Vendors tweak supply chains to help retailers optimize, smooth out product flow

By Powell Slaughter, Contributing Editor

HIGH POINT — How are vendors helping furniture retailers strike a balance between demand realities and ensuring adequate supply of the right goods at the right time? How are they using their supply chain practices in order to help their customers — and themselves — protect overall margins when there’s pressure to discount product just to get it out the door?

Furniture Today reached out to furniture manufacturers and importers to ask what they’re doing to help retail customers control product flow on one hand and increase the cost-effectiveness of their own logistics and supply chain operations on the other.

They discussed changes they’re making in their own logistics operation and/or partnerships with service providers.

As a full-line domestic manufacturer, Sherrill Furniture Co. has not been as broadly exposed to international supply chain issues as some resources. Efforts there focused on the domestic logistics operations and expedited delivery, especially as third-party carriers struggled to pick up and deliver goods in a timely manner, sometimes taking three to four weeks after a product was produced. That led Sherrill to make a significant investment in its own trucking fleet to shorten delivery times to the customer.

“In 2019 Sherrill trucks delivered to 16 states, and in 2022, Sherrill trucks are running regular routes to 39 states,” said John Mizell, general manager of logistics. Mizell’s cross-country delivery plan has improved efficiency by enabling designers and retailers that receive delivery on Sherrill trucks to more reliably plan installations and finish projects.

“In the last 12 months we doubled the size of our trucking fleet and added new Sherrill Trucking routes that include delivery to our West Coast customers,” Mizell added.

Full-line manufacturer and importer Flexsteel Inds. has been very active in evaluating, investing in and realigning its logistics and distribution landscape for flexibility in what Vice President of Sales David Crimmins called an environment of shortened, more extreme business cycles.

“Two significant enhancements to our network include the addition of a new distribution center in Greencastle, Pa.,” Crimmins said. “This DC services parts of the Ohio Valley, Mid-Atlantic and Northeast regions.

We’ve also implemented a new transportation management system that maximizes loadability, optimizes delivery routes and provides real time track-and-trace capabilities on all deliveries.”

In addition to its domestic upholstery production, Fairfield Chair Co. imports a line of case goods as well as some raw materials. The major changes it’s made this year in its logistics operation involve a broadening its options for ground transportation to customers.

While Fairfield would rather use specialized furniture carriers, Director of Transportation Barry Bailey said there’s an ongoing project to make changes based on customer needs for expedited transit times or white-glove delivery.

We want to use specialized carriers first, but with the demise of so many carriers and consolidation, the ones that are left are hamstrung with capacity, meaning longer lead times,” he said. “We’re looking into general commodity carriers as well. We’re trying to diversify our portfolio of partners to expedite lead times.”

Bailey also identified a need in Fairfield’s contract and hospitality divisions for final-mile partners for delivery to customers’ projects in locations where sending a 53-foot trailer isn’t feasible.

“These partners have also been able to step up in assisting on order delivery in larger metropolitan areas,” he said. “For example, we can send a trailer with Sunbelt to their facility where they can load a straight truck.”

In addition to importing case goods and a small upholstery assortment, Legends Furniture manufacturers mattresses and case goods domestically.

On the import side, Vice President of Sales Tim Donk said Legends switched from receiving shipments FOB to its own door to taking delivery at the container yard in port. The move has saved money and increased efficiency.

Now we’re sending (shipments) to the container yard, where we can shop for a better deal on the drayage to our door,” Donk said. “By managing our own drayage, we were able to get slightly better deals. In some cases, it’s only a couple hundred bucks, but every little bit helps.”

Legends also started “micro-managing” container flow to reduce per diem and demurrage charges.

“Lastly, we switched our strategy to work with both (steamship lines) and freight forwarders to find the best rates possible,” he said. “Long-term partnerships don’t seem to have the value there they once did. There are some aggressive freight forwarders out there offering better deals, and when we get solicited from one, we want to hear what they have to say.”

Smoothing order flow

How are vendors working with retail partners, and ocean and land carriers to stabilize order flow to accommodate anticipated business conditions?

Donk noted a “nice advantage” on Legends’ domestic side.

“Our minimum order is only $1,500, and the product is ready to ship in two weeks or sooner,” he said. “The dealers only need to order what they actually need, and they don’t have to take up valuable warehouse space when it arrives.”

For imported goods, Legends is working closely large customers and factories, coordinating product flow as needed for better supply/demand balance.

“We are also able to use our consolidation warehouse in Ho Chi Minh City to facilitate this for both the factories and the dealers,” Donk added. “It serves as a staging area, easing the constraints of everyone’s full warehouses.”

Sherrill produces its brand portolio almost entirely on a just-in-time basis, allowing a degree of flexibility that importers don’t enjoy, said Vice President of Marketing Dax Allen.

“For example, some customers have asked us to hold an order for 30, 60 or even 90 days to help manage their warehouse or delivery situations,” he said.

Usually, we are able to accept this hold request and pull other orders forward from the backlog to keep the supply chain moving and help the customer manage through their inventory that way.”

Despite ocean shipping’s space constraints and pricing, Bailey said Fairfield has been able to manage inventory to keep acceptable inventory levels through increased sales.

“It is an on-going process to manage, to keep up with raw materials for our custom upholstery orders,” he said. “We have managed well all things concerned.”

Flexsteel has taken steps to deal with challenges in forecasting demand cycles and unpredictable transit times from Asia.

“We offer a blended dealer-direct/warehouse-fulfillment model for sourced goods and increased our inventory on popular dealer-direct models,” Crimmins said. “This inventory can be leveraged by retailers to alleviate the pressure of forecasting and reduce safety stock requirements.”

Flexsteel is reducing uncertainty in ocean rates by leaning into its domestic production.

“We’ve invested heavily in our domestic product offering and fulfillment programs over the last six months, specifically, our popular South Haven collection,” Crimmins said. “Expanding this program was a focal point of April High Point Market, and we’ve continued to invest in the program in the months since.”

South Haven offers four-week production lead times and a five- to six-week delivery timeline designed to provide retailers with much greater flexibility and quick replenishment to reduce store inventory requirements.

“We also continue to stock our best-selling combinations at all three of our domestic warehouses,” Crimmins added.

Savings points

Transportation costs are moderating, but remain higher than historical averages, so vendors keep looking for ways to eliminate and/or manage costs in their supply chain and warehouse operations where necessary.

Crimmins pointed out that Flexsteel’s new Pennsylvania distribution center allows the company to leverage East Coast ports and significantly reduce the average mileage from distribution center to the retailer.

“We have also increased our usage of intermodal carriers for our inbound freight and some customer deliveries,” he said, adding that Flexsteel added a dealer-direct truckload program for the South Haven collection at April market. “This model reduces transit costs by allowing for direct shipments. We pass that savings on to the retailer for a better, total landed cost.”

Fairfield’s Bailey said the company is watching all POs closer than ever on inbound ocean containers and shopping the spot market more aggressively for sailings, noting the company works directly with ocean, air, rail and truck transportation partners without an intermediary.

“Managing cost is at the forefront of all we do with raw materials as well,” he added. “The closer we work with our partners, the better they can serve us in understanding each other’s struggles. Constant communication is the key to find smarter ways to ship where freight savings is concerned.”

Donk at Legends said the operations team has gotten very creative. Including bringing aboard operational talent with experience at the likes of Walmart and Amazon, the company took a new approach for accommodating extra warehouse space.

“We had been leasing an offsite warehouse but have recently terminated that lease,” he said. “We’re now leasing 53-foot trailers as needed for additional space. It works well because we have room on property to store a lot of them for a fraction of the cost of a warehouse. Plus, they’re on site, they’re flexible, and they’re temporary.”

Sherrill’s position as a domestic producer has shielded it from ocean freight costs’ explosion in the past year and a half. Plus, sustained and expanding order growth — Allen credits a general reshoring trend — haven’t made cost-cutting a priority.

“The Sherrill Family (of brands) is continuing to invest in support of the current and future growth of our business, and we are not on a cost-cutting or space reduction plan,” Allen said.

Accommodating the excess

With retailers’ warehouses bursting, many vendors — especially on the import side of the business — face inventory challenges of their own. Some are shifting sourcing for raw materials and/or finished goods or expanding with new warehouse investment.

Sherrill’s domestic JIT business model has shielded its companies from product backups on the production end.

“Again, as a domestic manufacturer with a healthy backlog that is diversified across multiple customer types, we really are not dealing with a distressing level of excess inventory,” Allen pointed out.

Rather than shift sourcing partners, Fairfield is working closer with them to work around delays, for raw materials as well as finished goods.

“This has helped us keep our plants on schedule and lead times down,” Bailey said. “Since we have managed our inventory well, no new investment (in warehousing) has been needed. We’ve been able to keep turning our inventory where we’re not too heavy or too light. We’ve been blessed by that and are more fortunate there than some people I talk with.”

Flexsteel re-launched inventory adjustment sales late last year.

“We use monthly selling periods to aggressively markdown select overstock items,” Crimmins said. “We continue to rotate this inventory as appropriate to ensure all retailers are able to participate in the savings.

In addition, Flexsteel is continually balancing inventory among its distribution centers to ensure optimal inventory deployment.

As with Sherrill, Legends domestic side isn’t overburdened with excess inventory.

“We are a just-in-time manufacturer and have been for a long time,” Donk said. “We receive raw materials daily from our suppliers and have been for almost 20 years. Our suppliers are used to our model, and we have great partnerships with them. Because we are just-in-time, we don’t have to keep a ton of finished goods on hand.

“For imports we’ve been relying on our consolidation warehouse (in Vietnam) and the creativity of our top-notch operations team,” Donk added. “Business as usual doesn’t really exist anymore.”

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