Not all outsourcing from American manufacturing to Asia is the result of short sighted management or Wall Street insanity. Some of it is the direct result of American customers reaching the end of their rope in dealing with lousy American suppliers. The case of JC Penney getting fed up with Bassett furniture is an excellent case in point.
In the course of doing research for a book project, I came across the testimony from a number of furniture companies before the International Trade Commission concerning allegations of dumping on the part of Chinese furniture makers. The case and the testimony of the various players opens up a whole barrel of worms, but the exchange between the big kahuna in charge of operations and the sourcing guy at Penney’s is particularly noteworthy.
JC Penney asserted that they switched their buying from Bassett to Chinese sources in order to get better quality. That seems incredible because everyone knows that Americans produce higher quality goods – right?
Bassett, of course, strongly denies this, alleging that JC Penney switched purely for lower prices. The barrage of ammunition Bassett launched at the Commission is nothing short of pathetic: "Quality charge backs and returns from all of our customers are less than two percent, yet from JC Penney charge backs were consistently over five." The head ops guy goes on to complain that JC Penney ignored the handling instructions Bassett had printed on the cartons, they call JC Penney’s warehouse operations "atrocious". They make the vile charge that JC Penney failed to follow the warehouse procedures that Basset gave them.
Apparently the boys at Bassett never got the memo saying that 20,000 PPM defect rates are not good. In fact, 20,000 PPM sucks, even when it is the measure of high tech quality – and these guys couldn’t do better than 20,000 PPM making bedroom furniture. Even if JC Penney was responsible for the additional 30,000 PPM defects it takes to get to 5%, the baseline of 2% returns is reason enough to find another supplier. Bassett, however, sent a guy to Washington to blame their embarrassing quality record on the customer. They somehow think that JC Penney has an obligation to follow their supplier’s rules for running warehouses.
But it gets worse. The JC Penney VP of Quality got a chance to testify and he brought up a few salient points Bassett failed to mention. In particular, when Penney began to experience a spike i quality problems reported by their customers, they ratcheted up their incoming inspection process – and Bassett responded by changing their shipping procedures to try to evade the inspectors. JC Penney then sent inspectors into the Bassett plant to perform 100% inspections and found defect rates ranging from 15-29%. Incredibly, Bassett refused to implement the statistical quality program Penney mandated.
Bassett’s response to all of this was to invest in more automation and to build a bigger warehouse to carry more inventory so they could replace defective stuff quicker. The obvious question that arises from all of this is why it took JC Penney three years to decide to dump Basset and find a Chinese guy who cared about quality.
All of this took place in the last five or six years, so we are not digging up ancient history here. It is nothing short of amazing that Bassett thinks they are somehow the victim of some nefarious Chinese plot. There is no one who reads this blog that would tolerate a supplier so totally ignorant of quality as Bassett.
Whether JC Penney could have replaced Bassett with a domestic supplier instead of going to Asia is a good question. Whether JC Penney is responsible for 350 Bassett employees losing their jobs due to lost Penney business is not an open question at all. They lost their jobs due to lousy manufacturing management – not because of JC Penney or some opportunistic Chinese guy who jumped in to fill the quality void.
Eric H says
JC Penney is well-known in the fashion industry for demanding high quality from its suppliers. It is apparently quite a feat to get through their door.
“Cheap Labor” and Quality aren’t the only reasons for going abroad, though. Look at the following post on F-I and marvel at how disgusted apparel manufacturers have become with US textile manufacturers’ disinterest in customer support. Apparently, the domestic manufacturers have decided that a good business model is to hide behind tariffs, complain about “cheap” overseas sources, deal only with megacustomers who want large batches of everything in semiannual shipments, and stop answering the phones.
http://www.fashion-incubator.com/mt/archives/submarining.html
Karen Wilhelm says
Research has shown that people who blame others rather than themselves for their problems are happier. People who look inward for causes tend to get more depressed. So the Bassett guys were able to remain in a fool’s paradise until reality set in. Had they listened to the poor soul who could see it coming but was powerless to stop the inevitable, they might have had a chance. Some say that pessimism was an evolutionary advantage to early humans because it allowed them to deal with “what could go wrong” while the happy folks got attacked by the woolly mammoths or ran out of food.
Paul Todd says
Thomas Friedman has gotten a lot of flack for his bashing of GM, but this post highlights one of his central themes. Globalization is not about “racing to the bottom” in terms of cheap labor, but about “racing to the top” – we are all in competition with the smartest and hardest-working people around the world. Geography and politics aside, sometimes Chinese companies are simply better at making things than American companies.
