July 26, 2016 Leveraging Capacity

Volume 11 | Issue 5

Reliance Solutions leverages the production capacity of its parent company, ready-to-assemble furniture maker bush industries, to provide component parts to OEMs in the store fixtures, institutional, furniture, wood point-of-purchase display, retail, kitchen and bath industries. David Soyka reports on how this work in progress is progressing.

A timely course correction can make the difference between sailing towards open waters or beaching on treacherous reefs. Case in point: As a start-up division of ready-to-assemble (RTA) furniture maker Bush Industries, Reliance Solutions was finding it difficult to navigate the store fixtures market. So, it makes a course correction to more properly align its competencies with the needs of the broader marketplace.

“The original idea was for Reliance Solutions to act as a new division that would leverage our existing Bush Industries manufacturing capabilities to make store fixtures,” explains Mike Zolner, plant and panels solutions manager. “However, we found that we really couldn’t compete as a full service fixtures supplier. The problems were that the markets were too fragmented and we were having difficulty demonstrating how Reliance in particular could add value across a series of xisting segments.

“So, after two years, we decided to step back and take a hard look at what we do best, and, then determine how what we do can best be put to use to add value to customer needs,” adds Ross Beveridge, operations vice president. “Bush Industries supplies the US RTA entertainment and office furniture for the two leading electronics retailers and all three big office supply chains. This is mass produced, cut and assemble kind of work. We have the capacity and capability to do that. It’s nothing fancy or exotic, but it’s our core competency. We cut standardized component parts consistently all day long. That was the offering we decided Reliance Solutions should focus on, supplying standardized component parts, what we call the ‘carcass,’ to OEMs across targeted industry segments. We’re still looking at the store fixtures segment, but also general retail, institutional, and kitchen and bath. The big difference, now, is that we’re not trying to produce and sell the final product. Rather, we partner with manufacturers to provide the underlying components that they can then customize into their finished product.”

According to Zolner, “Our new business model better aligns with global trends in supply chain management. These days, everyone is focusing on their core competencies and outsourcing whatever else they need. We have the available production capacity and expertise to make components in large quantities. The panel components are basically the same to make, whether they’re eventually intended for use in hospital cabinetry or point-of-purchase displays (POP) in a retailer. Because we do this in volume, we can offer the components at a less expensive price than smaller manufacturers can do making the components themselves. Kitchen cabinets are a great example. We can make the carcass panels in standardized sizes, and then distribute various smaller orders to multiple OEMs. They are free to pursue their core competency in the finish cabinetry doors, tops and facings. It doesn’t matter to us whether the cabinet is going in a doctor’s office or a home kitchen. To us, a box is a box is a box. Within reason, small lots can be accommodated, so the OEM still gets the cost savings we can offer to everyone else. And since even the biggest individual projects are part of the ongoing production process, we can provide quick delivery times and still guarantee the highest quality.”

One particular success story Zolner cites is furnishing all the shelving components for Rite-Aid Pharmacy’s GNC “store-withina-store” of vitamins and nutritional supplements. He notes, “The relationship grew out of our initial venture into store fixtures and actually led us to think about shifting to fixed panel processing only.
All the displays are simple, plain shelves and require minimal subassembly. That’s when we started to step back from our original business model and consider why we were venturing off into things beyond our core competencies. The Rite Aid account made us realize that mass volume production of components for someone else to assemble is really what we’re equipped to do.”

BUILDING RELIABILITY
For now though, the division is concentrating on growing sales primarily through a network of sales representatives in its own backyard. Reliance Solutions is based in its parent company’s headquarters and manufacturing facility in Jamestown, N.Y., with about 1.5 million square feet of manufacturing space and another 500,000 square feet of distribution and warehousing space. “The idea is to leverage the available capacity of Bush Industries,” Zolner explains. “Right now, we’re running two full shifts that produce about $150 million worth of product in the U.S., of about $250 million overall global sourcing. We have the head room to easily operate three shifts and produce $275 million. In the U.S. and €75 million in our European subsidiary. The assets are all in place. We have the equipment, the capabilities and the capacity to significantly gear up our volumes.”

Specifically, Reliance Solutions offers the following manufacturing and service capabilities:

• edge banding, soft forming, bore and groove
• shaped panels, slatwall, top shelves
• doors, top surfaces, drawer fonts, wall panels
• MDF wrapped, wood moldings
• subassembly, packaging, design and engineering

The first three are aimed primarily at the OEMs in institutional, furniture, store fixtures and wood POP displays. MDF wrapped and wood moldings also supply kitchen and bath OEMs, while subassembly, packaging, design and engineering services are offered to all these as well as retail markets.

In addition, as a division of Bush Industries, Reliance can take advantage of the larger company’s purchasing power for particleboard, melamine, MDF and other materials.

According to Beveridge, “Right now we see our biggest opportunity in the institutional and GSA market because of the potential high volume. Base and wall cabinet sizes are industry standard and need only be engineered one time. Parts are standard and fit our core competency in panel processing. Moreover, panels are shipped on standard panels. The only change the OEM needs to make is in core and exterior materials.”

Indeed, while Reliance Solutions foresees a global market potential of $15 billion annually for component sourcing, institutional sales are projected at representing a sizeable chunk of $4.6 billion. Beveridge adds, “Naturally, we’re looking to make inroads wherever we can into all these markets. Kitchen and bath cabinets are similar to institutional in that we’re talking standardized case parts, sides, shelves and drawers that we can mass produce. We also offer vinyl membrane press doors for this market. One advantage of selling across industry segments, of course, is that if there’s a down cycle in one industry, it is offset by a growth spurt in another segment. Typically, for example, government spending and the health care market are counter cyclical to general downward business trends.”

Beveridge also points outs, though, that, “When you’re talking about the high volume type of production we’re doing, our target end-users are less likely to be as affected by economic downturns. The guy supplying a 10- to 50-person office is going to feel a pinch as those smaller-sized businesses are less likely to start up or survive during a dip in the economy. Bigger companies are in a better position to withstand economic fluctuations, and when they need furniture, you’re still talking higher quantities. Our ability to produce the needed volumes at a reasonable price makes us all the more valuable, especially during a slow economy.”

Furthermore, Zolner points out, “Small OEMs, in particular, reduce their risk by using Reliance Solutions to provide their componentry. They don’t have to make investment in machinery and labor to gear up for big orders, and then have that investment lay around fallow during cyclical downturns. It’s the classic win-win situation.”

Beveridge notes that while Reliance Solutions is a new business, it is backed by the reputation of Bush Industries. “We have one of the quickest cycle delivery times backed by a proven track record of 49 years in manufacturing defect-free components. We offer six- to-10 year warranties and are fully compliant with all global manufacturing standards. Our name speaks for our reputation – we are highly reliable and we provide solutions that address customer needs.”

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