Furniture Importers Can Make Big Money Over Next Few Years If They Can Solve This Problem Part 3

In Part 1 of this series, we looked at the incredible opportunity presented to furniture importers and sellers by spiking demand that is predicted to stay strong over the next few years. In Part 2, we focused in on the struggles furniture importers and sellers face with supply chain issues and risks to the long-term high demand on furniture.

Today’s blog is all about solutions. We look at how businesses in the furniture and home/office furnishing industry can improve their supply chains and take advantage of the high demand opportunity that currently exists to make big money.

Unfortunately, there is no one size fits all solution for fixing a business’s supply chain in the furniture industry. Supply chain methods that work for a furniture chain giant with locations all over the country wouldn’t be feasible for a mom and pop antique furniture shop. Some in the business just have a small showcase location with warehousing of the actual furniture they sell elsewhere while others have giant stores they ship their inventory to and then from to their customers. Others don’t even have a brick and mortar location at all, selling to customers strictly through online stores.

Each furniture business must assess its own needs when it comes to supply chain. Below, we’ll get into advice that applies to any furniture business concerning its logistics as well as supply chain solutions better suited for different sizes and types of furniture sellers and importers. If you source domestically instead of internationally or sell a product other than furniture, don’t worry – this post is for your supply chain too.

Communicate With Suppliers About Logistics

A few years ago, I did some shopping on a phone app. I ordered some toys that I thought my kids would love that were reasonably priced. Christmas was a couple months away, so I thought this would get some of my holiday shopping done early. The problem was Christmas arrived before almost all of the toys did. Despite ordering them months before Christmas, it was more than a month after Christmas before all the presents arrived.

It’s easy to get caught up in the product and the price when sourcing goods or materials and overlook a supplier’s ability to get the product to you. Like I fell into the trap of ordering Christmas presents without looking into how long it might take for them to arrive (don’t worry, I got other presents for the kids before Christmas hit), many furniture sellers have fallen into this same trap with their inventory ordering.

It doesn’t matter how good a product is if you can’t get it when you need it. It’s important to talk to manufacturers and suppliers about their supply chains before entering into a deal with them. If they are responsible for shipping the goods to you, which they might not be, or if they are partially responsible for shipping the goods to you, there are several things you need to know:

• How long will it take to transport the goods?
• How many risks exist within their supply chain?
• What methods of shipping do they use?
• Do they handle shipping themselves or do they outsource?
• How have they handled supply chain problems in the past?
• Do they have contingency plans for things that go wrong in the supply chain?
• Who is responsible for each leg of the goods’ journey from manufacturer to you, including insurance, customs fees, etc?
• Are there extra costs and fees you’ll pay or may be charged from the delivery process of which you’re currently unaware?

Of course, you should not only speak to the other company about their supply chain but also to others who have worked with them concerning the supplier or manufacturer’s reliability. It’s also important to know that the supply chain doesn’t start with the product shipping from a manufacturer to you.

Where Does the Supply Chain Start?

If you’re ordering furniture or some other manufactured goods, the supply chain starts with the manufacturer getting the raw materials and resources needed to make the goods (and even before that with the companies that provide those). If something goes wrong with your manufacturer’s supply chain, your supply chain breaks before it even gets started.

Just like you talk to your manufacturer about how the goods get to you, talk to them about how the materials they use to manufacture the goods get to them. If your supplier manufactures wooden furniture, for example, where do they get their wood and other materials used in the construction of the furniture?

You want to make sure your suppliers are protecting their supply chains in ways like we’re going through in this blog post. If your suppliers’ material sourcing gets interrupted, your inventory gets interrupted.

Who Should Be Responsible for Shipping?

As alluded to above, your manufacturer may be responsible for getting goods to you, you may be responsible for that, or there may be some combination of the two.

You may want to leave as little of this as possible up to the manufacturer. They might just use the cheapest service they can find or cut corners, which could result in the products being damaged, getting delayed, never reaching you at all, not being properly insured, or just generally proving unreliable.

On the other hand, you may feel like your suppliers are much better qualified to handle the shipping details than you and be happy to put all of that in their hands.

Who is responsible for what in the shipping process should be clearly communicated between supplier and buyer. For international deals, there are Incoterms, which clearly define responsibilities for international shipping. We have a number of blogs plus a video series listed and embedded, respectively, below. These go through each Incoterm to help you know which one you want to use for any particular international deal:

• Incoterms 2020 — What Is Changing from Incoterms 2010
• What’s the Deal With Incoterms?!
• Incoterms Definitions Part 1: EXW, FCA, FAS, FOB
• Incoterms Definitions Part 2: CFR, CIF, CPT, CIP
• Incoterms Definitions Part 3: DAT, DAP, DDP
• 6 Ways to Ensure You Choose the Right Freight Forwarding Incoterm

These Incoterm deals define not just who is responsible for paying for the shipping of each leg of goods’ journey but who is responsible for insurance and customs costs.

