Q&A: What's your biggest logistical issue?
By Marc Barnes -- Furniture Today, March 24, 2008
High Point — Transportation is emerging as one of the bigger challenges within furniture retail, as fuel prices escalate and the industry continues to change from one that was based on domestic production to one in which inventory is largely sourced overseas. That change affects transportation, because product once delivered over highways by truck now comes by ship and rail.
To face the challenge, some retailers are scrutinizing deliveries to reduce costly errors. Some are investing in new software to more efficiently plan delivery routes while others are buying more fuel-efficient trucks.
One solution centers on the numbers: Choosing furniture that can be sold for a high enough markup to pay the freight and still make a profit. Still another approach keeps it simple: Ordering mostly from one place and hiring one truck line to deliver it.
Fuel costs
"We are looking at more aerodynamics for the equipment, cutting idle time, minimizing route mileage, combining as many shipments in LTL fashion across multiple vendors. What we looked at initially when fuel was $2 a gallon and now it is $4 a gallon, different things become feasible. If you can pick up a quarter-of-a-mile economy per gallon at $2 per gallon — now that it is $4 a gallon, it is a substantial payback. We are re-evaluating everything we can to conserve fuel."
Frank Miller, Director of Transportation, W.S. Badcock Corp., Mulberry, Fla.
Controlling global flow
"We have opened an International Logistics Office in Shenzhen, China, which is the most central location for most Asian furniture manufacturers. It is managed by Jeff Sears, our international logistics manager. Jeff is able to do on-site C-TPAT validation, logistics and supply chain support and analysis. By visiting every supplier in our supply chain and building relationships with key management personnel, we can better control the flow of goods by receiving preferential treatment as they know us by name and face. Most importantly, we get accurate information on production dates, production delays and reasons why orders are shipping early or late."
Dan Baran, Director of Operations, Art Van Furniture, Warren, Mich.
Enhancing efficiencies
"We have got wonderful drivers working for me to do our deliveries and our quality assurance department is fantastic to make sure that they are prepping it and getting it out to the consumer. Fuel cost is a challenge for everyone — that's the biggest gripe that I hear from drivers. Fuel has made it a little more difficult. We do arrange the trips as efficiently as possible, especially the long-haul deliveries, so that they can go out of here with a full load to make sure they can afford the cost — our drivers are private contractors and they own their own trucks."
Carl Dowdy, Operations Manager, Mathis Brothers Furniture, Oklahoma City, Okla.
Reducing expenses
"The pressing challenge for transportation and logistics is to reduce expenses and gain operating efficiencies while increasing end user satisfaction. To meet this challenge, we have been taking a proactive and hands-on approach to all existing operations, suppliers and service providers willing to partner in any change that provides higher customer satisfaction and bottom line results. This involves redesigning our logistics network and looking for cost-effective ways to position inventory closer to our customer base."
Gary Nagle, Director of Transportation, Robb & Stucky, Fort Myers, Fla.
Achieving 'visibility'
"On the inbound side, so much of it being imports these days, it is a challenge getting an accurate date to sell against — (when) the product is going to show up from overseas. What we are trying to do is to chase it further up the chain. The problem is getting visibility (on product movement). It comes off the ship and onto a railcar and across the country. With certain rail systems, the visibility isn't always there. On the outbound side, we are always looking for better ways to serve the customers. We've started using better software (to track the deliveries). It not only provides better visibility to us, but to the customer."
Rob Leskovar, Vice President of Operations, The RoomPlace at Harlem Furniture, Lombard, Ill.
Minimizing damage
"On our side of it, the challenge is getting (product) into the consumer's home to their level of satisfaction. We figure we need to measure everything we do. You total up the number of deliveries you make and those where you are successful in all areas — you didn't leave off a frame, you contacted them to make sure they were home, there were no flaws in the product. Anything that can go wrong is counted. Measuring it is the first step to figuring out, one if you have got a problem, and two, how to fix it."
Giff Gates, Owner, Gates Home Furnishings, Grants Pass, Ore.
Obtaining better rates
"I have tried endlessly to get a better inland freight rate. Inland freight to the West Coast is greater than container freight. I can bring a container from China for $2,800 to my door. A truck from Mississippi ends up over $3,200; if I run one from Jackson, Tenn., it is even higher. So, I have to be very selective in what I buy from Mississippi...logistically, you have to sort yourself on delivered cost. On average, a $250 sofa should be a $499 sofa (but with freight costs), it now becomes a $599 sofa."
Robert Yando, Director of Merchandising, Walker Furniture, Las Vegas
Cutting waste
"Probably our biggest concern is, in our Southern California marketplace with diesel approaching $4 a gallon, how can we be as effective and efficient as possible? In delivering, we deliver all over Southern California and we have to take into consideration the issues of traffic and congestion. We try to operate efficient vehicles. We have started to switch over to the Dodge Sprinter, which gets 22 miles a gallon. When you drive two hours away in Southern California, it seems like a day away. We look at box vans when we are delivering an armoire, but when you are delivering a sofa to Santa Barbara, we can deliver it (with the Sprinter) more efficiently and quicker."
Mark Fedde, Vice President of Operations, Fedde Furniture, Pasadena, Calif.
Keeping it simple
"We buy (almost) everything from North Carolina and we have one shipper coming from there. Occasionally, we buy from New York and we really haven't figured that out yet. Some (comes) from California, but it's not too far away, so it is pretty easy. The stuff from North Carolina comes on Palmer Transportation — that is their whole business, moving from North Carolina to the Northwest. We own our own truck and we have our own staff. And that's how we deliver it."
Jeff Parker, Owner, Parker Furniture, Beaverton, Ore.
Managing inventory
"The biggest issue for us is maintaining timeliness and cost effectiveness. With a reduced market, it is challenging to fill the truck on the routes and to maintain the three- to five-week delivery time with these reduced loads. With incoming goods, we are doing whatever we can to reduce freight costs. We are trying to order as much as we can but it is very difficult in this environment. To have the right stocking levels is a remarkable challenge. We are selling as aggressively as we can. Hopefully, spring will bring a new building season and we will see the whole marketplace take off again. It is as difficult time as has existed since I have owned the company."
Greg Metzger, President, Montana Furniture Inds., Bozeman, Mont.
