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Neuflor fights carpet rivals with on-demand 'smart tiles'
FACING stiff competition, local carpet tile distribution company Neuflor International came up with an on-demand carpet tile manufacturing technology, which it is now seeking to franchise in the region.
Neuflor has been in the carpet tile distribution business for over 20 years, with clients across Asia and the Middle East. However, competition started heating up with the rise of Chinese manufacturers and distributors, prompting some existing clients to buy directly from China.
"The business environment changed," said Neuflor director Joe Chiam. "We knew one day we were going to lose all our business so we decided to change the business model. If you want to compete with the two big giants, the US and China, you have to do things differently."
The local entrepreneur decided to address inefficiencies in the current business model, which can prove costly. For instance, it takes weeks to ship the products from China or the US, and distributors also have to stock big quantities of inventory, which requires warehouse space.
"It has always been a challenging business. For example, to sell a million square feet of carpet tiles a year, you probably have to carry ten million square feet," said Mr Chiam.
Typically, when it comes to manufacturing carpets, coloured fibres are woven into carpet cloth, onto which a backing is applied. The carpet is then cut into tiles for easy installation and greater convenience.
Mr Chiam decided to adopt an entirely different approach, using next-generation fibres and specially formulated dyes to create a made-to-order carpet tile.
The smart tile has the dye "printed" on it based on the patterns or colours chosen by clients. To do this, Neuflor had to re-engineer a traditional piece of carpet so that it could withstand the high temperatures required to "print" the colour onto it. It has the "smart tiles" manufactured by a licensed factory in China.
Aside from the base carpet, Mr Chiam also carried out research and development (R&D) on the dye and the printing machine, working with science and engineering conglomerate DuPont on the dye. All in all, the process took him over 10 years, but has yielded a market disruptor, he reckons.
"Instead of carrying inventory, you have one machine, and white carpet tiles," he said, adding that this reduces the amount of inventory the distributor needs to have on hand.
In addition, customers don't have to wait long periods of time for incoming shipments. Plus, the carpet material is cheaper compared to traditional carpets.
According to Mr Chiam, the smart tile is 20-30 per cent cheaper than a traditional carpet costing S$4.50 per sq ft, as costs saved from the leaner operation can be passed on to customers.
Since it launched the smart tile in June last year, the company has sold about 500,000 sq ft of carpet tiles. Yet, this is just a third to half the volume it usually sells for traditional carpets.
"You have to prove it to the market, which takes a little bit of time," he acknowledged. Here in Singapore, it has been installed in a couple of hotels as well as offices.
Neuflor, which has annual revenues in "six figures", is now planning to license its technology and is in talks for franchises in Kuala Lumpur and Jakarta. The firm will also take separate stakes of 20-30 per cent in the ventures, investing some US$500,000 in each.
"Singapore will (remain) the base, where we do research and development as well as design," Mr Chiam said.
Neuflor, he added, is also exploring other avenues to improve its smart tiles such as a "self-cleaning" carpet, where additives in the dye react with sunlight to destroy bacteria. This way, Neuflor will be able to differentiate itself from the competition.