Supply Chain and Product Sourcing for Furniture Purchasing
Interview and insights with Nickie Morrison, purchasing manager for IFN Modern
IFN Modern is a popular online furniture store that specializes in selling mid-century modern inspired furniture – think Mad Men styling or furnishings from the Kennedy era. Since starting in 2009, IFN Modern has grown substantially, and prides themselves in offering extremely high quality mid century modern reproduction furniture.
We sat down with Nickie Morrison, head purchasing manager for IFN Modern to discuss the significant role product purchasing and procurement has in the Online Furniture Industry.
Q) Tell us about IFN Modern.
IFN Modern started off in 2009, with no real specific intentions of selling mid-century modern products. In fact, our company began by selling any and everything in the furniture industry – from shelving, bedding, and dining tables to everything in-between. However, we discovered that sourcing these products from different companies and manufacturers became a pain – quality was either too low and we were constantly receiving customer complaints about these products, or cost was just too high for us to continue purchasing from them. They would also be short on products, or had discontinued products without any notice.
At the same time, we started seeing a trend within our own customer base and the items that they were ordering –specifically, mid-century modern style furniture, as well as products and styles from the Bauhaus era. We realized the potential of this specific and niche market of the furniture industry, so around late 2010 we decided to exclusively sell mid-century modern styled furniture. As such, our most popular and sought after items to this day include the iconic Barcelona chairs, to the Eames lounge chairs – timeless chairs and furniture pieces that you may recognize in any interior design magazine.
Q) You mentioned that sourcing furniture products became a pain – what did you do afterwards?
Yes, sourcing from different manufacturers and companies became difficult from a quality control (QC) stand point – while our company is based in Canada, the majority of our customers are located in the United States. In order to bypass extra duty and import fees, we have multiple warehouses in both Canada and the United States. As our warehouses are strictly for stocking reasons, we were unable to ensure high enough QC for our customers as the majority of our staff are located in Canada.
So, as mentioned earlier, once we made the decision to switch to strictly mid-century modern era styled furniture, we decided to manufacture our own products just so we can be sure to uphold the quality of the products being sent to our customers. To do this, we had to go overseas to China in order for us to be in control of the manufacturing process from beginning to end. However, our Chinese facilities are strictly for production purposes – a large majority of our products are leather or fabric based, we wanted to make sure to have these specific materials sourced from another part of the world – specifically, Europe, just so we can ensure that our customers have the highest quality materials and products at the lowest possible cost.
Q) Can you tell us a little about your experiences in dealing with manufacturing in China and sourcing your materials from Europe?
Dealing with our Chinese manufacturers has been both a blessing and a curse. On the plus side, we were able to modify our products to our exact specifications and to have our reproduction furniture as close to the real deal as possible. As well, we were able to monitor and control the quality of our products at a much higher level than if we were to have purchased them from another producer. On the down side, there were certain nuances and customs we had to overcome and learn during our first couple of years.
As an example, we usually manufacture and have our products shipped to our warehouses on a monthly basis – however, during the first year, we were unaware of the importance of Chinese New Year, and how major of a holiday this was for the Chinese. Our factory was shut down for almost a full month! We were unable to reach out to our contacts and to have our orders fulfilled – we ended up losing a fair share of orders through this mishap.
Since then we have always prepared ourselves for the upcoming Chinese New year holidays, and to order our shipments well in advance in order to avoid this situation. Other downsides include overcoming certain communication and language barriers, as well as constantly upholding quality. While our overall QC has certainly gone up, one of the issues most Chinese manufacturers have is the constant turnover of staff and laborers. This sometimes results in products not always being made to our standards. While this can be somewhat troublesome, it is expected to happen, as errors do occur even at the highest level. It then comes down to being able to replace the damaged or faulty product for our customers as fast as possible.
