MG Blair blog.

March 25, 2019

5 questions U.S. furniture importers should ask before partnering with a foreign manufacturer by Dan Roberts

While the tariff crisis may currently be on hold, the threat remains, and it leaves furniture companies in search of alternative solutions. Many U.S.-based furniture companies are looking to the countries in Southeast Asia and beyond in hopes of finding quality manufacturers to replace their partnerships with factories in China.

And we’ve heard the industry horror stories about bright-eyed furniture suppliers thinking they’ve found the perfect foreign manufacturer, wiring the dollars and signing a simple contract, only to then follow up months later and have the foreign manufacturer act like they’ve never heard of them. To prevent these risky situations, ask these questions before making any commitments:

  1.  Can we arrange a site visit? As a distributor or designer, the No. 1 pain point in this scenario is quality control. If the manufacturer is in Thailand and you’re in the U.S., how can you continue to be actively involved in ensuring the quality of your products? Go see it for yourself. Schedule a planned or surprise visit to tour the factory where your products will be made. Find a representative onsite who will be an advocate for your brand and thoroughly align on your quality standard expectations.
  1. What specific timelines can we expect?Ask for detailed estimates of lead times, transit and delivery expectations in writing. Request progress updates every two weeks, having them communicate which stage your products are in––being manufactured, shipped, reviewed at customs. A reputable manufacturer will not have an issue providing these updates. Throughout the process, products will go from factory to ship to port to truck/train to warehouse, and 2% is an expected defective rate. Anything over 4% should raise questions about product quality assurance.
  1. How long has your factory maintained manufacturing relationships with clients? Understanding a factory’s history with other clients is crucial. Have they been able to support clients with large-quantity requests over long periods of time? If you’re accustomed to working with a Chinese factory that fills large volume orders, don’t assume all manufacturers are the same. Some small factories in Southeast Asia may be signing large-volume agreements for the first time and don’t have a proven track record or the ability to handle large capacities while ensuring product quality.
  1. What kind of on-hand inventory do you have in the U.S.?When a furniture customer comes back to the store or supplier with an issue that is covered by warranty, how long will it take to replace their product? Many foreign manufacturers keep a limited inventory at a small U.S. warehouse to address these issues. If the manufacturer you’re working with does not have product in place domestically, how long will it take to receive the replacement product?
  1. What security and insurance measures are in place to protect our product?To ensure a safe and secure international supply chain process, consider the CTPAT certification. This stands for ‘Customs-Trade Partnership Against Terrorism,’ and the program provides product protection and monitors factories for concerns such as drugs and terrorism.It’s also vital to consider what you’re liable for as an importer. According to U.S. Customs Broker and International Trade Specialist, Steve Fodor, cargo insurance is vital. “Recently, a large ocean vessel caught fire, and while only some of the cargo was lost, all the importers who had containers on the vessel became liable for costs associated with the repair of the ship under the terms of “general average,” Fodor says. “If you had a container on the vessel, you assumed liability for things like fires or ship damages—even if you weren’t at fault. Cargo insurance is relatively inexpensive and importing without it is a very risky proposition.”He also cautions importers to audit their customs broker’s work, as the importer is 100% liable for any errors that are made. Reviewing import transactions or paying a third party to do so is a necessary precaution.

When working with foreign manufacturers, if it sounds too good to be true, most likely, it is. From language barriers to logistical challenges, international dealings come with their share of hurdles. However, if an importer does their due diligence and takes the necessary time to properly vet a foreign manufacturer, they can elevate a company’s product offerings while streamlining the development process.