=Paper=
{{Paper
|id=Vol-1498/HAICTA_2015_paper48
|storemode=property
|title=Techno-economic Analysis of Furniture Innovation: Developing a Green and Smart Furniture for Mass Production
|pdfUrl=https://ceur-ws.org/Vol-1498/HAICTA_2015_paper48.pdf
|volume=Vol-1498
|dblpUrl=https://dblp.org/rec/conf/haicta/PapadopoulosTKD15
}}
==Techno-economic Analysis of Furniture Innovation: Developing a Green and Smart Furniture for Mass Production==
https://ceur-ws.org/Vol-1498/HAICTA_2015_paper48.pdf
Techno-economic Analysis of Furniture Innovation:
Developing a Green and Smart Furniture for Mass
Production
Ioannis Papadopoulos1, Marios Trigkas2, Glykeria Karagouni3, Emmanouil
Dedoulis4, Aikaterini Papadopoulou5, George Blanas6
1
Department of Wood & Furniture Design & Technology, Technology Educational Institute of
Thessaly, 11 Str. Griva, Karditsa, 43100 Greece, e-mail: papad@teithessaly.gr
2
Department of Forestry & Natural Environment Aristotle University of Thessaloniki,
Building B Finikas Thessaloniki, 55134 Greece, e-mail: mtrigkas@for.auth.gr
3
Department of Wood & Furniture Design & Technology, Technology Educational Institute of
Thessaly, 11 Str. Griva, Karditsa, 43100 Greece, e-mail: karagg@teithessaly.gr
4
Department of Business Administration, Athens University of Economics and Business,
Greece, e-mail: ededoulis@aueb.gr
5
Department of Business Administration, Athens University of Economics and Business,
Greece, e-mail: fixipapad@hotmail.com
6
Department of Business Administration, Technology Educational Institute of Thessaly,
Larissa, 41110 Greece, e-mail: blanas@teithessaly.gr
Abstract. Innovation is considered fundamental for the survival and
sustainability of furniture manufacturers in Greece and Europe at least. The
paper presents a draft summary of the techno-economic analysis of a non-
incremental furniture innovation called GSF as an acronym of green and smart
furniture. It regards a smart and purely ecological main entrance furniture
piece with incorporated intelligent functions, wood and recyclable materials
and eco-based production process. Profit-loss analysis indicates that the new
proposal may be successful if it exceeds the Greek market. Initially high costs
of specific material and processes may be reconsidered if economies of scale
are developed.
Keywords: techno-economic analysis, green and smart furniture, furniture
innovation, furniture industry.
1 Introduction
Furniture manufacturing is a highly mature industry based on craft-method
production serving primarily local and national markets. However, it constitutes a
significant sector in the E.U. with a strong presence globally; European Union is still
one of the biggest manufacturers, traders and consumers of wooden products in the
world (European Commission, 2013). During the period 2000-2007, furniture
industry has known significant growth; a series of global rearrangements of the
sectoral players resulted in Asian producers to take the lead and big players to change
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the rules of the game. Furthermore, the crisis of 2008 and the continuing severe crisis
in Greece intensify the rather negative and risky efforts of Greek furniture
manufacturers to survive.
A number of studies (Petrakis et al., 2015; Trigkas et al., 2014, Kumar et al.,
2013; Gibson and Naquin, 2013) indicate innovation and differentiation together with
the development of extroversion as the only ways for these firms to stay active in the
national and global markets. An emerging field for innovation regards the growing
concern related to the environmental consequences either in regard of production and
transportation or raw materials and the use and disposal of produced goods during
their lifecycle (Fankhauser et al., 2013; Costantini and Mazzanti, 2012;
Papadopoulos et al., 2010). Furthermore, technological advances and ICT
applications offer the potential of novel concepts regarding comfort, usability and
even production.
The GSF research project regards the development of a non-incremental
innovation based on the combination of ICT and ecological production. Selecting the
elderly as the main target group, research focused on the development and market
introduction of technologically supported furniture eco-solution to foster the targeted
consumers’ self-determined living in their homes.
The research was undertaken by the Laboratory of Applied Marketing,
Management and Economic of the Wood and Furniture Design and Technology
Department of TEI of Thessaly Greece (WFDT from now on). The research team
included an ICT company, a furniture small company, two other Universities and a
number of external collaborators. The research project has been co-financed by the
European Union (European Social Fund - ESF) and Greek national funds through the
Operational Program "Education and Lifelong Learning" of the National Strategic
Reference Framework (NSRF) - Research Funding Program “ARCHIMEDES III
Investing in knowledge society through the European Social Fund”.
