Production Update

Max has spent the last few months analyzing the production process and cost structure of his counterpart Madera Verde. This meant multiple trips to each of their locations (6 in total) where he documented and timed each step in the process of making several of their furniture items. It also included documenting every item (materials and equipment) used in the process and allocating a cost to it. The study demonstrated that the furniture they sell is under priced by 15%. That explained why the artisans were not being able to build their inventory of wood, maintain their equipment or support their families from the work they do for the foundation.
His recommendation was that prices be increased by 30% (15% to break even and 15% for profit) and the foundation quickly implemented it. There was some original concern that the market would not bare the increased prices, but that hasn’t been the case at all. The orders have continued to come, a lot even from previous customers that paid lower prices in the past, and the artisans couldn’t be happier with their salary increase. Success!!