Lilly Hillcrest started a custom drapery business in Naples, Florida in 2014. Her market segment is for owners of homes over one million dollars. Her prices are high, but the customer receives exceptional personal service and a service guarantee on all work. Customer service and the quality of their work are the top competitive priorities of Custom Drapes (CD).
Custom draperies require Lilly and her employees to visit the customer’s home and evaluate the home’s layout, light, and color palette to decide what type of draperies might work best. Two of Lilly’s staff are interior designers specializing in drapery window treatments. Next the customer and employee select the fabric. Fabric books contain millions of fabric colors, weaves, and designs. The customer and designer must also decide on many other drape design characteristics, such as pleated folds, flat panels, classic tab and rod drapes, goblet pleats, linings, and valance designs.
The number of custom combinations now is in the billions, with many opportunities for errors. For high-end customers, the drapes for one wall can be over $100,000.
The next step is for an employee to take measurements of the venue where the drapes are to be installed. These specifications can range from a half-dozen to several dozen measurements. Once the customer order is approved, a work order is released to CD’s in-house factory. Purchase orders are sent to the supplier(s) for the fabric and thread.
Each work order is hand cut, sewed, and pressed using industrial sewing and stream pressing machines. CD groups sewing machines in one area of the factory alongside stainless steel work tables. Each order requires a new setup to install thread, set and calibrate the machine, and position the fabric. The sewing machines can accommodate a wide variety of thread weights and types of fabric, such as silk or cotton. The employees are cross-trained and skilled at sewing and pleating different fabrics. These skilled backroom employees inspect their own work, and three employees must sign off on a complete order. Eighteen percent of the factory work requires rework during production.

1. Rank in order the competitive priorities for CD’s custom jobs. Rank in order the competitive priorities for the standard drapery business.
2. What is the break-even quantity (in panels) if Lilly builds the facility and buys the equipment to produce standard panels?
3. Should Custom Draperies accept the proposals to manufacture 32 different drapery panels in order sizes up to 10,000 panels? What are the implications?
If the answer is yes, what other operations and logistics decisions are necessary to support this growth initiative? If your answer is no, justify and explain.
4. What are the strategic growth options for Custom Draperies?
5. What are your final recommendations?