Consolidators help smaller dealers with imports
By Thomas Russell -- Furniture Today, January 7, 2007
High Point — For furniture importers looking to warehouse in Asia, onsite facilities run by a source factory are just one option.
Companies looking to consolidate shipments from several factories also can turn to freight forwarders or third-party logistics providers for help.
In that scenario, the logistics firms will lease warehouse space near any number of source factories. Product from the various factories can then be mixed on a container for shipment.
The option is of keen interest to small and midsized retailers that don't want to order much from a single factory.
"Selling major retailers is easy," said Bill Smith, logistics and marketing manager for Charlotte, N.C.-based Globe Express Services. "But then I am leaving a major part of the market out of my direct-container sales channel because they can't buy a full container of bedroom. That is why we got into the business, because we have the infrastructure in place."
Globe Express has been involved in the consolidation business for several years and has more than 15 such warehouses in China, mainly serving furniture and footwear clients, according to Smith.
He said the furniture warehouses are leased facilities of anywhere from 10,000 to 250,000 square feet. While Globe doesn't own them, it has supervisory and management staff there and has the necessary software to run the logistics and warehousing component.
Smith said the China facilities can save customers money because they eliminate the need to have shipments consolidated in a U.S. warehouse.
"They (furniture companies) are looking at the big picture of how I can reduce the inventory I hold in the U.S.," he said. "Warehousing in the U.S. can be more expensive than in China."
Smith and others in who manage third-party logistics facilities — called 3pl — say the strategy also ensures that a client company's goods have dedicated space, which may not always be the case at a source factory.
"More and more furniture companies are going to third-party logistics rather than on-site (warehousing)," said Karim Azar, Globe's manager of sales planning and coordination. "It gives them an independent warehouse rather than being at the mercy of the manufacturer's warehouse. The 3pl is so much more attuned to the supply chain than the manufacturer."
However, both note that the China facilities aren't meant to replace U.S. warehouses. While the U.S. facilities are more expensive to run, they also have value in that they carry most or all of a company's product line.
The offshore facilities are more geared toward best-selling items with quick turns.
Still, they note that the Asian consolidation warehouses can reduce the need for U.S. distribution capacity and thus lower associated inventory and distribution costs. They also say that housing product in a China consolidation warehouse can help grow a company's base of small to midsized retailers.
However, they warn that it can take time to determine the right product mix for companies new to warehousing offshore.
Another company with Asian consolidation warehouses is Hudson, Wis.-based Wiseway Transportation, which began opening facilities in China in 2003 largely to help furniture sources offer container-direct business to small and midsized retailers.
Wiseway officials declined to reveal the number of warehouse operations the company has in China, other than to say they are in the southern part of the country. They are leased facilities that the company runs for its clients.
"We have one main facility, but will set up a warehouse wherever it makes the most sense," said Wayne Chan, Wiseway's managing director of Asian consolidation services. "Our strength is that we know where the best places are for different warehouses."
