Behind the scenes with top manufacturers
Kristine Ellis -- Casual Living, February 9, 2011
Best practices distinguish industry-honored manufacturers
O.W. LEE faced the proverbial perfect storm last season: decreased inventory, unexpected demand and what proved to be a rocky supply chain. Each swell could be tracked back to the recession, but knowing the "why" didn't make the "what" any easier.
"We had one of the toughest years delivering product as acknowledged since the late 1990s ... we felt that we let our customers down," said Terri Rogers, president of O.W. Lee.
Yet, O.W. Lee won the International Casual Furniture Association's 2010 Manufacturer of the Year Award. The industry's statement of confidence can be credited to O.W. Lee's long-term business practices as well as its performance in the face of last year's challenges.
A closer look at O.W. Lee and other manufacturers earning recognition at the top of their respective category in the ICFA awards reveals some of the best practices they follow no matter what the market conditions.
In the face of supply chain shipping delays, communication with dealers and sales reps alike became critical last season.
O.W. Lee issued weekly "hot sheet" broadcasts updating its reps on what materials were out-of-stock as well as what was "available to promise within regular lead times." The product "available to promise" was also posted on the manufacturer's Web site in the dealer portal.
"Basically, it was all about keeping the reps and dealers informed, even when the news wasn't good," Rogers said. She added O.W. Lee sent loaner items out at no charge and expedited shipping at its expense when necessary to help its dealers appease their customers and not lose a sale.
To improve the transparency in tracking and reporting orders, O.W. Lee is now upgrading its manufacturing software. It has also added new equipment that allows it to bring in raw materials in bulk resulting in more in-house flexibility as well as added more customer service personnel.
In addition, O.W. Lee changed some of its suppliers to resolve shipping issues and is carrying more inventory for 2011.
"So far, we are pleased with our 2011 stocking orders and we are cautiously optimistic going into 2011," Rogers said.
Gloster is another manufacturer refining its communication channels. Its weekly Stock Availability Bulletin goes out on Thursday night providing dealers with detailed information on what is in the warehouse as well as when those items not in inventory will be available.
"In addition, last season we developed an online business portal that gives retailers realtime information about available inventory, status of current orders and history of past orders," said Eric Parsons, president of Gloster. "This proved to be a valuable tool for both reps and retailers to better manage their Gloster business."
Going into the 2011 season Gloster also created a China-based director of purchasing position with the Gloster Group.
"The position is responsible for ensuring that all suppliers producing for Gloster are producing at the highest standards of quality and timeliness, providing greater value to our retailers," Parsons said.
He credits Gloster's recognition as the 2010 ICFA Manufacturer Award winner in the wood category in large part to its ability to support short lead times in both its core medium of teak, thanks to its 670,000-sq.-ft. warehouse in South Boston, Va., and its in-house cushion factory, which averaged less than 10 days for special order production last season. In addition, Gloster controls the quality and timeliness of every step in its production.
"There is not a piece of furniture anywhere in the world that has a Gloster badge on it that we are not directly responsible for, from its design, development, production, testing, inspection, packaging and shipping to our warehouse in Virginia," Parsons said.
While the recession prompted most manufacturers to go lean, knowing how to cut the fat and leave the muscle became a strategic differentiation.
"We have taken an almost ‘surgical' approach," said Cap Hendrix, president of Tropitone, which ICFA honored in the tubular materials furniture category.
"Our resources have been hyper-focused on the most essential value-creative activities - product development and quality, flexible marketing and sales programming, short order-to-shipment cycle time, on-time delivery in season, prompt issue resolution and, arguably the most important, dealer liquidity," he said.
The result is a much stronger company, Hendrix said. For example, because Tropitone didn't have supplier shipping delays, many dealers turned to it to fill the void created by late or cancelled deliveries from other manufacturers.
"Difficult times make weak companies weaker and strong companies stronger," Hendrix said. "There is no in-between. We have gotten stronger and are well positioned for the future."
Lane Venture President Gary McCray has a similar view. Lane Venture's focus the past two years has been on building a sustainable business model based on what he calls today's "new reality."
"The reduced budgets focused our company on what's most important, and that's offering value to our customers," McCray said.
That focus has been honed by implementation of lean manufacturing practices at the company's Conover, N.C. plant. In addition to new performance metrics, there is now an emphasis on increased communication and input from staff.
In its Employees Dedicated to Growth and Excellence (EDGE) Program, for example, self-directed work group teams in each functional area meet daily to discuss and resolve quality, safety and production issues as well as generate ideas for improvements.
Last season when it became apparent that its forecast underestimated demand, Lane Venture quickly brought its customer care department back up to full strength and worked to resolve individual issues when its supply chain couldn't keep up with demand. Weekly meetings of its fulfillment team now monitor all orders over 90 days to identify and resolve specific shipping issues.
"As a result, we've been able to reduce the number of these by 40 percent," McCray said.
A common thread connecting all of the industry's leading manufacturers is a lack of complacency.
"We always challenge the Treasure Garden team to aim high in terms of service and product," said Oliver Ma, president and CEO of Treasure Garden, a perennial winner in the industry's manufacturing awards competitions. "We strive to improve every year," Ma said.
Rather than make any cut backs in recent years, the company has been aggressively optimistic in everything from adding product to advocating for the entire industry via its renown "Hog Dog Stand" advertising campaign in 2009.
In addition to the company's vertically integrated factories, Ma points to Treasure Garden's long-term strategy of human resource development as global competitive strengths.
"We have benefited while others are suffering labor shortages and demands for higher wages, which has become a worldwide concern for all kinds of manufacturers but particularly for a labor-intensive industry such as ours," Ma said.
The manufacturer plans to stay the course going forward and continue to expand its manufacturing capacity and warehouse facilities in anticipation of what it believes will be an increasing demand for quick turn-around on deliveries.
Knowing where to invest as well as where to streamline is another common thread among leading manufacturers. Even as O.W. Lee was cutting back across the board it wasn't at the expense of materials quality and product design innovation, such as can be seen its Trazo table top.
Lane Venture made a big commitment to fabric in 2010, while Gloster introduced 11 collections with 112 SKUs for 2011.
Gloster is also once again offering Gloster ART - its two-day Advanced Reseller Training program for retail sales associates. The company covers all expenses for 40 sales associates believing that the increased knowledge on the floor will lead to a significant return on investment for Gloster.
These and other best practices help these award-winning manufacturers manage the present even as they prepare for the future.
Tiny Girl, Big Dream