Moving Furniture the Right Way
The online furniture community recently has seen its share of well-publicized supply chain failures. From my perspective as a transportation provider to this specialized niche, these online firms did not seriously consider product distribution issues. Granted, other customer-related consequences contributed to the difficulties, but it is impossible to overcome critical distribution problems.
Most of these businesses are set up as virtual companies that take orders for merchandise and pass the orders to a furniture manufacturer or, in some cases, to a distributor, with the items dropped-shipped directly to the customer. What can be better than a business with instant credit card billing, no inventory, relatively low overhead, and 30-to-45-day payables?
New vs. Existing Models
What these companies fail to consider, however, is the disparity between their new distribution model and existing distribution model characteristics—specifically, the shipping mode that is traditionally used and the packaging that supports this mode. Consider your local furniture store. It will purchase furniture in truckload (TL) or less-than-truckload (LTL) quantities. Full shipments are sent directly to the store; LTL shipments are combined at a consolidation point into full truckloads to achieve the most economical rate.
On the packaging side, the items are packaged just well enough for direct loading. And, most furniture is built to order, with lead times running from six to 12 weeks. Obviously, transportation time will always add to this schedule, with true truckload shipments adding normal TL transit times. Consolidation, however, can easily double the time between customer order and delivery from 12 to 24 weeks. That's hardly a customer-centric model.
Unfortunately, online companies fail to generate enough volume to make direct truckload shipments practical. They know their customers will not wait 12 to 24 weeks for delivery, so they let LTL providers handle their shipments, either directly or through third-party logistics providers. LTL transport clearly has become the method of choice for these items, but selecting the most practical type of LTL service—common carrier or 100- percent air-ride (van line)—is often difficult.
Transportation costs are an influencing factor because LTL expenditures, regardless of mode, can be more expensive than TL. Online companies largely rule out van line shipping because of cost and lead time.
No Such Thing as Easy Profits
Choosing LTL common carriers to transport furniture often proves to be disastrous, not because of negligence on the carrier's part, but because the packaging simply does not protect the items well enough to endure typical crossdock and LTL handling. When customers don't receive their orders as promised because of reshipments, or receive them with concealed damage, it is difficult to maintain an acceptable level of customer satisfaction.
The expenses from claims, re-shipments, and product returns eat into the overhead, as well. The seemingly easy profits are much more difficult to generate than originally thought.
What can online companies learn from this experience?
First, they need internal or external professional transportation specialists to work their distribution strategy. Granted, transportation is less exciting than the technology and hype generated by the dot.coms, but a distribution specialist knows the difference between a TL furniture shipment and an LTL furniture shipment.
Second, given the current packaging of furniture, there are few effective ways to ship it without a large risk of damage. There are no national LTL common carriers that treat furniture any differently than normal freight, with crossdocking and rough handling (for the commodity) accounting for most of the damage.
These are difficult lessons to learn, but they reinforce the value that specialists in various disciplines, including transportation, bring to a company. Ultimately, turning to experts who understand the unique challenges of delivering furniture allows online businesses to review distribution plans from all angles, ask the tough questions, and get the necessary answers before implementing a new system.