Pandemic-related problems prompt bedding companies to rethink the ways they source, produce, store and transport products
Talk about a perfect storm of tough logistical challenges. First and foremost because it’s exacerbating the others, there’s the global Covid-19 pandemic, which has disrupted virtually every stage of business, from material sourcing and production to shipping and delivery. Second, there’s the growing labor shortage, particularly in warehousing and transportation. Third, there’s a rising threat of spiraling inflation, which surfaced early in the pandemic with the skyrocketing price of containers coming from Asia and is now causing cost pressures throughout the supply chain and broader economy. And fourth, Russia invaded Ukraine, adding significant risk and uncertainty regarding the global economy and international shipping.
Still, there is a silver lining: During the pandemic, sales of sleep products, especially those at the higher end, generally are running strong as consumers spend more of their budgets on mattresses and other home furnishings to make their lives more comfortable, healthy and productive. Even that trend has created its own challenge, though, as manufacturers hustle to keep up with demand.
The bottom line? Bedding producers and importers are looking hard at their logistics operations to improve performance and contain costs. The effort has required creativity, staffing and investment.
Planning pays off
Pleasant Mattress, a Fresno, California-based bedding producer, operates its own delivery fleet, which Chief Executive Officer Rion Morgenstern says delivers on-time 95% of the time, despite the supply chain and production issues facing bedding producers.
“At the onset of the pandemic, we were proactive and invested in raw materials more than usual, which really paid off for us,” Morgenstern says, explaining that the company increased inventory to ensure it had the foam, fabric and other components needed to meet its delivery obligations to dealers.
“The domestic supply chain has by and large recovered, including foam and fabric, and we have ample materials to consistently fulfill all our orders — and then some,” Morgenstern says, noting that his company’s supply chain is 95% domestic. “So, we are not as dependent on materials coming in from abroad. We don’t have to deal with extraordinary ocean freight charges or long port times, or even unknown delivery times.”
To make its warehouses as efficient as possible, Pleasant Mattress uses a customized, proprietary software program designed to support and optimize its operations.
“The dissemination of inventory and delivery information both internally and to our customers is critical, especially during these high demand times,” Morgenstern says, adding that the company is making substantial investments in new technology that will further improve its warehouse operations.
Implementing lean manufacturing methods in its production plants and warehouses has helped Pleasant Mattress maintain a consistent flow of products, enabling the company to increase output by 30% and ship nearly all of its orders within one week.
“We focused on waste reduction, reorganized our factory and transitioned from single-person operations to teams to increase throughput and improve ergonomics,” Morgenstern says. Coupled with the new investments in raw materials inventory, “the effort has paid off with an increase in output of hundreds of units per day, resulting in more capacity now than in our entire history,” he says. In 2021, Pleasant Mattress became the first manufacturer to achieve certification for its production facilities through the Mattress Recycling Council’s Sleep Products Sustainability Program.
The solutions Pleasant Mattress has adopted are sustainable, Morgenstern adds, “and we are currently evaluating the benefits garnered as a launch point for further improvements.”
As retailers adopt an omnichannel model — with sales online and in brick-and-mortar stores, and deliveries going directly to homes, as well as to retailers — Kingsdown has taken on a new transportation model. In late 2019, just before the pandemic struck, the company switched to Miami-based Ryder System, which now handles all Kingsdown’s U.S. mattress shipping, both long-distance runs, as well as shorter deliveries where trucks are out and back in less than a day. Previously, Kingsdown deployed a single nationwide carrier for long runs and managed contracts for shorter trips with local carriers through its own internal department.
Ryder now provides Kingsdown the drivers and tractors necessary to move its inventory wherever it needs to go using a mix of Kingsdown-owned and Ryder trailers. GPS and other technologies allow Kingsdown to track products through every link of the supply chain.
“This new ‘flex’ approach enables us to better adjust to the ebbs and flows of our business,” says Frank Hood, president and CEO of the bedding maker based in Mebane, North Carolina. “Ryder scales up the number of drivers and trucks when we have a busy sales period and dials back when business is quieter.”
Another advantage, Hood says, is that “it’s a turnkey solution that we could bolt onto our internal systems. It doesn’t require a lot of infrastructure and manpower on our end, since they are managing the ‘air traffic control’ aspect of moving the goods in the most efficient way possible from point A to point B.”