2 Technological Analysis
The innovative furniture product regards an entrance furniture piece called “The
heart” (Fig. 1). Its innovativeness lies in the incorporation of intelligent functions
while the product is totally ecological. Although there is an increasing trend towards
intelligent furniture as well as towards green furniture, it appears that the two trends
were never combined. In addition, both trends are relatively new and seem to become
stronger as the need of innovation in the sectors becomes more imperative.
The main characteristics of the “heart” are:
a) Natural wood as core material and more precisely, American oak solid
wood of the best quality.
b) Recyclable supplementary material
c) The ICT system is composed of an Android tablet, a number of sensors and
a PLC. JAVA was used in Eclipse environment using the Android
Development Tools (ADT) which extends the IDE Eclipse for Android
Projects development.
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d) Functions: mirror becomes an information screen (e.g. face recognition,
indications about clothing and accessories, reminder of pills or meals etc.)
e) Store room for small objects, documents (e.g. letters, medicine descriptions
etc) in interaction with the supplied info by the mirror
f) Specific store room and relevant info on spectacle cases and keys
g) A wheelbarrow with store room attached (as part of the furniture) serving as
a sitting or supporting facility or a medium to carry heavy (in terms of the
elderly) load.
h) Supporting elements to hang objects (coats, hats, umbrellas etc) with
sensors to remind use of them under certain conditions (e.g. an umbrella for
the rain).
Design provided the potential to add or remove elements; it can adapt to specific
individual needs enabling consumers to choose and buy the parts they needed.
Furthermore, the screen can provide info-elements such as news and indications for
close relatives and friends added in a friendly and easy way. It has further the basis
for co-operation with other smart devices in a smart environment; i.e. inform on
security issues.
Fig. 1. The “heart” GSF product
The main wooden parts are the following:
• The basic profile
• The “heart” where the electronic parts are installed
• Store rooms for small objects
• The key ring and folder places
• Hangers (with sensors)
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• The supporter (serves as shopping carrier, a seat and a kind of supporter
for walking in the house)
The production of the wooden parts follows the normal production line shown in
Figure 2. Parameterization of initial panel cutting eliminated waste, try-and-error
efforts have eliminated energy needed while water is of minimum use. No
measurements have been yet performed regarding CO2 omissions.
SAWING
PLANE
FIGURING
DRILLING
PROFILE
ASSEMBLY
GRINDING
VARNISHING
PACKAGING
Fig. 2. Production process of wooden parts
The electronic parts have been chosen to be of recyclable material where possible,
added to be “invisible” but easy to access in case of technical problem. All
supplementary material was recyclable or recycled material. In regard of the ICT
part, the system was composed of an Android tablet, a number of sensors and a PLC.
JAVA was used in Eclipse environment using the Android Development Tools
(ADT) which extends the IDE Eclipse for Android Projects development. Regarding
face recognition, the open code OpenCV library was used. Advances in this area will
be taken into consideration for improved or new editions of the furniture.
3 Economic analysis
Raw materials are subject to two core limitations; i.e. they have to be totally eco-
materials, recycled or recyclable and be able to be assembled by eco-based ways.
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Table 1. Cost of raw and supplementary materials per furniture piece
Raw materials UNI Quantity % loss €/m3 Cost (€)
T
Solid wood - oaks m3 0.02300 19 1,800 41.35
Glulum (Solid Wood m3 0.00244 20 9,500 23.15
Pannel)
Plywood m3 0.00171 25 700 1.20
Supplementary material 75.25
Electronic Parts 845.7
Total 986.65
Therefore, the high cost, especially of the electronic parts, is due to the above
specific limitations. On the other hand, elimination of energy consumption and the
adaptation of conventional machinery, in order to secure the ecological production,
have some impact on the total production costs. Costs are expected to fall in the
future due to the development of economies of scale, the advances in the eco-
production of electronic parts and automatization and the improvement of the
suggested production technologies.
The estimation of marketing expenses in export markets is roughly estimated due
to the significant unstable socio-economic environment and the positioning of Greece
within the EU framework. Table 2 presents the total cost per piece and the suggested
prices in Greece and the European market.
Table 2. Total costs per furniture piece
TYPES OF COSTS (per piece) (€) Greece export
Raw material 986.7 986.7
Labor cost 176.7 176.7
General Industrial Expenses 140.3 140.3
Packaging/ Distribution / Storage 39.1 78.2
Other costs 26.1 26.1
Total production cost 1368.9 1408.0
Marketing 261.1 322.00
TOTAL 1630.0 1730.0
Profit 244.5 173.0
Suggested prices in Euros including VAT (23%) 1874.5 1903.0
Prices can be considered high if compared to conventional relevant pieces of
furniture. However, they are competitive if compared with high-value furniture (this
can be due to design name or ecological value).
