Furniture logistics leaders share views on steps taken to help producers, retailers
New programs aim to improve communication, boost efficiencies
Larry Thomas and Gary James -- Furniture Today, July 22, 2009
HIGH POINT — In this exclusive Q&A report, furniture logistics leaders share their views on steps being taken to help furniture manufacturers and retailers survive the recession. Each leader was asked to answer this question for Furniture/Today:
What key steps has your company taken to help furniture customers survive the recession?
"Zenith Global works with retailers and manufacturers in all areas of their supply chain to help them not only survive in this tough economy but, ideally, thrive. First, our Pacific Rim consolidation program allows our customers to take advantage of sourcing from multiple factories and even multiple countries to create full or less-than-container loads. This helps our customers eliminate excess inventory carrying costs and ends the problem of warehouses filled with out-of-balance SKUs.
"With respect to ocean freight, the Zenith Ocean Shippers Assn. offers our customers significant volume discounts through the association's multiple steamship contracts. Collectively, ZOSA members have negotiating power that benefits each of them individually. Domestically, our regional warehousing in strategic locations throughout the United States is designed to reduce our customers' freight costs.
"Our regional warehousing strategy also increases customers' speed to market, and we all know how important it is to get the product on the floor and in the consumer's home quickly, especially now. That's why we also maintain an unwavering commitment to our delivery windows. Full or not, our trucks move out so our customers have their shipment on, or before, the expected shipment date.
-- Jack Hawn, president and CEO, Zenith Global Logistics
"Worldwide Logistics cannot control the economy; however, we have developed several new marketing initiatives to (help) the furniture retailer in this down economy. We are putting a greater emphasis on the small to mid-size retailer, working with them to identify their vendors and the density of products they are receiving from specific geographic areas. The result of this effort has allowed WWL to price more competitively, reduce handling and improve the transit times to individual dealers. We also have been reviewing our high-density lanes to provide scheduled deliveries on specific days of the week. This allows the retailer to utilize his receiving and warehouse personnel more efficiently, along with planning their deliveries in advance of receiving their product.
"We feel that information is one of the best tools to manage cost, and have continued to enhance our Internet Web Tracking Portal, to allow retailers to have complete visibility of their shipments in transit 24-7 days per week. Retailers can generate custom service reports to analyze their vendor shipments, transit times and volumes, and use the reports as a tool to plan and manage their cost.
"Even in this down economy, we feel that customer service is more important than ever, and have expanded our customer service teams and enhanced our key account management program. To support this customer service process, WWL has invested in a customer relationship management (CRM) operating system to link the communications and workflow of all departments together, and to share information related to satisfying our customers needs."
-- Carl Abernathy, vice president of marketing and traffic, Worldwide Logistics
"There are two key things that Weiss Rohlig is doing to assist our business partners (customers) during these challenging times:
"First is utilizing partnership-based account management practices. For example, we work closely with our partners to take a fresh look/review of entire supply chain practices to discover and create solutions by system and procedural improvement. In our experience, many importers/exporters have areas in the supply chain where cost savings can be achieved outside of straight rate reduction via streamlining their internal systems.
"However, when we ask our customers this same question, the most tangible/practical assistance we provide is delivering money directly to clients' bottom line by providing flexible and proactive price management practices, thus ensuring our partners gain immediate advantage during this period where international freights costs continue to decline.
"During the last 10 months, Asian east-bound ocean rates have more than halved in some cases. The reality is that, as a freight provider, this creates a tempting opportunity to gain additional revenue as the gap between the buy and sell rate increases.
"A partnership approach to business means that all negotiated reductions are passed directly and proactively to our clients. During this time, our policy has created the need for additional work simply to keep track of the volume of contracts, and therefore client rate changes. However, it continues to strengthen our existing client relationships and has gained us many new clients during this time."
-- Matt Ingram, regional manager, Trans Pacific Trade Weiss Rohlig USA
"We offer a variable pricing model that ties our customers' transportation costs to their revenue or delivery activity. As a result, if their sales or revenues experience a decline, so do their freight bills. In these tough times, that often beats having the fixed cost of a private fleet.
"In addition, we've invested millions of dollars in technology and automated calling procedures that have allowed our customers to take a lot of cost out of their back office systems. In the process, we've helped our clients increase their level of customer service and satisfaction (through activities such as post-delivery surveys) without having to support the traditional headcount they'd have to have in order to do things manually.
"We have customers who have achieved delivery and customer savings in the neighborhood of 10% or more specifically because of these two factors."
-- Will O'Shea, chief sales and marketing officer, 3PD Inc.
"We are working to create more promotional opportunities for our dealers by being more flexible and adaptive in order to drive more traffic into the stores. Higher inventory at the shipper level works as a positive to flow goods quicker to our dealers which helps them to keep their inventory levels lower. This will aid them in positive cash flow and will give the consumers a reason to buy with inventory available.
"On the operational side, we have trimmed cost out of the supply chain so that our dealers are seeing not only lower transportation cost but value-added services as well. Quick and accurate communication to our dealers gives them the confidence to schedule delivery to the consumer's home as part of the sale."
-- Barry Bailey, director of transportation, Bernhardt Furniture
"First off, it was important to recognize that we were in this situation together with our retail partners. Our success or failure was directly connected so we began to search for creative ways to make our service more attractive both to the retailer as well as the end user. Some steps we have taken to help during this downturn include:
"We have offered deferred services that allowed our retail partners to lower their delivery prices making their product more attractive.
"We offered discounts to the retailers for utilizing our services on lower delivery volume days.
"By utilizing our network, we have allowed retailers with a local footprint to extend the reach of their web site and drive sales by offering two- to three-day delivery services in a much wider geography."
