1. Introduction - What are the major issues and problems facing Chabot?
Background – current situation – future plan - challenges confronted – problems need to be solved
Chabot is facing a lot of issues and problems in the wallpaper industry. As the number of wallpaper manufacturers is highly decreasing over last years the competition among remaining companies becomes fiercer. Some manufacturers face difficulties supplying large and powerful retailers. So does Chabot as a privately owned, small company selling products with short life cycles and highly valued at a reasonable price. Due to fashion orientated product industry and broad range of product preferences other types of wall covering are favored by consumers as well. To keep up with competitors Chabot is providing new items every 4 month but speeds up obsolete wallpapers as well. When wallpaper pattern and designs become obsolete, markdowns are necessary to help get rid of old inventory. Problems with inventory turnover lead to mark downs which decrease profits. Caused by inaccurate demand forecasting Chabot has to deal with a high amount of obsolete inventory and a resulting low turnover rate. Since customers base their decisions on style and appeal of the design as well as on in stock availability retailer want low inventory and expect quick order fulfillment. But Chabot cannot keep up with demand and causing a low level of customer service due to long production runs and lack of flexibility in manufacturing process. Consequently their retailer is complaining and threatens Chabot with removing their products from the shelves. Chabot already introduced some changes concerning their carton sizes and initial store set. They reduced the number of wallpaper from 8 to 4 per pack/ carton and as well reduced the number of wallpaper send to store as new item from 16 to 8 wallpapers. These changes caused some