At Supreme Quilting, constant reinvention keeps the business coming in

Crossing border creates unprecedented growth—and challenges

Steven and Ilit at Supreme Quilting plant

A tight ship Chief Financial Officer Ilit Granot (left) and President Steven Finkelstein run Supreme Quilting, a Toronto-based supplier of mattress covers and roll quilting, on a controlled growth model. They say they’ve created quicker turnarounds, reduced costs and increased efficiency by 10%.

Supreme Quilting, a Toronto-based supplier of mattress covers and roll quilting, is banking on highly efficient production practices and an unrelenting commitment to quality to secure its position as a favored provider to mattress manufacturers throughout North America. Company executives also believe that a focus on controlled, steady growth will position them to take advantage of new opportunities as they arise.

Identifying opportunities is nothing new for the company. “When my father, Herb Finkelstein, bought Supreme Quilting in 1970 it was dead in the water, and we’ve been reinventing ourselves ever since,” says Steven Finkelstein, now the company’s president and sole owner.

For its first 10 years, the company focused “strictly on quilting for the apparel industry,” Finkelstein says. “And even though the Toronto market has always been very competitive for quilting, as long as we were happy and comfortable in apparel, we didn’t go after other business.”

When the apparel industry began moving production from North America to China in the early 1980s, Supreme Quilting turned its attention to Canada’s mattress manufacturers. “Unlike the Americans, Canadian mattress manufacturers always outsourced quilting work,” Finkelstein says.

That, too, began to change after another decade. As Canadian manufacturers moved toward vertical integration, more and more of their quilting was done in-house. The growth of the specialty-bedding segment of the industry, which offered mattresses with smooth, often unquilted tops, also began to impact the company’s business.

It was time to consider another round of reinvention. “We saw that some of our counterparts in the U.S. were offering entire mattress covers, so, in addition to offering quilt rolls, we moved into cut and sew services,” Finkelstein says.

Crossing the border

The company’s most profound reinvention occurred when Finkelstein decided it was time to reach past the Canadian border for new business. “Until 2005, we were strictly a Canadian business and then we began to aggressively go after U.S. business,” he says.

The decision prompted a period of unprecedented growth. Sales peaked in 2008, Finkelstein says, presenting challenges that he had not faced before.

“There’s a point at which you can become too big,” he adds. “In this industry, the way that you make money as a supplier is to run a very tight ship. Margins are always going to be tight and unless you’re efficient you’re going to suffer.”

Just as Finkelstein began to realize that he was outgrowing his management systems, the full force of the recession hit the industry. As it turns out, it may have been a blessing in disguise.

Supreme Quilting 1

Hard at work Supreme Quilting’s products are made in a 30,000-square-foot facility on the outskirts of Toronto, where the company moved in May 2014 to increase efficiencies.

Finkelstein and his chief financial officer, Ilit Granot, evaluated all aspects of the business. “We found that we were too top heavy, had too much inventory, too many employees and that overhead was way too high,” Finkelstein says.

The evaluation prompted Finkelstein and Granot to begin moving the company toward a more controlled growth model. Their first step was to reduce labor costs.

“When business slowed down in 2009, we were able to reduce labor (by 10%),” Granot says.

Granot, a chartered accountant who worked for a public accounting firm for more than 20 years before joining Supreme Quilting, then developed a costing system to measure employee efficiency. By requiring all employees to account for the work they did daily, she could evaluate the efficiency of individual employees as well as the company’s entire production process.

“The staff questioned this at first, but at the end of the process the managers understood because I had the proof (they needed),” she says. “Now the process is our standard—and we’ve created quicker turnarounds, reduced costs and improved efficiency by 10%.”

Finkelstein now has made controlled growth the organizing principle of his entire business plan. “Growth can kill,” he says. “We now think that 3% to 5% annual growth is optimal.

“Because of how we’re now structured, we can grow steadily but we also can grow competitively,” he adds. “Growth requires expansion, but we have to weigh the costs, analyze the cost benefits, control debt load and evaluate risks factors.”

Today, about 75% of Supreme Quilting’s business comes from sales to customers in the United States. Canadian manufacturers, mostly located in the Toronto area, provide the balance of the company’s business. Mattress manufacturers make up 90% of the company’s customers. “We also do some contract cut and sew for hospitals and the pet market,” Finkelstein says.

Expanding product lines

All of the company’s products are produced in a 30,000-square-foot facility on the outskirts of Toronto. Supreme Quilting moved to this facility in May 2014 to increase efficiencies, Finkelstein says.

In addition to cut-and-sew services, Supreme Quilting offers roll quilting and finished mattress covers. “With foam mattresses growing bigger every year, our zippered covers are driving sales,” he says.

Supreme Quilting began offering zippered covers in 2006. “We were the first contract quilting company that made zippered covers for the mattress industry,” Finkelstein says. “We did over 150 burns to test them because no one else was doing it at the time.”

The company now offers 10 models of zippered and waterfall covers in a variety of knit and woven fabrics. Seven models are quilted to various constructions of polyfoam, while three others are smooth-surfaced.

Finkelstein is particularly proud of his Organic Beige cover line, which “passed all FR 1633 tests at UL Laboratories without any chemicals,” he says. UL Laboratories is a global, independent safety consulting and certification company based in Northbrook, Illinois.

The Organic Beige line offers covers in three fabric configurations. Wool is used as a natural fire barrier throughout the line.

“I recognize that within the industry there is a controversy over what ‘natural’ means,” he says. “We try to remove that confusion by disclosing all the information about the content on our covers. …

“Niche products, especially ones that appeal to customers who are concerned about environmental issues, are pushing sales in general, and I’m always looking for ways to address those concerns,” he says.

He and his product-development team also create custom designs for individual customers. “I’ll design whatever the client wants and understand that the price point is crucial because we have more and more competition all of the time,” he says.

Quality first

Supreme Quilting sewn covers for mattresses

‘Biggest bang’ Steven Finkelstein, pictured here at ISPA EXPO in March 2014, says he never misses an event hosted by the International Sleep Products Association.

As important as it is to offer competitive pricing, Finkelstein believes that it is the quality of Supreme Quilting’s products that sets the company apart. In fact, he believes that quality and integrity are his company’s primary competitive advantages.

To maintain high standards of quality, he remains involved in every aspect of his business, “from looking at all sales orders to dealing with client issues when it comes to quality,” he says.

His focus has paid big dividends. “Less than 1% of our product is ever returned,” he says.

Because of the decline of small mattress manufacturers and factory directs and the concurrent rise of the Internet and social media, Finkelstein has dramatically changed his approach to sales and marketing.

“Our model has changed a lot. With the Internet, FaceTime and social media, you don’t always have to be there to talk to them. These companies are trying to be more efficient, too, and a lot of our clients don’t even want to be on the phone,” he says. “I’m always present at International Sleep Products Association events though, because that’s where our biggest bang comes from.”

Finkelstein expects the Internet will continue to push change in an already rapidly changing marketplace, and he’s OK with that. “You always have to be open to change,” he says. “You do what you’re good at and hope for the best.”

Doing what he’s good at is likely to lead Finkelstein into new channels of distribution in the near future. “In five years, we’ll be more diversified and be producing new products for new industries,” he says.

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