Furniture vendors hustle to control what they can in tumultuous supply chain environment

By Powell Slaughter, Contributing Editor

HIGH POINT — With high ocean- and road-freight rates and scheduling challenges, port congestion and more beyond shippers’ control these days, what are vendors doing to manage around those logistical problems, and how have those steps impacted dealer service?

That’s the question Furniture Today put to several furniture resources who’ve swapped handwringing for proactive measures to mitigate the impact of the past two years’ chaotic supply chain environment.

Those steps include new ordering patterns and re-assessment of priorities regarding ocean shipping for finished goods and inputs, re-imagining utilization of existing resources, and doubling down on materials and production to safeguard their ability to supply their customers and mitigate cost and time effects on their business.

Stormy seas

With high ocean-freight rates a given these days, Hooker Furnishings has prioritized vessel-space allocation over price when negotiating this year’s contracts with steamship lines.

Scott Prillaman

“We’re looking to lock in the maximum volume on contracts,” said Scott Prillaman, Hooker’s vice president of case goods operations, noting that although contract rates continue to be exorbitant spot and premium rates remain a bigger concern. “We’re in no position of power to negotiate effectively on price, but we can negotiate on volume. You still have to work hard to get it.

“We’re also working hard to negotiate with our (non-vessel operator) partners to give us notable volume as named accounts with their carriers,” he continued. “That will help offset the fact we know we’ll have to ship some containers at spot-market and premium rates.”

An example of such an NVO agreement would be a commitment to a fixed number of containers a month with 50% at the named account rate and 50% on the spot market. If the contract is, say, $12,000 per container and the spot market is $17,000, that at least provides a decent average of $14,500 for planning purposes.

More importers are re-engineering finished goods for higher cube yields on containers, but parts and components are getting re-thought as well. Jackson Furniture, for example, imports cut-and-sew kits, primarily from Vietnam and is looking for ways to get more out of value out of each shipment.

“We’ve been experimenting with shrink-wrapping the kits vs. cartoning,” said Senior Vice President of Sales and Merchandising Anthony Teague. “That could give us 15% to 20% more kits on containers.”

Larry Cryan

With so much out of shippers’ control, maintaining a strong finished-goods inventory position to reduce backlogs and meet ongoing demand has been critical for Samson Marketing, said Vice President of Operations Larry Cryan, adding that, in today’s environment, it’s best to err on the side of too much product on hand.

“Our companies have made a concerted effort to bolster our inventory positions in an attempt to service the high demand,” he said. “No one likes these high rates and unpredictable schedules, but there seems to be an acceptance or, perhaps, resignation to them being the new norm. Retailers seem to have had success in passing these costs along, so the key still seems to be that the winners will be the ones with inventory to sell and service.”

That “new norm” of long ship times has Samson building a lot more stock stateside than pre-pandemic.

“When you couple long lead times and the difficulty of booking space, the difficulty of forecasting needs increases exponentially,” Cryan said. “We order heavily, take our chances, and that makes forecast accuracy difficult, but you have to pick your poison.”

Samson’s backlogs were large enough, he added, to “ship our way out of storage challenges” when product piled up in Asian factories.

“We’re also fortunate that in Lenoir (N.C.) we have capacity for storage in those HHG buildings we’d purchased,” Cryan said, noting those facilities enabled Samson to build very large stocks stateside. “Not too long ago, we were wondering how we’d put those facilities to good use, but the rainy day came.”

Cryan was referring to a Samson affiliate’s 2018 acquisition of the former Heritage Home Group’s 800,000-square-foot case goods plant and 400,000-square-foot upholstery facility in Lenoir. (Samson’s Craftmaster domestic upholstery brand utilizes some 100,000 square feet of the latter building for its production.)

JIT now ‘JIC’

Roy Calcagne

Craftmaster took action to offset supply chain challenges for in-bound parts and materials. President and CEO Roy Calcagne noted the company brings in chair parts from Vietnam, while 70% of its fabric and some seat cushion linings come from China. When container rates began skyrocketing and vessel space tightened, Craftmaster began ordering basic inputs in larger quantities.

“We brought in six to seven months of inventory for those components, and we always have that much in hand or already in the pipeline,” Calcagne said. “We’re doing the same thing for plywood.”

Having a large supply of plywood on hand is helping as Craftmaster expands plywood sourcing with Russian birch now under boycott. The company already had increased plywood inventories a while back.

“We’d seen any hardwood plywood that was $28 dollars a sheet increase to $70 a sheet,” Calcagne said.

The moves on production inputs have helped keep the plant running at full capacity.

“We can afford to put more money into these raw material inputs. You may have more than what you need, but for these basic inputs there’s no risk of obsolescence; you know you’ll use it,” he said. “JIT operation has become JIC: ‘just in case.’”