Down the road, Hood envisions dedicated Ryder trucks and drivers playing an important role in last-mile delivery to consumers. “Everybody is thinking harder about how to manage that last mile. There’s a Wild West aspect to this part of the business currently but, with our flexible Ryder relationship, we have a path for providing a quality delivery experience right to the consumer’s door.”
Flexibility has become a watchword for Kingsdown during this difficult pandemic period. In every area of its operations, from staffing and workflow to sourcing and shipping, the company has looked for creative ways to build suppleness into its systems.
Take staffing, for example. Recognizing the increasing number of employees in production and warehousing who might not make it in for a shift due to illness or family needs, Kingsdown began more cross-training so that team members can fill in on key jobs when needed. This “all hands-on deck” mentality enables Kingsdown to keep a steady flow of mattresses through its factories and out the doors even with absences.
To keep up with the surges in demand that surfaced during the pandemic, Kingsdown also adjusted its approach to inventory management. While the company still aims to produce as much as possible on a just-in-time basis, it also beefed up stocks of bestselling beds and vital raw materials for those times when demand suddenly spikes.
In addition, Kingsdown recently added a warehouse facility near its plant in Mebane and expanded storage capacity at its plant in Calgary, Canada. Kingsdown, which merged with Canada’s Owen & Co. in 2018, operates five plants in California, Florida, North Carolina, Texas and Virginia, as well as four plants in Canada. Novacap, a leading Canadian private equity company, financially backed the merger.
“With the support of our partners, we made the investment to carry a bigger inventory of finished goods and raw materials so we can respond more quickly to demand,” Hood says, adding that the company also uses the extra space to assemble components ahead of mattress production.
At the peak of the pandemic, Kingsdown also reached out to key retailers more frequently to see what they were forecasting in terms of sales “so we could better prepare for what was to come,” Hood says. “Having the extra space made us nimbler, so we plan to keep operating this way even when business returns to a more normal condition.”
The pandemic caused everyone on Kingsdown’s team to think more critically about how the company operates. “It inspired some of the best thinking I’ve seen in a long time across the entire enterprise,” Hood says. “And it fast-forwarded a lot of changes that we had been at the early stages of considering.”
In logistics, he says, the challenges and rising costs related to labor shortages and supply snags won’t go away any time soon. In the meantime, the company has a game plan in place for minimizing the unavoidable bumps in the road the entire industry is facing.
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Enhancing fleet capabilities
At independent bedding producer Southerland, the pandemic stymied plans to improve the fleet at Southerland Transport, a wholly owned subsidiary of the Nashville, Tennessee-based company. Last spring, it announced plans to acquire 14 new Kenworth tractors but, because of production backlogs at Kenworth, Southerland received only six of those vehicles in 2021. When the pandemic winds down and business becomes more predictable, Southerland hopes to add more tractors to its fleet of 38. The company also leases about 75 trailers to transport its products.
“These investments enable us to deliver great value to our customers by reining in costs and improving customer service,” says Doug Kasel, Southerland’s director of transportation. “Having our own tractors also differentiates us from other manufacturers who contract deliveries to common carriers where they do not have the same level of control over the fleet.”
Southerland serves retailers in 43 states through production and distribution facilities in Nashville, Oklahoma City, Phoenix and Portland, Oregon. It delivers about 70% of its beds to retailers via its transportation company, which it formed in 2003. A select group of outside contract carriers delivers the remainder.
“As we onboard our new tractors, we expect to get back up in the 90% range with the volume of beds we deliver ourselves,” says Kasel, who joined the company in June 2021 after a long career with Roadrunner Freight, YRC and Roadway Express.
One of the first steps Kasel took after joining Southerland was to conduct a thorough review of the rates it paid outside carriers. “As a result, we reduced the number of carriers we were working with,” he says, “and we also renegotiated our rates for a considerable savings.”
To ensure greater safety and a better experience for drivers, Southerland’s new tractors are equipped with the latest technologies, including cruise control with space distancing, lane departure warnings, blind spot monitoring, and automatic braking and lane correction capabilities. The vehicles feature upgraded GPS that improves real-time tracking of shipments in transit to customers.
Southerland Transport also is looking for new ways to integrate current technologies to provide customers with more precise details about when loads will arrive at stores. Those include McLeod Software’s LoadMaster transportation management system, Solera’s Omnitracs One intelligence platform and Avochato text messaging.
“We’d like to get to the point where we can provide an exact time of arrival, rather than just a ballpark estimate, so our retailers know what to expect and are ready for our drivers when they pull up to their dock,” Kasel says. “This will save time for everybody.”
