National Furniture relies primarily on raw materials such as lumber, nails and glue to make it’s furniture products, although some merchandise is bought on a wholesale basis to be affixed to the final product (for example: drawer knobs, hinges, etc.). Both the raw materials and the wholesale products are classified as “purchases” for the purpose of financial statements.

The manufacturing facility is actually a giant warehouse, divided by partitions into five large areas, with a small office for the manufacturing manager, a kitchen, and restroom facilities for the employees.  One of the areas is a receiving and storage area for raw materials and auxiliary items to be used in producing the furniture.  A second area is used for cutting and sanding the wood products.  A third area is used in assembly line fashion to build the final furniture product.  A fourth area is dedicated to staining/painting the final product.  A fifth area serves as the stock house for inventory awaiting pickup and delivery.

National Furniture relies on skilled craftsmen for production of it’s furniture products, and has done so since it’s inception.  These craftsmen are assisted by precision machinery in both the drafting and the design of the final product.

Drafting is done at the most advanced levels.  Furniture is no longer designed by hand, but is electronically envisioned through CAD (computer assisted drafting) even before being built as a prototype.  The company uses desktop 486 technology for this purpose.

However, National Furniture is not as technologically advanced in it’s production facilities.  The company uses old manual jigsaw technology to create it’s more intricate designs.  Assembly lines allowing mass production of the final products from individual pieces and sourced components rely on outdated, costly motors and have relatively few automated processes.  Staining and painting are done using machines that are old and frequently malfunction. Consequently, the production process is extremely labor intensive and inefficient, costing large amounts of money in repair bills and lost sales opportunities.

Recent innovations hold many promising technologies, and new electronic equipment has been developed to allow an increased pace of production.  Repair costs are estimated to immediately decrease by 75%, and the increased manufacturing capacity will result in increased sales.

The new technologies are relatively easy to learn, and are definitely easier to operate, than the outdated processes currently used.  Re-training labor and locating skilled labor to operate the machines in the future will pose no challenge.  Thus the modernization program is a beneficial use of capital.