--Joe Gallo, senior vice president, Select Express
"Sunbelt Furniture Xpress has a value commitment to our customers that says: ‘We earn your business by serving your customers.' Our committed goal is to adapt, change and provide new solutions to our customer's needs, whether that be our recent expansion into the Midwest, opening new pick-up operations in Dallas and Southern California, or asking the customer simply ‘what do you need on the transportation side to be competitive and successful and how can we both benefit and grow?'
"We continue our efforts to strengthen the scope, reach and depth of our services to the furniture industry. And we are in a time where communication between SunBelt and our current and prospective customers is vitally important so that we both can be ahead of the curve.
"I also believe that our stability and commitment to being a solid and dependable long-term provider for shippers and receivers of new furniture creates a value for the customer. We often ask our customers, ‘What has you excited about your company, what are your new initiatives and how can SunBelt assist and improve upon these initiatives?' "
-- Stan Froneberger, vice president of sales and marketing, Sunbelt Furniture Xpress
"We offer an honest assessment of their current operation and fleet configuration. From this, we recommend programs that reduce labor, warehousing and fleet costs.
"Many times, when implementing the Demountable truck Body System, the customer can actually reduce the number of trucks in their fleet.
"We have also helped customers find existing equipment at reduced pricing to help them through these challenging times."
-- Michael Frett, sales representative, Demountable Concepts
"Five specific areas stand out:
"Working with our customers to optimize their inventory. Cancellations and returns are evaluated in order to be reassigned so that we fully utilize merchandise and not dispose of inventory.
"Being more lenient on payables and not holding freight or assessing late fees per our contract on past due balances.
"Holding rates steady. While most costs for us are increasing, we are trying to create even more efficiencies and optimize our resources in order to maintain current rates for the marketplace.
"Additional savings are being provided through our partnership with Shelba D. Johnson, thus providing quicker manufacturer pickup, which in return creates faster delivery timelines, reducing consumer chargebacks and building brand loyalty for future purchases.
"Releasing updated versions of our technology platform for on-line tracking of shipments and email notifications. This reduces our customers' internal costs from an optimization standpoint of their resources to better focus on sales and other areas of the business that drive additional revenue."
-- Keith Hewitt, president, Hep Direct
"To help our clients through the current economic downturn, IMCG is investing heavily in increasing our overall systems' capabilities. (Providing) our clients (more visibility) on the product before arrival is a key factor. This allows our partners to properly plan their labor, which reduces unnecessary costs.
"Also, our equipment inventory management upgrades will partially remove the element of human error by showing the correct location of equipment as it is moved from each location. The end result is reduced cost and avoidance of unnecessary expense of equipment being misplaced or sitting idle.
"Recently, IMCG added onboard satellite computers to all of our tractors. This enables us to give real-live time data feeds to the consignee /shipper as to where their product is currently located so they are able to manage warehouse staffing, scheduling, and performance. Continuing to invest in information technology allows our clients to be more effective with their work time."
-- Nick Payne, sales manager, Intermodal Cartage
"At Sun Delivery, we have held the line on our pricing and even reduced pricing in some of our stronger lanes while at the same time, we have added support staff in our company to do more of the legwork that was formally done by the customer service staff of our customers. Additionally, we have introduced new services and reduced our transit times especially into the Northeast, Florida, Texas, Chicago/Great Lakes and Southern California to help our customers have a competitive edge over their competition."
-- Rick Phillips, president, Sun Delivery Inc.
"In order to help our clients survive and thrive during this economic downturn, Cory has turned to a mixture of new technology and proven methods of success.
"Working in partnership with Demountable Concepts and Penske Truck Leasing, Cory has introduced to our clients demountables, a warehouse-on-wheels program that allows clients to cover a wide delivery area without having to set up a warehouse or cross-dock. We also are utilizing state-of-the-art routing programs to help reduce fuel costs and increase density.
"Another tool we have turned to is automated dialing systems for customer confirmations. We are working with a major information technology company to introduce smart phones on our delivery vehicles to track deliveries and get updates automatically so we can provide real-time delivery information to our clients.
"Cory is reinvesting heavily in our IT area to try to find ways to continually increase efficiencies and drive down costs for our retail clients.
"We also are focusing on the proven methods of successful home deliveries. This includes measuring on a daily basis the key metrics of home delivery, completion rate, non-productive deliveries, on time performance, post-delivery service rate and customer satisfaction. We continue to work with clients to try and find ways to reduce even-exchanges, pick-ups, returns and post-delivery service. We, of course, believe in opening, inspecting and making minor repairs of all furniture before it goes on a delivery truck. This includes full assembly of all beds to ensure the hardware, slats and rails work correctly. We also conduct ZIP code analysis to try to help increase density and efficiency by delivering to ZIP codes based on the volume and frequency that the customer requires as opposed to delivering everywhere everyday."
--Patrick Cory, managing partner, Cory Home Delivery Service
"Diakon Logistics always seeks to create a partnership with clients based on one primary philosophy: Everyday, striving to make our clients more successful. We work with our furniture retailers to drive down warehouse and delivery costs by continually analyzing the business for opportunities to increase the productivity and efficiency of delivery routes; reduce unproductive deliveries such as ‘not-at-homes' and even exchanges; reduce damage to merchandise; and, most importantly, improve customer satisfaction -- making (sure) our clients' customers (become) repeat customers.
"In this difficult economic time for many furniture retailers, we understand the importance of focusing on the need to be profitable. Our success in contributing to our clients' profitability can be best described by a recent quote from one of our major furniture clients: ‘With Diakon Logistics, we were able to turn our delivery service from a cost center to a profit center.' "
-- Charles Johnson, president, Diakon Logistics
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