Southerland’s longstanding policy of assigning drivers to deliver along the same route over time improves service and deepens bonds with customers, Kasel says. “We get letters from customers saying what a great driver they have, which is very gratifying and shows us how that relationship is another key factor in customer service overlooked by many in our industry.”
Southerland also is assessing functions within its plants to identify where automation might improve efficiencies. “On the transport side, I’d like to see a more fluid loading process,” he says. “Right now, there’s too much human labor involved in moving beds from one spot to another.”
In mid-2021, Southerland consolidated its Nashville production operations into a new 318,000-square-foot facility. The move brought all of its mattress manufacturing, adjustable base production and transportation in the metro area under one roof, improving workflow. The new site features 20 loading dock doors, double the company’s previous capacity.
Fresh start in the West
To support growth in the western United States, Bedding Industries of America acquired a 90,000-square-foot production and distribution facility in Rialto, California, in early 2021. The facility serves the entire state of California, as well as BIA’s customers in Arizona and Nevada.
Industry veteran Russ Bowman designed the layout of the factory, which features the latest machinery, technology and systems. Bowman joined BIA in 2017 from Leggett & Platt Inc. as a quality assurance and process improvement consultant. In creating the layout, Bowman worked closely with David Eidson, vice president of sales at Global Systems Group, the machinery division of L&P. Industry veteran Mike Mulligan, former owner of Stress-O-Pedic in Ontario, California, manages the plant, which employs 120.
“The plant has new equipment throughout, from quilting and other production machines to our racking system in the warehouse,” says Stuart Carlitz, president and CEO of BIA, based in North Brunswick, New Jersey. “It’s a highly efficient batch-mode approach where our mattresses move through production to the wrapping machine and onto trucks without ever touching the floor.”
At its New Jersey headquarters campus, BIA operates two facilities with a combined 135,000 square feet of space. In January, the company acquired a majority interest in Illinois Sleep Products, its licensee for the Midwest, which operates a 240,000-square-foot facility in Chicago.
BIA also boasts a network of 17 U.S. licensees in key markets throughout the country, as well as a strong group of international licensees.
To keep up with sales in the New Jersey area, Carlitz says, BIA signed a five-year lease last year for a 40,000-square-foot space across the street from its Garden State production sites. BIA uses the new facility to store raw materials and to assemble components.
“Having this extra space has boosted our productivity,” Carlitz says. “It allows us to receive more raw materials on a just-in-time basis and to keep a steady flow of goods moving through production.”
Carlitz says BIA’s flagship plants in New Jersey produce twice the volume of its new California plant, adding that 2021 was a record sales year for BIA and its brands. The BIA product portfolio includes Eastman House, Eclipse, Ernest Hemingway, Fieldcrest, Millbrook Beds, Natural Dreams Pure Talalay and Velika. BIA and its licensees also produce mattresses for the direct-to-consumer Saatva brand.
As the company jump-started operations at its plant in California, BIA limited the number of raw material SKUs it sourced — and bed models it produced — to simplify the workflow. “Our biggest customer in California is Saatva,” Carlitz says. “When we ramped up in this new plant, we were very mindful not to overly complicate things, so we put a limit on the number of new components and SKUs in the mix.”
From the receipt of raw materials to the shipping of finished beds to customers, BIA uses bar coding to maximize productivity. The approach eliminates double handling of materials, ensuring that what is needed for production is in the right spot at the right time.
“We have a dedicated spot for every raw material that comes in so that they arrive at their proper stations quickly and efficiently,” Carlitz says. Materials and finished mattresses still move by forklift and carts, he adds, because “robotics haven’t yet found much of a place in bedding due to the bulk and weight of the product.”
BIA uses GPS software to track the movement of its goods once they leave the plant for delivery to customers. The company delivers about 90% of its mattresses through a company-owned fleet, with a select number of third-party logistics companies handling the rest.
“We would like to bring even more of this activity in-house,” Carlitz says. “Managing our own deliveries helps control costs and results in higher customer satisfaction, since our drivers typically go to the same stores each time.”
Still, trucking costs continue to rise and “skilled drivers are getting harder and harder to find,” Carlitz says. “Our drivers tend to stay with us, so we’ve been fortunate. But finding and keeping talent is a challenge for every bed producer, in every area of the business, right now. To attract and keep good people, you have to pay more and provide better working conditions.”
