Outsourcing: a popular choice for today's manufacturers.

Outsourcing of wood components is a practice that has become increasingly common because of the many advantages it offers.

On the surface, outsourcing looks like the simple act of purchasing a part from an outside vendor instead of making it in-house. But in reality, outsourcing offers manufacturers much more, including the ability to retain their competitive edge and be flexible in a time when flexibility is crucial to a company's success. Outsourcing takes the stress off a workforce and it also removes the need for capital investments in machinery.

Executives of Hitchcock Chair and Chromcraft Furniture had much to say in discussing their respective companies' outsourcing programs.

Hitchcock Capitalizes on Its Strengths

The Hitchcock Co. of New Hartford, CT, was founded in 1826 by Lambert Hitchcock. The company soon became known for its high-end chairs and cabinetry featuring stencil designs, striping and banding. Today, Hitchcock is a case goods manufacturer, offering an extensive line of dining room, bedroom and occasional furniture along with the company's signature chairs.

Ron Coleman, CEO, said, "The Hitchcock line covers almost 10,000 SKUs. There are a lot of different options and opportunities out there. Our employees are very well cross-trained. We have people who are multi-talented and we are very effective at what we do. When we look at outsourcing, we look at it as an opportunity to capitalize on our strengths, which are assembly and finishing. It also allows us to capitalize on other people's strengths."

Coleman said Hitchcock prefers to single source components whenever possible. "We buy all our dimension stock and all of our panels from one source. We use the single-source model because we believe that limits the number of variables that we have to deal with and it's very important for us to make sure we have a good quality product delivered on time at a reasonable price.

"We try to buy from the people we think are the best. That allows us to capitalize on their expertise," Coleman added. He said the company chose to oursource panels, for example, because it found a source that "makes a better panel than we would, they make it faster than we would and at a lower cost."

Prior to working with a single source for its dimension stock, Coleman said Hitchcock worked with a number of panel companies. "About 10 years ago, we were buying from, eight panel sources. We might have bought cherry seat blanks from one company and maple seat blanks from another and dining room rabletops from yet another. What we dealt with was all the variables for each company and the variables are pretty extensive. You look at just one company and you might think that variables are just two things -- price and quality. But it's a lot more than that. It's price, quality and delivery time.

"Also, you can break delivery time into even more variables, such as how quickly they deliver, what type of transportation is used, what's the freight cost on the transportation, and what's the quality of the transportation? Do they deliver to your dock window within an hour? You can get very detailed on each aspect of the relationship and when you reduce the number of relationships you exponentially reduce the number of variables you have to deal with. There is a lot to be said for single source outsourcing for a particular product type."

Outsourcing also offers flexibility on inventory and the ability to work in a lean manufacturing environment, Coleman said. "You hear that term 'lean manufacturing environment' more and more. For us it includes reducing inventory. Our suppliers are also working toward lean manufacturing techniques. Outsourcing allows us to reduce our inventory and because our supplier sells us smaller run quantities, it reduces their inventories."

Outsourcing is often referred to as spending money to save money and that's true for Hitchcock. "We do one dining room table with a curved apron," Coleman said. "The volume we need to purchase just doesn't justify us buying the equipment to make it. We have to outsource. It saves space, capital investment and it gives you a lot of flexibility. Outsourcing today includes other departments beyond manufacturing, including IT departments and human resources. Outsourcing is thriving because it makes good business sense."

Chromcraft Buys All Its Wood Parts

Chromcraft Furniture of Senatobia, MS, outsources a variety of wood components for its line of casual dining and commercial furniture.

Danny Kopf, senior buyer, said the company, a subsidiary of Chromcraft Revington Inc., chooses to outsource wood components and put the emphasis instead on metalworking. "We outsource just about everything we use made from wood."

Kopf explained that they don't have the machinery geared for making wood parts. "We work with metal, but many of our designs feature wood components, so we purchase parts and assemble the furniture here."

Kopf said outsourcing wood components "works fine for us. It is the only way to work given our expertise with chrome and metal. We may shape a table edge, but for the most part, we outsource wood parts."

Parts that Chromcraft purchases from outside vendors include wood caps, wood frames and all dimension wood parts.

Kopf said that he looks for a variety of factors from the companies he buys from, but quality, service and delivery reliability are at the top of the list. "We need high-quality, on-time delivery and competitive pricing."

