Seven ways the furniture supply chain is different from others

In 1982, Keith Oliver first witnessed the term “supply chain management” in a public interview conducted by Financial times. Subsequently, in today’s modern and dynamic world of business, supply chain management is crucial to meet the demands of customers.

In simple words, the supply chain is defined as the entire process of manufacturing and selling commercial goods, including the identification and supply of raw materials, manufacturing, distribution, retail location and customer delivery. Thereafter, the management of this flow of operations is termed as "Supply Chain Management."

Generic supply chain system

The generic supply chain begins with the consumer demands, sourcing and extraction of raw materials. Then, through the logistics provider, it is sent to the supplier, which majorly works as the wholesaler. The raw materials are taken to the manufacturers for refining and processing into a finished product.

After this, the finished product is sent to the distributor that wholesales the finalized product and then it is provided to retailers. Then, the retailers sell the product to consumers. Once the consumers buy the product, it completes the cycle but it may continue due to an increase in the demand by consumers.

Manufacturing

The furniture industry is like where customers demand and they command. Therefore, the manufacturing cycle is not that simple as compared to the other industries like automobiles, electronics etc.

For instance, in the bulk manufacturing of cars, the size, style and shape are the same for the particular brand and it becomes easier to satisfy the consumer’s demand. On the contrary to the furniture business, the consumer’s demands get change according to their personal choices. Hence, the design and construction of bulk furniture products become complicated.

Moreover, the manufacturing industry depends upon the fact that “a great product most often sells itself and the customer’s contentment is the topmost priority.” With this, the furniture industry sells tangible products that customers can feel and touch, whereas, in service-based industries, products are intangible.

Supply chain logistics

In the furniture industry, supply chain management mainly focuses on logistics in terms of transportation of physical materials (raw and finished products) from one location to another. Thereafter, the overall prices of the product are totally affected by the shipping charges from wholesalers to retailers and also the distance travelled from suppliers hub to manufacturer.

While in service-based and other industries, according to the business type, this cost can be reduced.

Finished output

In manufacturing or furniture industry, the finished good is the product that has been completely transformed from raw material form (Wood) to the form that is ready to sell to the customer.

Here, it is the furniture that is assembled, manufactured, tested and packaged at a warehouse and is ready to get sold. Whereas, in various industries like government services, the finished output in the supply chain is customer satisfaction.

Inventory and market demand

The service firms, unlike the furniture manufacturer industry, don’t hold the inventory. They create a service when the client demands. For example, it may be government or defence services or engineering or banking services.

On the other hand, the furniture industry produces goods for stock, with inventory levels aligned to the forecasts of market demands. Here, the inventory also illustrates the cost for the organization.

Labor requirements

The furniture manufacturing industry can automate many processes, resulting in the reduction of labor costs and requirements. In comparison, service-based industries hire knowledgeable people according to their deliveries, where the process or deliverables cannot be automated easily. Hence, most of the modern furniture industries are not too labor-intensive.

Physical production location

Service firms do not require any physical location to make their deliverables happen. The people can create or deliver their services from anywhere they want to. For example, consulting-based companies use communication networks to access and deliver their services across any part of the world.

Talking about furniture companies, they need a physical site to manufacture the product and for stockholding operations. Also, the production of the furniture is not necessarily on the manufacturer’s site, but it can process at any site in the supply chain process.

Supply chain optimization

The main drivers of optimization in the furniture supply chain industry are the cost and the speed of delivery. It can be accomplished by timely deliveries of products to the consumers and reducing the overall cost spend in the supply chain process.

Many companies work on the reduction of physical inventories or in negotiating the prices of raw materials. On the other hand, in the service model, the drivers of optimization are building relationship by clients.

Supply Chain Management plays a significant role in the world of every business. It must be followed promptly in terms of every factor associated with the supply chain process directly or indirectly to achieve the company’s objectives. Whether we talk about furniture or any other industries, an eye to the supply chain management practices is important and must to compete in this global competitive market.

This article has been written by Lokendra Ranwat, CEO, WoodenStreet