FurnitureCore
Search Twitter Facebook Digital HFBusiness Magazine Pinterest Google
Advertisement
[Ad_40_Under_40]

Get the latest industry scoop

Subscribe
rss

Monthly Issue

From Home Furnishing Business

Building on New Ideas

By: Bob George

We are in a phase of significant change with new distribution channels emerging. The challenges of supply chain management are the same whether it’s furniture or the latest phone. These challenges may be even greater in furniture.

When we address the human assets that are not on the balance sheet, but are critical to any company’s success, it causes me to reflect on an issue—the issue of integrating new ideas into a company’s culture.

While much has changed over the past 30 years in terms of the development of the second tier of management for retailers and manufacturers, there is much still to be done.

We should challenge ourselves to figure out why the industry isn’t attracting the best talent from business schools. I understand our industry is considered to be mature. However, is it really? We are in a phase of significant change with new distribution channels emerging. The challenges of supply chain management are the same whether it’s furniture or the latest phone. These challenges may be even greater in furniture.

In the 1980s, coinciding with leverage buyouts, new managers entered the industry. In recent years in which the industry has witnessed the change in ownership of some of the larger companies, new managers with new ideas have once again entered the discussion. We continue to handle this new blood in the same way. The new participants often enter the fray with the attitude that the industry is backward and charging in with a new way to manage business. The existing players are amused with these new ones’ lack of understanding about how things work. They respond with the adage of how we’ve always done things this way or that. The challenge for the industry is to encourage the newcomers and the old guard to work together in moving furniture forward.

A question looms.

How much could it cost if the newcomers and the old guard fail to work together? What if the industry had embraced the synchronous manufacturing Stanley had introduced many years ago or the pioneering work of Ethan Allen’s integrating retail and manufacturing? I could continue with examples of how we turned left when we should have gone right. But, as in all aspects of life, it does not help to reflect on the should have dones. It is more important now to identify the current concepts that could have traction.

Allegheny Consignment and others are addressing what to do with old furniture. La-Z-Boy is delivering direct to the consumer. Target marketing is becoming an alternative to television advertising.

I could continue, but what is important is that senior management takes 10 percent of undisturbed time each week to think about what could be.

Pay attention to the stars in your organization, the movers and shakers who will create the furniture industry of tomorrow. You may want to keep them in mind when we come to you for our Forty Under 40 nominees later this month.

 

Game Plan for a Winning Season

In the last issue we focused on the need for the sales manager in a home furnishings store to be its sales team coach to maximize performance.

In future articles we will discuss the duties, tasks and talents necessary to do that, like observation, feedback, training and communication. While most readers agree setting up such a system is the right thing to do, many said they had struggled to make it happen on a regular basis in their store. A myriad of daily interruptions and distractions consistently pop up making the task difficult.

In many cases, that happens because we miss one of the most important steps in the coaching process—planning. In sports you must have a solid game plan before competing. It’s the same in business. Everyone has heard of the Five Ps of Business—Proper Planning Prevents Poor Performance. (Many of us might be aware of a sixth P, which I chose not to include since this is a family magazine.)

 

Successful organizations always have a plan in place to manage the most important areas like finance, inventory, marketing and physical assets. Since sales volume fundamentally drives retail, it makes sense to have a solid plan in place to manage that area, too. While most can put the numbers together fairly well, many tend to struggle when it comes to creating a blueprint to make things happen on the sales floor. We may know the ingredients to success, but without a proper strategy in place, we can’t make them happen consistently to drive sales growth. We understand the why and what, we just stumble with the how part of the success equation.

Here is an outline of a simple, fun approach to executing a sales plan that will help incorporate the power of team coaching into sales management efforts in the future.

 

Step 1: Treat the year like the coach and the owner of a pro football team would treat a season. You’ll play 12 games in the season, and each game pits you against an opponent presenting different challenges and opportunities. Your first game is against January; the second against February and so on until November and December when the playoff games determine success or failure.

Create a game plan for each game or month that maximizes the impact of advertising, merchandising and sales efforts. The person in charge of executing the plan is your sales manager or coach.

