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Furniture Import Strategies: Consolidation Overseas

Furniture World Magazine


The third way: Alternative to importing furniture yourself or sticking with the services that manufacturer’s provide.

The Decision To Import Furniture On Your Own Is A Big One It’s an expensive proposition with many hidden costs and one that will likely lie outside of your areas of expertise.

In the past, furniture retailers were faced with a difficult choice if they wanted to include imported furniture collections in their showrooms. They had to import the furniture themselves or they had to rely on what U.S. furniture manufacturers had to offer. With either choice, the retailers faced a range of delays, obstacles, and limitations.

Become a Furniture Importer
If the choice is to import yourself, you will need to invest time and money to identify a broker and/or foreign manufacturer that meet your needs. Potential manufacturers will have to be familiar with North American tastes and offer suitable styles for your showroom. Finding one that is appropriate, who provides something unique, and can deliver on time is not as easy as you may think.

The decision to import furniture on your own is a big one. It's an expensive proposition with many hidden costs. It is a decision that will likely lie outside your areas of expertise. One of the biggest obstacles you may face as a direct importer may be the need to meet minimum order quantities required by overseas factories. The volume required to get the prices you need may call for large investments in warehouse facilities and additional staffing. These additional costs must be absorbed somewhere.

Stick with the Status Quo
If your choice is to purchase imported goods through U.S. furniture manufacturers, you have a number of limitations and added costs to consider as well.

Many manufacturers who carry imported furniture have quick ship programs, low minimum order requirements, and provide a range of services. However, nearly every manufacturer delivers imported products from warehouses located in the southeast section of the country. For imported furniture coming from Asia, this is not a problem if you are a regional retail chain in the southeast section of the country. Retailers located elsewhere must assume the direct or indirect costs related to the delivery of those goods to remote locations.

For those retailers located in the Midwest and in the west, those railroad container cars you see passing by may be for you.Unfortunately, they will have to go all the way to North Carolina before turning around and heading back – and you assume the cost.

Of course, some manufacturers provide direct ship programs, but again, there are usually some restrictions. More often than not, the minimum order amount is a full forty-foot container load. Even if a container load is fine, it's usually limited to collections produced at a single factory. If you’d like to add another collection from another factory, you’ll more than likely need to order another container. In addition, these direct shipments are unlikely to have undergone any sort of quality inspection once they've left the factory. You will have to rely on the quality control measures of that factory.

The Logistics Gap
The reason for these limitations has to do with geography and logistics. Consolidating furniture coming out of factories located in China, the Philippines, Indonesia and other places is expensive and furniture manufacturers are reluctant to shoulder these costs. So as a retailer, you either get more product than you need or pay more for exactly what you want.
It’s easy to understand the problem. It’s all about core competencies and the need to stick to them. As a retailer, is import production, import finance, global logistics and warehousing really a core competency? Likewise, is the core competency of U.S. manufacturers designing and manufacturing quality furniture at reasonable prices or overcoming the inherent logistics challenges that exist with an import program?

The Third Way
The third way that several industry executives are considering and even implementing for their import programs has to do with moving their logistics process upstream. That means transferring consolidation, distribution and quality inspection duties to where the products are produced. It eliminates the added expense of transporting the cargo to the U.S. East Coast and back out to customers, lowers ocean freight costs, inland transport costs, and handling. Even the labor and warehousing costs overseas are far lower than in the U.S.

These are the same factors that explain why most of the U.S. consolidation warehouses are located in the southeast section of the U.S. – this is where most domestic factories are located.

The more import programs take hold, the more companies will need to apply the same principles they implemented when they started their domestic manufacturing. Consolidate close to where products are manufactured.
what can retailers do?

It turns out that furniture retailers hold the key to opening this new door of opportunity. Retailers who insisted on direct ship programs got the ball rolling with a number of manufacturers. It will take retailers to insist that their needs must be met if U.S. furniture manufacturers are going to expand their markets through imports.

The trend is clearly going in this direction and there are a number of companies already walking down this path.
Whether U.S. manufacturers develop a new program on their own or contract out to a third party, the time has come for the furniture industry to streamline their systems, much like the electronics and apparel industries have done.

Wayne Chan, a manager of PacMil Logistics, develops supply chain solutions solely for the U.S. furniture industry. PacMil Logistics is one of the leading logistics companies specializing in U.S./Asia logistics solutions. Questions can be directed to Mr. Chan care of FURNITURE WORLD at wchan@furninfo.com