. The company specializes in

WA timbers of Marri, Jarrah and Blackbutt, and has won several Furniture Industry Association of

Australia awards for its contemporary and timeless products.

Figure 1 shows the organizational structure for WA Furniture.

Figure 1: Organizational structure of WA Furniture

WA Furniture uses a few different software programs to support its operations, with heavy reliance

on Excel spreadsheets to share information between departments. As the company grow, the

number of spreadsheets grew, increasing the chances of error and misplaced information.

In Production, the company run a Materials Requirements Planning (MRP) system to help manage

the production process. This system schedules the production of all pieces required to make the

customer’s orders. Although outdated, it meets the manufacturing needs of the plant.

From the sales perspective, providing an accurate quotation to the customer is challenging. The

accuracy of quotations depends on information from previous orders. However, Production does not

capture costs by order at the point they were incurred and can only pass on “rough” estimations. As

such, it is not possible to provide an accurate quotation. There have been several occasions where the

company had to bear the losses because the orders were under quoted.

The accounting and finance activities are processed by a stand-alone package which has been in place

for several years. It relies to a large extent on input from paper-based output from the MRP system

and customer and supplier invoicing. While the system can handle the accounting processes in general,

there are frequently delays in processing of payments and invoices due to missing documentation.

As the company grows, it became obvious that the existing IT arrangement is not going to be sufficient.

WA Furniture is in the process of acquiring an ERP system. The company identified the following

business functions to be included in the scope of the implementation:

• Accounting

• Procurement

• Sales

• Production

• Inventory Management

The IT and Logistics Manager, Eddie Baker, has recommended that the company consider Odoo ERP,

an open-source system which has received raving reviews among SMEs in the recent years. You work

in the IT and Logistics department and have been assigned the task of creating a demo to show how

Odoo ERP may work for WA Furniture.

The management is particularly interested in understanding how Odoo ERP system can improve the

information flow in the company. In particular, the management want to understand:

• How the system supports the order fulfillment process

• How the system supports production process

• How the system supports processing of payments and invoices

• How the system supports the information flow between different departments

You should draw on information described in the following section to build and configure your

demo. For details that are not provided, reasonable assumptions are allowed. These should be

clearly listed in the accompanying report.

Company Operations

WA Furniture is a make-to-order business. The company has a range of designs from which

customers can choose but customers can also commission the company to design a unique piece to

suit their requirements. It has two main types of customers: consumers who are furnishing their

homes and businesses (eg. builders) furnishing houses for sale.

The order fulfillment process begins when Sales and Design team carries out an initial consultation

with customer to determine the specific requirements. For product selected from the company’s

existing range, customers may customize by choosing from the available options specific to the

selected piece. For instance, for a dining table, the customer is able to choose the type of timber (eg.

Jarrah, Tasmanian Oak, Marri, or Blackbutt), the size (eg. 1800w x 1050d X 760 h, 2100w X 1050d X

760h, 2400w X 1050d X 760h, 2700w X 1050 X 760h) and finish (eg. matt or gloss) of the final

product. For custom design pieces, the Sales and Design team works with the customer to produce a

design that satisfy the customer’s requirements.

A quotation is drawn up based on the customers’ requirements and presented to customers for

confirmation. A 30% deposit is typically required on acceptance of the quotation, with the final

payment upon delivery. Customers may choose to pick up the final product from WA Furniture or

they could utilize the delivery services provided. For deliveries within Perth metro, a standard of

$110 fee applies. The fees for outside Perth metro and interstate deliveries can range from $150 –

$350, depending on location.

The Sales and Design team has the discretion to apply 5-7% discount on the entire order for loyal

customers.

The figures below show examples of two quotations: 1) a quotation for a dining table and chairs

from the company’s existing range, and 2) a quotation for a custom design kitchen island for a

valued corporate customer.

Once the quotation has been confirmed by the customer, the design specifications will be forwarded

to the Production Team for production. The final product will take 6-8 weeks from order.

All furniture from the company’s existing range has an associated Bill of Materials (BOM). The

Production team modifies the BOM according to customer’s choice of timber, size and finish. These

BOMs are created when needed. For custom orders, the Production team relies on a standard BOM

designed to provide skeleton set of material, labour and machine requirements. This is created

based on past history of orders of similar type. This BOM is modified extensively by adding custom

components and routing steps to reflect the unique orders. This has resulted in many hundreds of

“dead” BOM in the MPR system due to one-time order.

WA Furniture maintains an inventory of components (eg. nuts, bolts, nails, fabric, timber etc.) that

enable them to fulfill orders from their existing range. The manager in Production has been working

in WA Furniture for many years and has developed a “sense” of how often different components

need to be restocked to avoid situations where sales order cannot be fulfilled because of out-of-

stock components. For customized furniture orders that require components that are not

maintained in the company, a call for tender may be raised from existing vendors and the vendor

that offers the lowest price will be selected. All purchase orders over $500 needs to be approved by

the manager. The company works closely with a few suppliers and has developed a good working

partnership over the years. Many of the company’s suppliers offer bulk discounts on purchases and

the management prefers to order from these suppliers.

The main steps in the production of a typical order are1:

1. Preparing material – eg. preparing the timber required for the production

2. Cutting the timber to required size

3. Size inspect and rubbing

4. Seasoning (providing chemical protection)

5. Making of joints and connected parts

6. First inspect (repair and trimming)

7. Colour and protective coating

8. Assembly

9. Final inspection.

1 Mehidi, S. and Haider, M. 2014. “Residue Reduction and Reuse in Wooden Furniture Manufacturing Industry” International Journal of Scientific and Engineering Research, October.

Figure 2: Quotation Example 1

Figure 3: Quotation Example 2