Even when you decide to let the manufacturer or supplier be responsible for shipping, you want to have a conversation about their shipping and supply chain as discussed above.

If you’re sourcing domestically rather than internationally, you don’t have to worry about Incoterms, but you still want to have clear communication about who is responsible for what in the shipping process.

Know the Risks to Your Supply Chain

Risk assessment is an important part of any business. It is extremely important when it comes to supply chain to head off potential problems before they disrupt your whole business.

We’ve started to get into this already with the sections above as supply chain risks obviously start before you ever get the furniture or products (or the materials to build the furniture or products) you sell. Beyond making sure your suppliers assess and manage their risks, diversifying your suppliers greatly reduces yours.

If you have only one supplier and that supplier shuts down or is unable to get the furniture you sell to you, you’re in serious trouble. Having multiple suppliers protects you from this risk, but spreading those suppliers out geographically also mitigates risk in a big way. If all of your suppliers are near each other, something like a natural disaster or local port congestion could disrupt your sourcing from all of them.

Spreading out your suppliers but having them all within the same country also carries risk. If you had several manufacturers, but they were all in China when the trade war with China hit, the costs on all of your goods went up with the tariffs regardless of which manufacturer they came from. Imagine all your goods came from the same country, and then that country was hit with sanctions. Suddenly, you wouldn’t be able to get your products at all.

Of course, diversifying where you source your goods or materials from is only managing one of many risks, and Universal Cargo has published several posts dedicated to supply chain risk assessment. These posts include guest articles like Reasons Why Supply Chain Risk Management Is More Important Than Ever Before, 6 Small Supply Chain Issues That Can Topple Your Entire Operation, and 6 Supply Chain Management Issues That Hurt the Bottom Line.

You can read those articles to get into the importance of risk assessment and specific areas you might not have thought to examine yet, but the bottom line is to see where there are weaknesses in your supply chain and act to make those weaknesses stronger before a link breaks in your chain.

Deciding Between In-House and 3PL Logistics Solutions

There’s a choice to be made by each furniture importer and seller, and that’s whether to handle its own logistics or hire an outside company with supply chain expertise to handle these matters. If a business does decide to go with a 3rd party logistics company (3PL), more decisions have to be made about how much of their logistics they want that outside company to handle.

As a trusted freight forwarder, Universal Cargo has handled importing and exporting for furniture companies and other types of businesses for the last 35 years. Sometimes our services for a company end there, just getting their goods to a port inside the country, but other companies have us deliver all the way to their door or go further by having us handle their warehousing needs.

The easiest way for a company to improve its supply chain is to hire a well-established logistics company to put its expertise to work for them. However, some companies may find going in-house for some or all of their logistics needs is the way they want to go.

While many companies may not find hiring full-time employees with logistics experience to handle the importing and exporting of goods to be optimal or even feasible, they may find success going in-house when it comes to their last-mile logistics after importing through a freight forwarder. Earlier in this series as well as in other posts, we mention the trucker shortage problem that currently exists. A furniture seller may choose to buy their own trucks and hire their own drivers to handle deliveries to their customers so they don’t have to worry about service disruptions from trucking companies.

Each business has to assess its own capabilities and compare benefits of going in-house vs. 3PL when it comes to their supply chain. Universal Cargo has a number of blogs on the benefits 3PLs provide and how to choose freight forwarders or other logistics companies if you decide to go that route:

• 3PL Vs. In-House: Which Order Fulfillment Option is Best for You
• 4 Ways to Customize Your Supply Chain by Using a 3PL
• 5 Ways a 3PL Reduces Common Supply Chain Operational Inefficiencies
• 5 Reasons Why Freight Forwarders Are Crucial for Business Success
• 5 Tips on How To Choose a Freight Forwarder
• Shippers Beware: How to Avoid Fake Freight Forwarder Scams
• How To Evaluate a Freight Forwarding Company
• 5 Hints for How to Choose an International Shipping Company
• 6 Barriers Supply Chain Managers Face in Choosing the Right Freight Forwarder

There’s obvious bias in suggesting you go 3PL here, but there are also obvious advantages, especially with international shipping. Utilizing the the expertise and experience of a freight forwarder like Universal Cargo over going it alone makes sure someone is handling your supply chain who has seen all the challenges supply chains encounter and knows how to navigate those problems with the most efficiency possible.

More To Improve Your Supply Chain

There’s more we could get into on improving your supply chain, covering issues like security and utilizing new technology. Rather than try to pack any more into today’s post, here are more posts you could read to make your supply chain more efficient and your business more profitable now and into the future:

Contract Management Best Practices for Improving Supply Chain Performance

5 Effective Ways to Handle the Complexity of a Supply Chain

How To Optimize 3 Key Areas of Business for Supply Chain Success in 2020 Pandemic

Supply Chains in the Post COVID Era

4 Lessons for Mitigating Supply Chain Disruption During a Pandemic

3 Ways for Companies that Import & Export Goods to Secure Systems

3 Tips for Creating a Branded Supply Chain to Boost Your Business