Furniture industry tackles pandemic supply-chain challenges

Date: Wednesday, November 11, 2020
Source: Furniture Today

HIGH POINT – Furniture companies large and small, domestic and global, have all experienced pain as the COVID-19 pandemic rattled supply chains and have “ripped page after page out of previously effective logistics play books,” according to a report commissioned by the Specialized Furniture Carriers division of the American Home Furnishings Alliance.

The report queried logistics and manufacturing executives for their analysis of the pandemic’s impact. In describing the COVID-19 virus as “an equal-opportunity disrupter,” the report cited a recent study conducted by Procurious, an online business network for procurement and supply chain professionals. The firm’s “How Now? Supply Chain Confidence Index” found that virtually all, 97%, of the more than 600 supply chain professionals polled experienced a supply chain disruption due to COVID-19.

In response, 73% of those professionals are now planning major shifts in their supply chain strategies, including supply base expansions and an increase in inventory levels.

In noting that the home furnishings sector has not been immune to the impact of the pandemic, the report sector gave examples of how the industry currently is working diligently to mop up from what many say is a perfect storm.

With shelter-in-place mandates issued by most states and with schools and colleges closing classrooms, America suddenly found itself working and studying as well as “sheltering” at home.

In addition to creating an unplanned and unprecedented demand for furniture suitable for home office use, or for a newly formed home schoolroom, consumers began allocating disposable income that might have originally been earmarked for vacations, dining out and other recreational activities to new furniture for virtually every room of their homes.

Enter the perfect storm

Demand for furniture spiked while the pandemic put the brakes on raw materials, production, manpower, transportation, distribution and just about every resource needed to make, ship and deliver furniture.

Richard Tucker is national sales manager for Shelba D. Johnson Trucking and chairman of the Specialized Furniture Carriers.  He confirmed that specialized furniture carriers are playing catch up. Depending on delivery destination, Tucker says they have cut lead times down from weeks to days.

“The reality, at least for the near term, is that this sudden skyrocketing demand for furniture is resulting in longer-than-normal delivery times,” Tucker said in the report, adding, “and while we are making inroads, this is an issue that is not going to disappear overnight.”

Capacity in our industry is at a premium, he noted. “And with demand also so high, we are asking our customers to understand the reality that delivery times, at least until after the holidays, are probably going to be longer than normal.”

Tucker also pointed out that the trucking sector, even prior to COVID-19, had been grappling with issues that included driver and equipment shortages.

“Our industry has been actively recruiting new drivers and looking for additional equipment, but there is no magic wand that anyone can wave to make these issues disappear,” he said.

Industry impacts

Interviews with leaders throughout the home furnishings sector underscore the impact the pandemic has had.

“The impact of COVID-19 helped put the entire supply chain in turmoil,” said Roy Calcagne, president and CEO of Craftmaster Furniture. “As an upholstery maker who sources fabric both domestically and offshore, we had issues with longer lead times for raw materials as well as issues securing container spaces.”

For example, Calcagne, who imports wood parts from Asia, said what would normally take four weeks to deliver is now taking up to 10 weeks due to the shortage of available container space.

And this has also bumped his transportation costs up dramatically. “If we had been paying $3,700 for a container, we are now looking at $2,000 more just to secure a spot on the container ship,” Calcagne noted.

And the challenges go on. Calcagne said once the goods land in the states, domestic carriers are scrambling to find enough equipment to get the finished goods on the road in a timely manner.

Price increases are another impact of COVID, said company executives, including Calcagne.

“Many companies have recently announced price increases,” he said. “The cost of foam, metal, steel and lumber are all rising and, in addition to seeing price hikes now, we will probably see more in the first quarter of 2021.”

Garrett Bowman, president of Gulfstream Shippers Assn., brings a global perspective to the situation. He said he spotted supply chain constraints right after the most recent Chinese New Year.

“Workers did not return to the factories, which slowed down production,” Bowman said. “Then, when the COVID outbreak began, many states shut down and we had challenges getting products delivered to the warehouses, all of which resulted in a big lag in terms of delivery furniture.”

Early in the pandemic, many trucking companies that had traditionally transported furniture started looking for other goods to haul during the downtime.

“By last June and July, there was chaos due to a shortage of trailers, severe congestion at the overseas ports, congestions at the domestic ports and big spikes in equipment costs for many truckers,” Bowman said.

While he sees some improvements in the situation, he suggests that the industry will be challenged until possibly February or March next year.

Consolidation increases challenge

Barry Bailey, director of transportation at Fairfield Chair, pointed out that industry consolidation has made a tough situation even tougher. As did other observers, Bailey credited companies within the Specialized Furniture Carriers group for running at 110%.

“The challenge is (that) the demand right now is so overwhelming that they can’t turn the equipment fast enough, and they are also facing an issue of a massive shortage of trailers,” he noted.

Given the challenges at hand, Bailey said that location has a bigger than normal impact on delivery times.

“Anything west of the Mississippi you can add a week for delivery, and even longer in more remote areas,” he said. “What used to take three to five days to deliver is now running at eight to 10 days.”

The pandemic has also impacted furniture delivery times in other ways. For example, Fairfield Chair, which is a leading supplier to the contract, hospitality and assisted living sectors, sometimes gets push back from customers who are hesitant to allow white-glove delivery onto their properties.

“We are all on an unknown playing field, and there is no play book,” Bailey said.  “It is so ironic in that, at a time when business has never been stronger, there does not seem to be one leased trailer available to rent on the entire East Coast.”

Raw materials higher

Rising prices for raw materials has been a key concern for Caroline Hipple, president of Norwalk Furniture.

“As upholstery makers, we consume lots and lots of foam, hardwoods, steel, feathers and fabric,” she said. “So when we first heard about COVID-19, even before it came here, we made the decision to buy up what we could, so that in the event things got bad, we could keep the factory up and running.”

If that was a gamble, it paid off. Norwalk not only enjoyed a largely uninterrupted manufacturing process, but it also was able to quickly transform itself into a local supplier of personal protective equipment for a time.

According to Hipple, one of the things that gave Norwalk a leg up during the pandemic was the fact that the company enjoyed strong supplier relations.

“As a company, Norwalk made it a point to build great vendor relations before there was ever a crisis,” she said.

Looking ahead, while Norwalk Furniture is producing at full throttle, Hipple does see an inevitable industry-wide slowdown in demand “once people feel comfortable going out to eat, taking vacations and traveling again.”

In the meantime, her game plan is to continue to improve Norwalk’s processes, procedures and technology.

“With logistics being what they are in the industry, we are also working to adjust our lead times and adjust the number of suppliers we work with to make certain that we have everything we need when we need it,” Hipple said.


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