Marketing is considered of high importance since it regards the communication of
values that combine quality of life to ecologic benefits and support a quite radical
innovation. Especially in Greece, such products need to be widely discussed in order
to reach a critical mass of consumers and become known. Europe’s consumers may
397
be regarded more sensitive to eco-matters, more prone to information through
internet and therefore marketing will not be much more costly than in Greece.
Table 3 presents the profit-loss analysis for the subsequent three years. The time
period is considered satisfactory since it regards a radical novelty for the Greek
market and it can be assumed among the innovative furniture products in Europe as
well. However, estimations are quite moderated, mainly for the Greek market; this is
due to the mediocre buying capacity of the third age population at this very moment
due to the crisis and the political instability.
Table 3. Profit-loss analysis
SALES VOLUME (IN PIECES) YEAR 1 YEAR 2 YEAR 3
Sales in Greece 170 190 210
Sales (exports) 400 440 490
SALES TOTAL 570 630 700
SALES (IN EUROS) YEAR 1 YEAR 2 YEAR 3
Unit price in euros (Greece) 1875 1875 1875
Unit price in euros (Exports) 1903 1903 1903
Sales in Greece 318.750 356.250 393.750
Sales (exports) 760.000 836.000 931.000
SALES TOTAL 1.078.750 1.192.250 1.324.750
Cost of goods sold 812.877,9 898.443,9 998.271,1
GROSS PROFIT 265.872,1 293.806,1 326.479,0
EXPENSES
Investment expenses (amortizations) 15,315.0 15,315.0 15,315.0
R&D expenses 53,937,5 59,612,5 66,237.5
Other expenses 4,146.2 3,418.0 2,642.4
Taxes 50,043.1 56,019.8 62,993.8
TOTAL EXPENSES 123,441.7 134,365.3 147,188.7
NET PROFIT (before taxes) 142,430.4 159,440.8 179,290.3
The increase in sales volume per year is also the most moderate for the same
reasons. On the other hand, the moderate volume of exports is due mainly to two
reasons:
a) the quite hostile current business environment in Greece that hinders export
activity
b) the generalized suspicion towards Greek business today, taking into account
the usual difficulties of foreign market entrance.
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According to net profits per year as they appear in Table 3 and Figure 3, the
innovative green and smart furniture has the potential to be profitable even under the
most pessimistic expectations. Improvements that have already been planed will
improve functionality and user-friendliness enhancing further the value of the new
product.
200000
150000
100000
NET
PROFIT
(before
taxes)
50000
0
YEAR
1
YEAR
2
YEAR
3
Fig. 3. Net profits (before taxes) in Euros for the first three years
4 Conclusions
The present paper presented the techno-economic analysis of an innovative piece
of furniture that combine the ecological value with the information and
communication technology novelties. The product is actually a main entrance
intelligent furniture piece which addresses every day of the ordinary people and can
suit perfectly to the needs of elderly for more self-dependence. However, it may
serve other groups of consumers as well.
The development of a techno-economic analysis in the mature and craft-based
furniture sector is quite a challenge; markets are quite suspicious against the benefits
of intelligent furniture in general since it a just emerging market. On the other hand,
ecological perspectives have been overestimated in the past, especially when
combined with branded designer names and luxurious shows. Readers should also
bear in mind that ICT technology is evolving at very fast paces which may alter the
initial costs of the product. On the contrary the eco-production of the wooden and
recyclable parts of the product is quite easy to cost. Moving from costs to sales’
predictions, difficulties are easy to trace. Besides market analysis, the outline of
consumers’ attitudes for such products is still quite vague. Furthermore, the severe
socio-economic and political crisis in Greece enhances the vulnerable and highly
volatile business environment and markets.
Yet, the very moderate profit-loss analysis indicates success under the condition
that the product will be simultaneously launched in Greek and European markets.
Furthermore, seeing it under a wider perspective, innovation combined to
399
extroversion is proven to be fundamental for the survival and sustainability of
furniture manufacturers in Greece at least.
Acknowledgments. This research has been co-financed by the European Union
(European Social Fund - ESF) and Greek national funds through the Operational
Program "Education and Lifelong Learning" of the National Strategic Reference
Framework (NSRF) - Research Funding Program: ARCHIMEDES III. Investing in
knowledge society through the European Social Fund
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