I know Bassett has dabbled in lean over the years, but they closed two plants in my area before any real change could be made. They strike me as a classic old-school company that can’t understand how their own shortcomings could be the problem. From Peter Drucker’s earliest days to the present, American managers have been famously resistant to the message that management may be the problem. Victimization is left as the only answer.
Mike says
In a story related to the furniture business, The Storehouse furniture chain is closing down 71 stores nationwide. Executives for the company “said the chain was plagued in recent months with a sales downturn, largely tied to computer system problems delaying upholstered furniture deliveries.”
Sounds like another example of the misguided use of technology. I don’t know if it was an MRP/ERP issue, or some other type of computer problem. Either way, what a shame that all of those U.S. jobs are being eliminated.
Here’s the link to the article I read:
http://www.tbo.com/news/money/MGBB7JJM3TE.html
Kathleen Fasanella says
Questionable chargebacks are rife among the big retailers but Penney’s isn’t known to be one of them. If I’m not mistaken, the situation has become so dire it has attracted the US attorney who is investigating Saks et al. Penney’s is famous for their quality standards. If Penney’s takes your stuff, anybody else will too. There are plenty of companies who’ve sold to Neiman’s but can’t get into Penneys. Imo, that’s what Basset is really p.o’d about. If Penney’s decertifies them, they can count on a lot of other stores dropping them too. I’ve seen Penney’s warehousing/inventory policy manuals so it’s really really funny that Basset thinks they have the wherewithall to dictate the standards to them. I mean, it’s funny!
As Eric mentioned, most of the entrepreneurs I know are sourcing abroad, not because they’re looking to save a buck, but because off shore suppliers engage in unusual practices and behaviors -for the apparel industry- such as answering their phones, replying to emails, submitting bids, supplying price lists, sending samples and the like. US fabric suppliers do not do any of these things.
My designer friends could not be more committed to domestic production but as much as they’d like, they can’t get fabrics made here. Few among us have any sympathy whatsoever for domestic textile producers. They can all go under; it will affect none of the small to medium sized domestic clothing manufacturers I know. Unless you’re buying 500,000 or more yards of white pocketing to be shipped to Nicaragua (for those 5 pocket commodities), you won’t care if the mills go under. Who cares? The pocketing twill btw, isn’t even that great. It pills all too readily. Tacky if you ask me.
Natalie says
And I thought Bassett’s quality issues were BECAUSE they started outsourcing to China. Maybe they need to find out who JCPenney uses over there to build their stuff and have them produce theirs as well! It might bring their numbers of customer complaints down ’cause they seem to have a lot.
Debra Lewis says
JC Penney furniture is just plain some of the worst furniture out there. I ordered a Manning Table set and the table, after leg assembly, sags in the middle terribly. I have been stareing at this monstrosity since November, and condisering puting a board and lift under it. Worst part is, it sags without the leaves inserted. Of course due to their strict return policy, I am screwed out of approx $900.00. Never again will I order online from JCP. A couple of years ago I ordered a serta mattress set for $800.00 and it showed up with ripped plastic (should have been boxed)with dirt and oil all over it. There will be no “Third time is a charm”. I just cannot afford to be ripped off by JCP anymore.
Diane says
We are a middle aged couple, our children have left our home years ago. in the house. We are proud of our home, we keep it up. It clean and cared for.. The $1,800. Bassett Leather sofa that we bought 16 months ago is losing color where we sit and rest our heads. NOT fading…the color is rubbing off and it is very noticeable. We have contacted the store, their customer service people, Bassett’s customer service office, the CEO of Bassett furniture.
THE REAL RUB is that we waited for some time to receive our leather sofa after the order because IT WAS BEING ESPECIALLY MADE IN CHINA. And when we asked for that color in another chair we were told that the leather is stained in CHINA. We had the blind faith that BASSETT was a fine line of furniture so we waited.
We have tried everyone connected with customer service but we get answering machines. We did speak to one person that told us they only guarantee for one year. It took about a year for us (and everyone else) to notice it. WE SENT PHOTO to all of the Bassett “customer service ” people we could locate.
We are sending a report it to the State Attorney General. The man that owns the Bassett store in Raleigh, NC also owns other leather furniture stores. I hope to find other folks that can help expose them for what they are if it means the consumer help broadcast on the local TV stations.
By the way, check out the web for bogs/articles about JC PENNEY has been burnt by BASSETT FURNITURE.
Can you help us? Have suggestions?
THANKS.