In terms of sourcing items from Europe – this was probably the most enjoyable part of the process for me because I had the opportunity to actually go to Europe and to survey new leather and fabric sources. This is an essential part of our business as the materials used in our products are the main differentiator between other lower end reproduction companies.
While it’s not particularly the easiest job, purchasing and sourcing materials from one part of the world to another comes down to good communication management (from both the inbound and outbound end), coordination and organization.
Q) You mentioned a large majority of your products are leather based or made from high quality fabrics, why did you choose to use these materials?
There are a variety of factors as to why we chose our specific materials. First, as a furniture reproduction company, it is in our best interest and prerogative to have the closest reproductions to the original pieces as possible, and this means using the highest quality materials possible to match those of the original. Second, although our furniture pieces are nowhere near the pricing of some of the original pieces (some original designer pieces can cost upwards of $8000, per chair!), our average products are still around the $900 mark and is still not considered to be cheap – and this is largely because of the high quality materials and craftsmanship our products are put through.
Q) How important is it to have a strong supply chain management system?
It’s definitely a key part of our business! As mentioned, because we source our own materials, manufacture it, and ship it from our own warehouses, being constantly aware and in the know of our supply chain is part of my everyday duties!
Q) How did your purchasing and sourcing change as your company grew?
Since we switched to manufacturing our own products, I can say with certainty that the quality of our products have grown significantly. As we started to become more and more recognized over the internet, we were faced with more feedback and criticisms than ever before – something that happens to any company that goes through a period of growth, and this is especially true with a product based company. I can’t tell you how many times we’ve switched the sourcing for our materials, or even changed our manufacturers – the process that worked for the first 100 orders you receive will most likely not work for the next 1000, 10,000 or 100,000. It’s my duty to continue finding new and better sources and purchasers as our company grows.
Q) What do you look for when sourcing materials for your furniture products?
Like any product based business, there’s always a catch 22 when it comes to the cost of goods and the quality of the goods. On one hand, a company can only do well if it can justify the margins on the materials and construction versus what the product is sold for. On the other hand, if a company sources low quality materials in order to cut cost, the overall product will be of a lower quality and the probability of an unhappy or unsatisfied customer goes way up.
We’re now in an age where there is so much information, communication and competition that we can’t afford to lose customers over a low quality product – and that’s why we would rather stay on the competitive end and source either the highest quality materials as possible or to at least have additional features while cutting our margins a little more in comparison to our competition. For example, all our cushions are inserted with an extra layer of Dacron covered foaming in order to uphold the shape of the cushion while providing extra support and comfort; a feature that is usually overlooked and not provided by our competition. I guess in short, we always try to look for quality over quantity.
Q) The Furniture industry is a pretty competitive industry; how do you think you’re able to grow the way you are and remain so competitive?
The furniture industry in the US alone is over $100 Billion, so yes, it is extremely competitive! I think though, our most competitive advantage over our competition is actually our supply chain. As I had mentioned, most furniture companies source their products from multiple different companies and producers as we had before, and therefore cannot control the quality of their products, or make changes to the products according to customer feedback. I think this is key for our growth and will continue down this path when we start exploring more and different furniture options beyond what we already sell.
Q) Any final thoughts or last insights you’d like to share with anyone interested in sourcing or manufacturing their own products from overseas?
I would definitely advice anyone looking to source or manufacture their own products to first visit and become familiar with their manufacturers and factories you are going to be involved in. Because of the recent Alibaba IPO and all the hype surrounding it, I think there’s been a large misunderstanding and over assumption in the ease of sourcing products from places like China. Sure, it may be significantly cheaper in comparison to any domestic sources, but that also becomes red flag in regards to quality control.
At the end of the day, as a smaller and privately held company, we don’t answer to any shareholders or investors, but instead, we answer to our customers, so delivering top notch and high quality products is our number one priority. I would encourage anyone getting into this field to become familiar with all parts of their supply chain, as it’s an often overlooked but incredibly important part of any products based business.
For more on IFN Modern, watch their about us video: