By Andrea Lillo
It’s a double whammy for vendors who are feeling it from both sides.
Retailers are pressuring vendors for faster turnaround times to receive goods—down from months to weeks to even days. At the same time, vendors are struggling with longer delivery times from Asia due to labor shortages and shipping delays.
Manufacturers are attempting to balance the production cycle in a difficult economy as retailers keep less inventory, but expect manufacturers to move quickly when the need for product arises. Manufacturers now have to plan out further in advance to make sure product is available, sources said.
“Similar to everything else, times have changed,” said Tony Rubino, vice president of sales, Quoizel, the lighting company. “Now it’s just-in-time inventory; retailers need just one product for the floor and one for the warehouse.”
Retailers are forecasting for much shorter periods, trying to gauge their business and the economy, manufacturers said. “Once a retailer decides on a product to fulfill an overall need, capture a trend or capitalize on seasonal demands, they are looking for extremely quick delivery, usually in less than 90 days, so no opportunities are missed,” said Antonio Galafassi, president and chief executive officer, Tramontina USA.
Supplying goods in a more timely fashion can be a financial strain for the manufacturer, “especially if the product doesn’t work out,” said Steve White, vice president of sales and marketing, Kuhn Rikon.
Timing varies depending on the category. For example, “most retailers expect kitchenware to arrive in less than a week but dinnerware sets in up to three months,” said Jeffrey Siegel, president, chairman and chief executive officer of Lifetime Brands.
But product delivery times from China have lagged significantly. In some product classifications, lead times from the factory have doubled.
The “supply chain has simply slowed down,” said Quoizel’s Rubino. Before, Quoizel expected product to arrive from China in 90 days; now it takes a minimum of 120 days. Many other companies noted a similar time frame.
Pressure intensified after the Chinese New Year in February as fewer workers returned to the factories after the holiday. After Chinese New Year, “everything hit a brick wall,” said Jan Murtagh, president of Component Design Northwest (CDN). “Retailers may want things faster, but China is slower than ever.”
Manufacturers are adjusting their strategies to manage both sets of lead times by stockpiling inventories and product components, offering quick-ship programs for best-selling products and implementing more factory oversight.
Uttermost “stocked up to where we should be if not more,” said Mac Cooper, president and chief executive officer. “For our mid- to best-sellers, we’ve build inventory through fall 2011,” he said.
Rug manufacturer Nourison has been placing more orders to ensure it will have goods in inventory at all times, said Steven Peykar, principal. But it’s been difficult. “Murphy’s Law has been in play” in India, he said, while it has had better control in China. But between 94 and 98 percent of Nourison’s main line product is in stock, he added.
This past September, Kuhn Rikon’s White spent time in its factories in Switzerland and China. “We think the key to business is new product,” he said. “To help speed the process, we’re going to the factories.”
Tracy Panase, marketing manager, Microplane agreed. “We have made a tremendous investment in product development over the past 18 months in an effort to get innovative products to the marketplace faster,” she said. “While we do present concepts and prototypes at major trade events, it is our goal in 2011 to have an equal number of products that are available for immediate delivery.”
Rug manufacturer Surya will open its third warehouse—at 70,000 square feet—in several months, said Seth King, vice president, sales and marketing. It also just launched its Quick Ship program at High Point Market, where its top 200 sellers are guaranteed to be in stock in 5-by-8 and 8-by-11 sizes and ship within 72 hours.
Similarly, Microplane has implemented its Fast Lane program for independent retailers, ensuring its best-selling items are available to ship within two days from its Mission, Texas, distribution center.
Tramontina’s new products are usually already in production when unveiled at shows, Galafassi said. And by also building up its number of unassembled vessels in various colors and capacities, the company allows retailers to customize an order with options for packaging and fixtures, such as handles and lids.
Tabletop company Nikko stocks semi-finished components in its manufacturing facility in Japan so pieces can be quickly glazed and decorated after it receives an order or forecast, said Tage Strom, vice president, sales and marketing. It also has a flexible production line to accommodate the size of an order and does everything in-house from molds and tools to decal printing and box manufacturing.
Lifetime Brands has placed employees in key factories to ensure on-time delivery, Siegel said. In addition, the company will soon announce an initiative to control production in 2011.
Business has forever changed, some vendors said. “This is not going away,” said Will Symonds, managing director of DKB Household USA. “Retailers will continue to expect suppliers to carry the load as they try to remain lean and nimble.”
Estimating 30 percent of dinnerware factories have closed in China, “the remaining factories are in the driver’s seat,” said Ian Zucker, chief executive officer, Ten Strawberry Street. “They have more business and can do business the way they want—they can dictate the terms.”
—Allison Zisko and Dave Gill contributed to this report.