Step Two: Organize the plan’s execution for each game or month. Remember, each game has four quarters—the weeks. During the pre-game or kick-off meeting at the start of the month, the coach reviews the plan with the players, or in this case, the salespeople.

Be sure to present and review advertising and promotional efforts; address any new or special product information; and discuss staffing needs for events. Be sure to announce goals for important measurements like volume, growth and revenue per up, and train the staff on how to use key elements of the promotion to close sales.

Pump up the team and keep them motivated with monthly contests to drive performance. During the first week, the coach watches the game and tracks each member’s performance, helping where needed, being on the sales floor and in the game.

At the end of the first quarter or week, the coach meets with players individually, updating them on the team’s—and their performance—during the first week. All team members receive individual feedback on how they and the team are doing.

Above-average team members get positive reinforcement during brief, informal meetings. Team members with sub-par performance get special attention including additional training and coaching through formal one-on-one meetings on how to improve. The coach then reviews the game plan and covers any changes or new elements with the team.

During the second week, the coach again watches the game, tracks each team member’s performance, specifically following up with under performers to ensure they follow suggestions for improvement.

At the halftime market, or at the end of the two-week period, the coach should meet with team members to discuss how the game is going and announce additional events or elements to the game plan for the second half. All team members should receive individual feedback on how they and the team are performing.

Players above the team average receive positive reinforcement and are encouraged to continue their efforts in one-on-one meetings with the coach.

During the third week, the coach observes the game and tracks team member’s performance and again, follows up with under performers.

With roughly a week or so to go in the game at the end of the third week, the coach continues to keep all players up to date on performance through the first three quarters and double downs on efforts to drive sales. This is where great sports coaches shine because they know what needs to be done to win the game and focus on helping individual players rise to the challenge of a strong finish.

Team members are given individual feedback on progress. Above-average members are positively encouraged to continue their pace, and those team members who are below the average are given special attention, training and coaching in formal one-on-one meetings to improve their stats.

The coach reviews the game plan, covers any changes or new elements and provides positive motivation for the team to win the game.

Once the game is over, the coach leads the celebration after a victory and the post-game analysis following a loss. It is now time to discuss what the team did well and where it needs to improve. Congratulate the stars in public, and coach those that failed individually. However, there’s no need to dwell on either for too long. It’s now time for the kickoff meeting for the next game.

Besides, champions never rest on past victories. They focus on future triumphs.

Remember, you can only play and coach one game at a time. If you and your team focus on winning each game and put enough effort into the process, chances are you will win most of your games, netting a winning season.

Every coach should have a few tools to help build the best sales team possible.

An individual feedback report is an easy way for both the coach and the sales team to track needed information. It includes sales performance numbers for the team and for individuals.

It presents the information month-to-date so the coach can keep the team aware of ongoing progress. The format makes it easy to hand out and discuss with team members on a weekly basis. This example comes from the proprietary SalesWorks Online software program, available through FurnitureCore.com and Impact Consulting Services.

An individual performance report, like the one below, is another tool for a retail sales coach. A performance report shows each individual’s month-to-date performance along with an analysis that shows how much those that underperform the store average are leaving on the table.

The report calculates what each person’s results would be if they were at the store average in closing rate and average sale instead of at their own level. The last column reflects the total sales that were missed had both performances numbers been at the store average. This information shows managers where the greatest potential for improvement lies so he or she can focus their efforts on that area with individuals. It is also very easy to calculate the lost income by person, which can be used to help motivate them to improve. This sample report also comes from the SalesWorks Online program.


Editor’s Note: Tom Zollar is retail operations practice manager for Impact Consulting where he creates and delivers sales training for retailer sales associates and managers, facilitates retail performance groups, coaches managers and helps retailers grow their business. In other words, he’s our resident coach … without the whistle.

 

Snap! - It Broke

When the International Longshore and Warehouse Union and the Pacific Maritime Association reached a tentative labor agreement covering 29 West Coast ports last month, everyone affected breathed a collective sigh of relief.

