Posted 7/20/2010 - 12:25:47 PM
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What are these?
I’d like to take credit for summing up why expanding U.S. manufacturing and warehousing programs by housewares companies have regained favor among retailers. But I can’t.
The credit goes to Chris Robason, national retail sales manager for veteran U.S. cookware producer Regal Ware, who, while being interviewed for a story in this issue, said, “Now [retailers] can manage their business instead of managing their inventory.”
Sums it up nicely, doesn’t it?
Stories throughout this, our second annual “U.S.A.” issue, detail how the burden of inventory management in a still-nervous economy has shifted painstakingly back to suppliers. And how the amplified call for just-in-time delivery agility has provided new incentive and opportunity for suppliers that can respond with swift precision from U.S. factories and/or warehouses.
Some might want to chalk up all of this to big, powerful retailers callously dumping inventory and freight costs— plus steep penalties for missing restrictive delivery terms— on defenseless suppliers.
It’s true increasing supply-chain and inventory costs without the guarantee of fast-turning sell-through might be the most tangible and measurable factors on a balance sheet persuading retailers to demand more on-demand delivery.
And it’s true this puts considerably more operational and fiscal strain on suppliers, notably those reliant on imports and facing mounting costs and lengthening lead times from their factories.
But there is something to the notion that if suppliers can reinforce their domestic production and/or distribution capabilities, they might contribute to the long-term viability of customers by allowing them to focus more on merchandising and marketing initiatives, and less on inventory.
It’s not as if retailers ever were carelessly tolerant of inventory buildup on their store shelves or in their distribution centers. Suppliers have faced progressively later order commitments and narrowing delivery windows for years. Until the recent recession, however, goods moved at a steady enough clip to prevent the extreme retailer aversion to inventory the industry confronts today.
Direct-import programs soared during the gravy days of retail consolidation. Expanding national and regional retailers jumped at the chance to take ownership at huge discounts of container loads.
Now, even the largest retailers are reducing their DI exposure. Some want private-label programs, once only available on a DI basis, to be fulfilled from domestic warehouses of suppliers.
That’s risky business for any supplier, especially importers who could be stuck with truckloads of hard-to-move goods if the customer suddenly cuts an order.
Retailers in this conservative fiscal climate might be more likely to give more business to companies with a domestic production or warehousing edge that can turn around not only top-selling, everyday items faster, but also secondary and promotional goods for which long-term forecasts are difficult to assign.
For some low-labor housewares categories, the opportunity to reestablish or enhance U.S. production— and to reap its fast-reacting advantages— is quite real. For most categories, it’s not.
All companies that market housewares in the U.S., including importers, face the very real opportunity to make themselves more important to retailers by boosting the capacity, efficiency and agility of domestic warehouse operations.
In the process, they might help retailers concentrate on managing their business, instead of their inventory, to thrive in this unpredictable new economy. Everyone might be better off in the long run.
Sums it up nicely, doesn’t it?
