Supply Chain Clout

CHIEFEXECUTIVE—Ah, the good old days—25 years ago when uniform-maker Cintas bought fabric from a North Carolina mill, made the uniforms in Kentucky and distributed them to customers. In later years, the Carolina fabric was shipped to Mexico or the Caribbean for stitching, then sent back to the United States.

Now much of the fabric is spun in China, and the manufacturing is done in North Africa. Or Eastern Europe. Or other parts of Asia. All this, said CEO Scott Farmer, is “so that we can drive the cost out of it.” But those lower costs come with costs of their own, and headaches with logistics, supply chains and internal corporate structural issues. In short, said Farmer, “it’s getting a lot more complicated.”

Farooq Kathwari, chairman and CEO of Ethan Allen Interiors, knows this all too well. In the past four or five years, he said, the amount of furniture crafted overseas has burgeoned, with 35 percent now originating in Asia. “It changed our distribution network,” he said. “Our national distributions were set up where our manufacturing was in the U.S. Now, we have to change it because in good furniture, 50 percent is coming from overseas.” The company is now building a national distribution center on the West Coast and closing a major center in North Carolina because the products are not being made there anymore. Read article.