Unfortunately, that breath was shallow and short-lived.

 

It Ain’t Over

The reality is, along with getting all that cargo where it needs to go, other critical short- and long-term operations and logistics problems must be addressed for the future.

The agreement enabled the ports to avoid a complete shutdown, which could have cost the U.S. economy as much as $2 billion a day. However, the contract hasn’t yet been ratified. Any number of issues could surface or reappear before the vote this month, causing many of the employers or the 20,000 union members to reject the contract.

A Forbes article in February casts a dim light on the process reporting that if the agreement is approved, the two sides have damaged their working relationship. That damage could create future issues for shippers throwing the supply chain—including the furniture vendors—into another chaotic state.

The article called for a major change in the way the industry approaches its contract negotiations.

Workers at the Port of Oakland (California) seem to be the most unhappy with the agreement, and almost before the ink was dry caused a shutdown. The Pacific Maritime Association released a terse statement: “…ILWU Local 10 has repeatedly engaged in illegal work stoppages at the Port of Oakland, bringing operations to a standstill at Oakland International Container Terminal. ILWU Local 10 has repeatedly refused to allow yard crane operators to work as directed…and has also refused to allow longshore utility workers to lock and unlock connecting devices between chassis and containers. These repeated work stoppages by Local 10—which run counter to the tentative agreement reached after more than nine months of negotiations—are the sort of counterproductive activity that has become commonplace in Oakland over the years. Local 10’s current actions are damaging to the PMA member companies, to the shippers whose containers are idled, and to the reputation and future of the Port of Oakland.”

The strife at the port continued at press time with a significant amount of cargo remaining on ships waiting to be unloaded. Unions and management cannot continue to hold the economy hostage during contract negotiations. Something must change in the way discussions are handled.

 

It’s Somewhere in Long Beach

Workers elsewhere began digging out from under the massive pileup of cargo that accumulated during the nine months of contract negotiations. Estimates vary on the length of time it will take to get operations back to normal, but the average is three months.

Don Essenberg, president of case goods supplier Legacy Classic, said the company was “impacted, but not devastated” by the West Coast port slowdown.

“We’ve got containers on the West Coast waiting to be unloaded,” he said last month. “Product is being held up. Most of our customers are east of the Mississippi, and we bring those things through the Panama Canal.”

When ports are operating on schedule without labor disputes, Legacy can get product from its Asian facilities into its warehouse in six weeks, and sometimes quicker. Now, with the logjam in the West Coast ports, Essenberg said it could be several months before containers that were there when the slowdown started make it to their destination.

“We ship 90 percent of our sales line to North America from three factories in China,” said Dwight Hardison, vice president of marketing for upholstery supplier Simon Li Furniture. “Naturally, it affected our container-direct customers who deal with their own freight forwarders and ocean carriers. They were all having trouble getting products through the West Coast ports.”

For retailers, that delay can result in lost sales or substantial markdowns.

“We’re waiting on three containers of outdoor furniture for summer promotion, and we’re ready to go great guns with it, but it’s still ‘somewhere in Long Beach,’” said Tom Olinde, president of Olinde’s Furniture in Baton Rouge, La. “We really don’t know when it will be unloaded and delivered.”

Home furnishings retailer Schneiderman’s Furniture in Lakeville, Minn., tells its customers that product delivery will take three weeks, according to Larry Schneiderman, president.

“Now, we’re guessing eight to 10 weeks, but we can’t even say that for certain,” he said. “We don’t want to lose any orders, but when the customer says, ‘when will I get it?’ I have to tell them I basically have no idea. I’ve had to reward many of my customers for waiting.”

Consumers have a hard time grasping the impact of the slowdown on manufacturers and retailers. Few have even paid attention to news stories.

“We had one customer whose (upholstery from) Albany order had been greatly delayed,” said Schneiderman. “She couldn’t understand why the slowdown on the West Coast affected her order, when the vendor is in Mississippi.”

Suppliers who rely on off-shore production or supplies have been hit the hardest.

