Turning Around a Failing Company David Krieger President

Turning Around a Failing Company David Krieger President CDS Ensembles, Inc.

CDS Overview • Home Textile Contract Manufacturer Focusing on Top-Of-The-Bed – Comforters, Pillows, Sheets, Shams, Duvets… • Largest Independent Comforter Manufacturer in the US • Started by Herman Krieger in 1979 • In 2005, David Krieger, Herman’s son, became CEO and President

CDS Overview (continued) • Originally - Contract manufacturer for big mills like Dan River, West. Point and Springs – Manufactured all components for Bed in a Bag • Today – Restructured to flexibly integrate into existing and emerging home textile global supply chains – Fill and quilt comforters from imported pre-made shells – Other components cut and sewn in Asia

Facilities Delta Manufacturing 12 Miles 3 Miles Receiving and Distribution 15 Miles Appalach Manufacturing

Dinosaur Company?

Reasons for Failing • Changes in Market Ecology – 2005 Lifted Quota – Customers Disappearing • Dan River, Springs, West. Point … • Internal Issues – Pathological Leadership • Abuse, Theft, Venality, Arrogance • Unwilling to Learn – Denial About Required Scope of Change

Failure By The Numbers

Is There a Business Rationale? • There is nothing so useless as doing efficiently that which should not be done at all. ” Peter Drucker • Why should CDS exist? • What is its role in the Global Supply Chain? • Everyone is closing. Why shouldn’t we?

Educate the Market

Core Competencies • Reliable Purchase Order Execution • Wide Range of Plug and Play Services – Shipping To Client’s Distribution Center or Direct to Retailers (Wal-Mart, Costco, Kohl's…) – Electronic Data Interchange (EDI) – Inventory Management

Steps Taken • Apply TOC and Lean Concepts – Reduce Turn Time (2 Weeks to 3 Days) • Lower Overhead – Lower Health Insurance cost – Realign Salaries • Consolidate Operations – Process Adjacency – Discontinue Unprofitable Operations • Stop Factoring

Facilities Delta Manufacturing Receiving and Shipping 12 Miles 3 Miles Receiving and Distribution 15 Miles Appalach Manufacturing

3 Floors Manufacturing

Further Consolidation • Originally: 1 Shift, 3 Floors • Currently: 2 Shifts, 1 Floor • In Progress – Scaling for Efficiency and Growth – 1 Shift, 1 Floor, 20 Quilting Machines

By the Numbers

Can This Model Scale?

Positioned To Grow Profitably

What Now? • Get More Customers • Invest in Sales and Marketing – Revamp Website – Newsletter – Advertise • Sales Promotions – e. g. One month free distribution with any order over 50, 000 units