The drivers who work at BIA’s company-owned plants make most of their deliveries within a 250-mile radius. “That enables them to get home each night, which is a huge plus for them,” Carlitz says.
Relationships prove key
While the past two years have been filled with logistical challenges, they also have created opportunities, says Bob Naboicheck, president of Gold Bond, a 123-year-old independent mattress producer based in Hartford, Connecticut. For instance, the company has added new retailers and expanded the number of stores where it is the exclusive bedding supplier.
Naboicheck attributes his company’s success to its deep relationships with retail partners, suppliers and employees. Gold Bond sources its components from a select group of suppliers and has worked with the same ones for years. “In 2020, when the pandemic started, a lot of companies were scrambling to get the components they needed to build beds,” Naboicheck says. “We were able to get the innersprings and other materials we needed despite these obstacles because of two main factors: We’re small and we’re extremely loyal.”
In 2020, pocketed coils “were almost unavailable because the fabric was being diverted for use in making masks,” Naboicheck says. “It made an even difficult time more so.” Steel and foam also have been in short supply due to a variety of factors, including weather-related refinery outages in 2021 that impacted the availability of a key chemical used to make foam.
Gold Bond kept its factory active as an essential provider of medical beds during the Covid-19 closures in 2020. “A lot of factories were shut down for 60 days and that disrupted their supply chains. But because we were open, we were able to maintain a continuous flow of supplies, even with challenges,” he says.
Gold Bond’s focus on building deep relationships extends to every aspect of its operation, Naboicheck says. “We’re a family business and that resonates with our employees and our retailers,” he says. “They know we’ll do whatever it takes to solve any problems that arise.” To wit: Naboicheck personally drove a demo mattress to a group intereseted in buying the company’s student mattresses for dorms when he couldn’t find a more affordable way to get it there.
There’s no denying that this has been a tough time to do business. Naboicheck notes that disruptions in the flow of goods from Asia has impacted Gold Bond’s ability to get wooden frames for its popular futon mattresses. “All the ports have been backed up, and it takes much longer to get what we need,” he says.
And costs have skyrocketed. Gold Bond used to pay $6,000 to bring a container of futon frames from Asia to the United States, Naboicheck says, but that price is now about $24,000. The company has assessed a temporary surcharge on futons to help manage the extra cost.
“We do what we can to contain costs, and it helps that we’ve been working with the same shipping company for 25 years,” Naboicheck says, adding that he is looking for domestic futon frame sources to reduce some of the headaches involved with importing.
Trucking is another part of the business where prices have risen rapidly. “Carriers can’t hire enough new drivers to keep up, and many of the drivers they have are sitting home right now rather than working because they’re scared of Covid,” Naboicheck says, estimating that domestic freight charges have nearly doubled.
To manage this expense, Naboichek and his son, Skip Naboichek, Gold Bond’s vice president, spend more time than ever hunting for affordable carriers to ship products to the company’s more distant customers in the Carolinas, the Midwest and Florida. For its home market in the Northeast, Gold Bond continues to rely on a single outside carrier with whom it has done business for years.
Gold Bond also works with retailers to maximize the value of every shipment. If a truck isn’t quite full, Naboicheck encourages a retailer to purchase a few additional mattresses. On an average day, Gold Bond sends eight to 10 truckloads of mattresses to retailers.
Beefing up warehouse networks
During the past two years, Logan, Utah-based Malouf has made major investments in new and expanded distribution facilities.
In 2020, the importer of sleep products and furniture opened a second distribution center in Lenoir, North Carolina, adjacent to its existing warehouse, adding 500,000 square feet of space. It also acquired a 1.2 million-square-foot warehouse in Delano, California. In 2021, the company expanded its distribution capabilities further by acquiring a 1.2 million square-foot space in Laurens, South Carolina.
Malouf now operates 6 million square feet of warehouse space stretching from California and Utah to Ohio and Texas to the Carolinas. The facilities enable the company to fulfill orders anywhere within the continental United States in two days.
“Like every industry, the pandemic and global supply chain restraints have played a major factor in our recent operations,” says Ryan Egbert, Malouf’s national director of distribution. “The biggest issues have been the shortage of containers and major congestion at U.S. ports, which has led to a dramatically increased cost of booking containers and extended lead times for receiving product.”
To address this, Malouf’s supply chain team “is constantly monitoring the situation and collaborating with our carriers to ensure we get the best available rates,” Egbert says. “Due to the current economic situation, we expect this constraint to continue through most of 2022.”