RELATED ARTICLE: On-Time Delivery a Key

Forty percent of WCMA members participating in a recent Wood & Wood Products survey cited "Just-In-Time Delivery" as their customer's top requirement from among a list of six possible items. "Consistent Quality" at 33 percent and "Customized Components" at 20 percent ranked second and third respectively.

The ability to consistently deliver parts and dimension stock right when their customers want them is seen as the leading reason why North American furniture makers turn to members of the Wood Component Manufacturers Association.

Leon Favreau, president of Bethel Furniture Stock, noted that a stronger emphasis on JIT delivery stems from the trend for manufacturers to "greatly reduce inventories and work on tighter schedules."

"Everyone must reduce inventory to reduce the cost of doing business," added Jerry Coe, president of American Wood Products. In addition to upgrading equipment to improve his plant's productivity and quality, Coe said his company has been able to better respond to customers' JIT requirements by "taking steps to completely understand their specifications."

Ira Lauer, sales and marketing manager of Catawissa Lumber & Specialty Co. Inc., said, "Our customers rely on us to keep their production pipelines full with no stops or delays due to late shipment. This has required us to develop closer relationships with customers to reduce lead times. We have also been doing more value added services, including assembling."

"More companies want speedier delivery because it allows them to reduce inventories, which saves them money," said Dave Pflieger, president of Svoboda Industries Inc. "Reducing inventories also reduces all those associated costs including spoilage, obsolescence, space, inventory management, etc."

WCMA's Member Match[TM] Is A Win/Win Program for Buyers and Sellers

One of the most useful industry services provided by the Wood Component Manufacturers Association is its Member Match[TM] program. Member Match helps component buyers in finding manufacturers who can produce the exact component they need in the wood species they desire.

Member Match is a popular service because it not only offers a straightforward approach to finding a supplier, it also generates sales leads year round for WCMA members. Users give the Member Match and other WCMA services high marks for a wide number of reasons. "User friendly," "rapid response and "quality leads" are the types of feedback the WCMA is getting for its Member March program, which is a free service.

Steve Lawser, executive director of the WCMA, said there are several ways to use the Member March. "People can call, fax or e-mail our office with questions or go to our Web site at www.woodcomponents.org and use our Source Guide. The Wood Components Buyer's Guide is yet another way to find information. The Member Match program is a unique way to help buyers and brokers find what they need."

Two Testimonials

Donna Amos, sales and customer service, for Southeastern Wood Products, Martinsville, VA, is a big fan of the WCMA's many services, especially the Member March program.

"I keep a WCMA Buyers Guide on my desk. It's very helpful," Amos said. "Usually my inquiries begin with a species or product that I am not that familiar with. I access the WCMA's Web site and look at the source guide to look up specific products. What I have found is that your search nets a list of potential vendors, but you also receive calls, faxes, brochures and mailings from the vendors."

Amos also appreciates the spirit of cooperation between WCMA members. "If I call a vendor and they don't have what I'm looking for, I have been given leads to other vendors. For me, it's the beginning of an extensive search that leads to more information beyond what I anticipated in the beginning. I have even had vendors refer me to other vendors who are their competitors. To me, that's great. It says a lot for our industry."

Amos uses the Member Match to locate such items as stock, panels, squares, mouldings, turnings, and carvings. "There are a lot of species that we don't work with exclusively in the South. The service will give me contacts to vendors in other parts of the country who deal with species native to those areas."

Mike Dodick, president of Premier Wood Products, Statesville, NC, said he uses many of the WCMA services including the Member March. "It's very user friendly. As a wholesaler, and manufacturer's rep, my business is outsourcing for other people. People come to me because I'm supposed to have the time and expertise to do a better job of sourcing than they or their purchasing agents can, so I value the kinds of resources the WCMA provides. The WCMA's Web site, Source Guide and Buyer's Guide are very easy to use and that makes the WCMA a good resource. If I encounter a product that I'm unfamiliar with or need to know who has the most expertise producing it, the WCMA is one of the sources I use to research and ferret out potential manufacturers. I can go to the WCMA's Web site and know that the WCMA members are top quality and highly recognizable names. I can get a list of people who produce the product I'm looking for very quickly. The Member Match distributes my name and what I'm looking for to those companies that can produce what I need. They follow up with me in a timely fashion."