Lane Home Furnishings is building big stocks of manufacturing inputs with a continued focus on vertical procurement to support its 19 manufacturing facilities. That includes lumber and materials, trucking and mechanisms (Lane makes many of its mechanisms and clips).

“We also stockpiled foam; we have more than 200 truckloads of foam on hand,” said Executive Vice President of Sales Jay Quimby, adding Lane is ordering more domestic cut-and-sew kits — up 15% this year — to counter cost and time problems with offshore sourcing. “We’re putting in buffers to isolate (potential shortages), carrying more fiber, stockpiling more mechanisms.

Big inventories are an acceptable risk for Lane: “If you don’t have it, you can’t make (the product), and that policy is paying off now,” Quimby noted. “You’re still having COVID shutdowns in China that could be impactful in the third and fourth quarter. That’s why we’re stockpiling kits.”

That approach is helping Lane follow through on new programs such as “Ready to Roll,” building in-stock positions for four best-selling stationary groups and three recliners for shipment on order out of Mississippi and North Carolina.

“We have 10,000 kits in-stock to support some of these groups,” Quimby said. “We’re warehousing them heavy.”

Jackson Furniture needed adequate stocking to support a major capacity expansion that’s helping it expand quicker shipping to more dealers. Like many vendors, the company had prioritized customer shipments dependent upon levels of business with the manufacturer.

Teague said some have lead times of three to four weeks, another tier might be at six to eight weeks, with others longer, adding the company shipped 62% more goods in Q1 this year vs. Q1 2019, and 40% more this year than 2020 so far.

A key to that jump is a huge increase in production capacity. Jackson has added 22 lines in its three plants since the pandemic began for a total of 58 lines, an increase of almost 38% in two years.

“That’s enabled us to get deeper into our account base and put more dealers on our priority shipment schedule,” Teague said. “We believe business in the third and fourth quarter will pick back up, and we’re going to be there.”

On the road

While vendors said furniture carriers are catching up from a stressful 2021, getting product to customers remains an area for improvement.

Jeb Bassett

Bassett Furniture Inds. closed the $87 million sale of Zenith Freight Lines to logistics and trucking major J.B. Hunt Transport Services at the end of February. J.B. Hunt’s acquisition of Zenith, which remains Bassett’s domestic distribution arm under a long-term agreement, already is paying dividends, Bassett COO Jeb Bassett told Furniture Today.

In examining logistical challenges beyond Bassett’s control, “We still felt there’s no one in the industry with Zenith’s expertise in the middle mile,” Bassett said, adding that J.B. Hunt is “able to offer everything Zenith did with added horsepower. They have excellence in technology, in driver and warehouse associate recruiting and additional equipment resources. They can control fleet costs like fuel and tires through economies of scale.”

Bassett had seen benefits from the new J.B. Hunt/Zenith relationship by its fifth week in late March.

“From a wholesale perspective, we’ve seen the same level of service we’ve always had with Zenith,” Bassett said. “With more equipment available, our transit times are meeting projections.”

He also pointed out that J.B. Hunt’s reach allows it to service all U.S. ZIP codes on a near-weekly basis. “That’s a big plus, especially as you explore e-commerce,” Bassett said.

Beyond Zenith’s ongoing role with Bassett, the company also is exploring J.B. Hunt’s truck and intermodal services available throughout North America.

Hooker’s Prillaman said while the company has faced challenges with road transportation, strong partnerships with drayage providers developed over the years have helped manage “peaks and valleys” of availability.

He noted Hooker brought its new Savannah, Ga., distribution center online during a difficult period last fall given the port congestion and chassis shortage issues.

“In that market, we are working with a couple of drayage providers that own their chassis, which helps a lot,” Prillaman said. “We had one carrier who bought a number of chassis just for Hooker. These are the types of partnerships that are important to have and that we value greatly.”

While Craftmaster always will use furniture carriers for delivery to retailers, the company took action when delivery times went from two to three weeks to six to seven weeks last fall due to overwhelming demand.

“We usually ship 70 truckloads a week, and we found our carriers couldn’t take that many. We were producing at full capacity, but 20% to 30% of the product couldn’t go anywhere,” Calcagne said. “We realized we have 100 company trailers, (tractors) and CDL drivers on staff to move materials between plants.”

Craftmaster bought four more tractors in the past year, bringing its total to 10. Now, although carriers’ service times have improved from fall, the company uses its equipment and drivers to make retail deliveries to dealers within a 300- to 400-mile radius of Craftmaster’s Taylorsville, N.C., operation. In addition to taking load off the company’s trucking partners, those dealers can receive goods in a few days vs. weeks.

“I never wanted to get into the trucking business, but it was necessary to keep the plant running at capacity,” Calcagne said.