Paradigm Shift For Furniture Suppliers

June 26, 2006
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With his company representing both sides of the OEM/supplier relationship, izzydesign founder and president Chuck Saylor has a unique perspective on the contract furniture supply chain. And he thinks there is a new model emerging for OEM suppliers.

The old model, he explained, was converting raw materials into a part according to an OEM’s specifications — the standard relationship seen in all manufacturing industries.

“I don’t think there is much of a future in doing that,” he said.

Saylor cited the rise of supply chain management: essentially, the creation of a culture that “beat up on suppliers to get costs down, constantly keeping pressure on continuous improvement, taking costs out, and pushing the pressure constantly downward.”

Made famous by automotive manufacturers, this philosophy assumes there is always room for improvement and waste to eliminate. Unfortunately, Saylor said, there is only so much to be done with materials and processes.

“Especially when you’re making parts where material is 60 percent of the cost. How much flexibility can you really have?” he said. “What we’re seeing now — the smart move for the future — is having a much more strategic relationship.”

In this relationship, the supplier is more than a vendor — its actions create internal value for the customer.

“What they do has to create value for you, the customer, where you can go to them and say, ‘You know what? I need your new ideas to help improve our business,’” he said. “Not, ‘I’m going to bring you this part and you’re going to put a price on it.’”

That is what Saylor believes his company is doing through its contract manufacturing business, formerly known as Counter Point Furniture: making finished assemblies in its Spring Lake facility for other brands such as Herman Miller and Haworth, putting them in that company’s box and shipping them out. It does the same for seating at its Texas plant, and also uses the manufacturing capacity of other competitors, including making the Catie stacking chair at American Seating’s Grand Rapids plant.

He also sees this value in his own suppliers, such as Interface Fabrics.

“When we’re talking to the bigger manufacturers, in most cases we’re partnering with them to develop product,” said Rob Harper, senior vice president of sales, marketing and design for Interface Fabrics in Grand Rapids. “They’re coming to us and saying, ‘We have this need, can you develop something for it?’”

Atlanta-based Interface has become a global leader in the sustainability movement behind its environmentalist CEO Ray Anderson. In West Michigan, the fabrics division has parlayed that into a significant advantage in the contract furniture industry. Sustainability has become not only a best practice within the sector but a point of competition. The heightened interest has bled into other OEM purchases, as the company has begun to supply materials other than upholstery.

“Now, are we a supplier of fabric or sustainability?” Harper asked, rhetorically.

The same can be seen at Cascade Engineering, a company that prides itself on strategic partnerships. Its knowledge of injection molding played a key role in developing Herman Miller’s Mirra and Cella chairs.

“Everybody talks about strategic partnerships,” said Kevin Kolesar, president of G&T Industries’ foam products group. “Now they actually have to start living it.”

Also included among G&T Industries’ various companies is World Resources Partners, a Byron Center company specializing in global sourcing. Through this, Kolesar has seen what he thinks the manufacturing sector is slowly realizing — that global sourcing can disappoint.

“In this industry, they’re still struggling with whether to purchase completely upholstered furniture overseas,” Kolesar said. “When you get a quote that says they ship it to you, including freight, for $24, and it costs you $50, it’s a no-brainer — until you start doing it.”

In such a move, the manufacturer sees lead times jump to 16 to 20 weeks and a corresponding rise in inventory costs from larger required purchases. The selection of features such as colors, design and material is limited.

In addition to the quality issues concerning global sourcing, these factors often come as unwelcome surprises to manufacturers.

Both G&T Industries and JSJ Corp., izzydesign’s parent company, have extensive investments in global sourcing, but both Saylor and Kolesar have concerns about the practice that virtually every manufacturer has investigated to some degree.

“If it boils down to price, then unfortunately, somewhere in the world someone is going to do it cheaper,” Saylor said. “Suppliers that are going to survive need to take their manufacturing core competency and add more value to it in the form of innovation and design.”

Most of the automotive suppliers that have stayed competitive have employed such a model, he noted.

What may eventually develop, as characterized by izzydesign, is a separation of brand and manufacturing. The outsourcing model has shown many sectors in which a company can be extremely successful with no manufacturing capacity whatsoever. Saylor believes this puts companies such as his in a position to serve both the market and natural competitors.

“Let the brands compete in the marketplace,” he said. “Manufacturing isn’t generally marketing and brand driven. … You need to leverage your core competencies, and that can include making products for other people.”

Not only does izzydesign make products for nearby manufacturers, it has also introduced a number of European brands to the domestic market through strategic partnerships.

Also, this can work both ways, he said, suggesting suppliers develop products they can introduce to the general marketplace.

A solid example of this is Grand Rapids furniture supplier Knape & Vogt, which manufactures the base for the sit-to-stand table in izzydesign’s Riley collection, even as it sells competing sit-to-stand products through its wholly-owned subsidiary, idea@work.   

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