“Since the first of December it’s been a grind on the operations side,” Hardison said. “We have a contract factory in Morristown, Tenn., that produces the product for us. We had a container of (cut-and-sew) kits ordered for them that was a month late.

“I feel bad for the brokers that we deal with because they only have a finite number of vessels,” he said. “Customers are begging them for help because their regular brokers can’t accommodate them.”

Stakeholders at all points on the supply chain¾ even those who didn’t cause the problem ¾have lost some amount of credibility.

 

Paying More, Getting Less

In November, many carriers reinstated port congestion surcharges averaging about $800 per 20-foot containers going into the West Coast. Some commanded much higher premiums.

“About 80 percent of what I sell in the warehouse programs comes through Savannah, (Ga.), but the congestion and slowdown on the West Coast affected the East Coast as well,” Hardison said. “Mass merchants booked most of the available vessels going into the East Coast ports so they could bypass the West Coast. Starting in late December, we couldn’t get space on vessels. When we finally did find space we had to pay a 50 percent premium—$2,100 extra per container. I’ve been out of inventory for a lot of our better sellers because I couldn’t get our normal flow in available space on our regular vessels.

“Of course, this affected sales and cash flow,” he said. “Right now I have 22 containers running six weeks behind in delivery to a warehouse in North Carolina. A lot of our retailers have orders from customers that they can’t deliver until we get it to them.”

Hardison said while Simon LI still hasn’t recovered completely, the shipping surcharges have now eased and the company is able to ship on its regular vessels at normal prices. He continues to negotiate with the company’s ocean carriers to keep the surcharges at bay.

City Furniture in Fort Lauderdale, Fla., was impacted by the shutdown when the East Coast port capacity became crowded.

“We don’t bring any goods into Long Beach, (Calif.), but big suppliers moved their transport to the East Coast so capacity was substantially affected,” said Keith Koenig, president of City Furniture. “We lost some shipping ability and that pushed us back. Our suppliers felt it.”

Like Hardison, Koenig said shipping companies were increasing prices significantly.

“As a direct or indirect result of the port slowdown, pretty much all of our shipping companies told us they were raising prices overall by several hundred dollars,” he said. “Whether that will stick is yet to be determined.”

Even the Chinese New Year impacted costs. Many suppliers paid surcharges to get product out of China prior to the February 19 start of the New Year. Those goods then languished on ships that could not be unloaded once they reached the West Coast.

“The combination of the shutdown and increased cargo from China created a perfect storm in getting product into the U.S.,” Essenberg said. “It reminds us that logistics are more important in this industry than they’ve ever been.”

A New Normal

Even before contract negotiations went south, productivity at West Coast ports was slowing. Ships are getting bigger and bigger to cut costs per container. The sheer volume of these behemoths can slow productivity to a crawl at ports without adequate space or systems for processing. It’s time for major upgrades in facilities and processes.

Short-term issues, such as chassis shortages, must be anticipated before they become obstacles to productivity.

Port authorities must upgrade processes, facilities and technology to aid, instead of hinder, the flow of goods.

 

Planes, Trains and Trucks

Intermodal transportation is getting busier as the flow of goods increases from the ports. Also at issue here is the shortage of truck drivers in Southern California. Efforts are underway in many ports to speed the process of container transfer, but many truckers still wait in long pick-up queues. Some have stopped doing this kind of work altogether because they can’t move enough containers to make a living.

“The railroads, yards, and trucks got backed up,” Schneiderman said. “The driver shortage affected the whole thing, too. It got pretty frustrating.”

Expect premium pricing for expedited intermodal delivery, as trucking providers and railways get even more backed up with shipments.

 

What if it Happens Again?

The question should probably be, “…when it happens again.”

No matter how well you plan, stuff happens. You may be an innocent victim, but that doesn’t mean you can’t learn from the experience and try to plan for the next one.

Very few companies have the clout of Target or Walmart, with the ability to carry millions in extra inventory, lock down vessels on either coast, or even invest in port equipment such as proprietary chassis.

Realistically, though, there isn’t much optimism that the furniture industry will be able to weather another slowdown any better.