In addition to expanding its distribution capabilities, Malouf has enhanced its sales forecasting and inventory management systems to ensure it has product availability.
“We have collaborated heavily with our retail partners on how best to support them during these challenging times,” Egbert says. “As a result, we have been focusing more on ensuring our in-stock inventory is concentrated on our top SKUs that are core to our retailers’ businesses.”
Technology is the cornerstone of Malouf’s warehouse and sourcing operations. The company uses a sophisticated management and inventory system developed by its in-house software engineering team. This program, called HQ, is linked to its internal forecasting, ordering and customer relationship management systems. “That way, all of our systems speak the same language, and we eliminate errors and keep costs low,” Egbert says. Half the warehouses include a network of conveyor belts and scanners that enhance automation and “drastically speed up throughput,” he adds.
Malouf also uses its HQ system to book common carriers to transport its mattresses and other products. “This makes the process easy on our sales operations team and guarantees the lowest price for our retail partners,” Egbert says.
The company offers a wholesale resource center, where retailers can place orders and track shipments. “When orders are placed through this system, we can fulfill them quickly, with very minimal manual error, due to the automation,” he says.
The current supply challenges extend beyond raw materials and finished products, Egbert adds. Pallets are more expensive and in short supply, as is other equipment needed for warehouse operations. “For example, when setting up a new distribution center previously, the lead time for forklifts was about 10 to 14 weeks,” he says. “Now, lead times have doubled to 20 to 28 weeks.”
New domestic mindset
As Mlily USA pivoted from importing to domestic production in 2020, the Glendale, Arizona-based company acquired its first 115,000-square-foot warehouse and distribution center in Andersonville, Tennessee, to support its expanding business, fulfill retail and direct-to-consumer orders, and increase storage capacity. The company invested heavily in racking, forklifts and other equipment for the warehouse.
Next, Mlily USA built out its existing facilities in Glendale and in Goodyear, Arizona, to provide more storage space. The company also leased two, third-party warehouses — one in Los Angeles and one in Seattle — that store as many as 8,000 SKUs between the two locations.
The company now has five domestic warehouses strategically located across the United States that it stocks to capacity to accommodate customers’ needs. With sales running strong, the company is using 40-foot storage containers in its parking areas for additional inventory.
In the second quarter of this year, Mlily USA plans to add 684,000 square feet to its manufacturing plant in Glendale. The additional space, which will include more warehouse capacity, “will be a tremendous help,” says James Cureton, logistics manager for the company, which is part of Healthcare Co. Ltd., based in Rugao, China.
To keep products moving smoothly, Mlily USA recently implemented a warehouse management system, which establishes parameters that help the company define, configure and optimize where it stores inventory. “The benefit has been huge in that it enables us to manage all of our supply chain and logistics activities, including warehouse, inventory and order management, in one place,” Cureton says.
Technology is playing a growing role across the company, he adds. “The warehouse management system we deployed has helped us to control warehouse operations, from receiving to inventory to shipping,” he says. “It provides real-time visibility into inventory stock levels and locations, and allows us to fulfill orders at each of our warehouses twice as fast as we were able to do prior to implementing the system.”
The technology also has allowed Mlily USA to eliminate spreadsheets and manual data entry and “offers us the ability to produce reports to track costs,” Cureton says. “It also has facilitated the shipping and labeling process to save time and reduce errors and has allowed us to increase worker efficiency with automated picklists and streamlined workflows. Having all of our warehouses use the same system provides a synergy for us to operate more accurately and with more efficiency.”
Mlily USA uses a transportation management system to control its supply chain and identify the cheapest, fastest transit options from outside carriers. The company also uses DAT’s load board tools to access the most comprehensive freight listings, in real time, and to leverage its pricing tools. “With trucking costs being so volatile, the software allows for continual sourcing of contract carriers and helps us leverage competitive rates,” Cureton says.
Port jams and driver shortages are causing new stresses throughout the trucking sector. In response, he says, Mlily USA is leveraging its long-term relationships “to develop solutions, including, in some cases, persuading carriers to share costs for wait times and other factors that affect price. Because of the high volume of business we give them, we do have some leverage,” Cureton adds.
Vertically integrated to make its own coils, pour its own foam and sew its own covers, Mlily has experienced “fewer supply chain disruptions than others in the industry have faced,” Cureton says. “We have slight delays for our components, but this has not created major problems.”