“Five years from now, you would hope that we’d learn from this and be able to avoid it,” said Essenberg, adding that the negotiations between the union and port managers seemed stalled worse than in years past.

Schneiderman echoed that sentiment.

“My stance is that none of us will learn anything by this,” he said.

Well, the National Retail Federation is predicting a 4 percent increase in retail sales this year, so let’s hope all remains stable for a while. It would certainly be a breath of fresh air.

Plan now to take advantage of an improving economy.

 

 

 

Port Woes

Just when players in the furniture industry think they have the logistics side of importing all figured out, something comes along and smacks the entire industry in the face.

The most recent slap was painful.

The West Coast labor dispute that caused a months-long slowdown at some of the busiest ports in the U.S hurt. Those same ports are the ones many furniture importers use to bring in their goods for sale here in our country. The logjam is still being cleaned up and will be for sometime.

While there’s a preliminary agreement in place that have workers moving again, there’s a rogue faction that has said it disagrees with the agreement. Negotiations continued at our presstime.

This has been a precarious situation for our industry. Furniture executives are quite adept at tackling problems head on and finding creative solutions. Once the solution is implemented, the problem gets checked off the list.

The port slowdowns—perhaps in the future it will be port shutdowns—fell completely out of reach for the industry’s brightest problem solvers. The issue impacted an abundance of suppliers and retailers. The few domestic suppliers were unscathed, of course, but for the most part, this has been an across-the-board blow.

And, the timing couldn’t have been worse. Companies involved in premarket in High Point were struggling to get goods in time. Regrettably, some missed out and their product was still sitting on container ships waiting their turn to come in for unloading. Other companies opted to pay the additional cost of sending goods via air freight, and still more paid the cost of surcharges that felt more like exorbitant premiums.

I’ve heard from a few who were still waiting at the end of March for product to be unloaded. I’ll be interested to see in Market showrooms how many new collections didn’t make it to the big dance.

The supply chain broke down, and it stands to happen again when the union contract expires at ports on the East Coast in the next couple of years.

Perhaps it’s time to start crafting a strategy for when that time comes. I’m not sure what the plan is or how it will work, but I do know that a predicament like this one would be just as painful.

What's Next

Boy, is it ever time for spring.

 

I need to buy a new Market tie—or maybe more than one. It has been a long winter.


I spend a portion of my time in the publishing side of the business and also in the sometimes brainiac environment of business intelligence via FurnitureCore. My primary focus, however, is management consulting and, more specifically, the strategies to create high performance companies.


The process is fairly straightforward. It involves taking the more traditional approach to strategy by assessing a company’s strengths, weakness, opportunities and threats—A good, old-fashioned SWOT analysis. Since we work only in the home furnishings industry, we are able to drill down to a significant level of specificity.


One area of investigation is external factors. These are defined as factors outside the control of the company that may significantly impact the performance of the company. The first quarter has seen an abundance of such. 


First, we had the slowly emerging dock strike. Then, Mother Nature commanded a repeat performance of last year with her blow of extreme winter weather in the Northeast. These events are following in the not too distant past one of the most extreme financial disruptions that the United States has ever experienced.


All of these factors are, for the most part, outside the scope of what a company can control. These repeated body blows are when the president and the senior management team of a company earn their pay and more. It is also at this time that the leadership is defined. This is when all eyes go to the end of the conference table with implied looks that say, “What should we do?”


First of all management must believe that it will be over. The dock strike will be settled. Spring will occur even in Providence, R.I. And, yes, the recession will end. There are three steps that you may want to consider as you go forward.

·        Initially, one must understand the financial impact of what has happened. This translates to cash flow.

·        Next, manage the expectations of your customers by keeping them informed.

·        The third action is to make long-term decisions. These should be carefully thought-out decisions. Resist the urge to make a decision that may impact the company—good or bad—and must be answered for later.

And oh, yes—go buy that new tie.

 

 

EMP
Performance Groups
HFB Designer Weekly
HFBSChell I love HFB
HFB Got News
HFB Designer Weekly
LinkedIn