The Perks of a Short Supply Chain

Photo: Schoolhouse
Sara Fritsch, president of Schoolhouse

Buying local pays dividends for a Portland homewares manufacturer. 

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The pandemic has exposed weaknesses in the supply chains of manufacturers that source products from all over the world. One Portland manufacturer has found how beneficial it is to be able to rely on local suppliers and have control over every aspect of production from manufacture to marketing and selling.

Schoolhouse makes homewares, lighting and hardware from a factory in Northwest Portland. It also has a retail store inside the same building. Most of its supplies are sourced in the U.S., and more than 80% of what it sells is made domestically.  

In this interview, president Sara Fritsch explains how the company was able to launch a new product line during the pandemic, and why it took aggressive steps to furlough and lay off 40% of its staff in the early days of the shutdown.   

This interview has been edited for length and clarity.

How were you able to launch a new product line in the middle of the pandemic?

That was an assortment product launch that we had been planning since pre-pandemic. For the most part we were able to pull it together. By the time the pandemic hit, we had the bulk of supplies we needed. Because we have our own factory, we could still pull it together and produce enough product to launch with.

It helps that we have end-to-end control of our business from product design and development through to purchasing and planning, assembly, manufacture and finishing of those materials. It is all happening within our building.

Through the pandemic, we have been able to keep a skeleton crew in the building under close partnership with the state to make sure we are abiding with social distancing and other recommendations.

How has the pandemic impacted demand for your products?

Demand is down. We have reshaped our business to fit demand. We came at the pandemic with a clear framework of how we wanted to tackle it.

We wanted to keep our health as a No. 1 priority; we wanted to make sure we stayed on top of the latest with regards to what the scientists and government were saying about the pandemic; and thirdly, we wanted to have an open and honest acknowledgment that this pandemic will impact our business.  

Within that framework, we set some common goals: We wanted to emerge from the pandemic with our health intact; we wanted to lead with transparency and let teams know what is going on and how we are handling it; third, we wanted to be proud of how we navigated through the pandemic.

As demand started to come down, we rightsized our staffing accordingly. We have been of the mind frame that it is better to do too much too soon than to do too little too late.

We did an aggressive round of layoffs and furloughs early on so we could be in a healthy position to ride out the pandemic.

Why did you decide to lay off and furlough a large portion of staff in the early days of the pandemic given that it was difficult to see how long the lockdown would last?

Even now it is still really difficult to predict. I am of the mindset that we should rely on data as opposed to dates to tell us we are through it. As I watched how other people were handling it, I saw a lot of people were setting time frames.

They were saying, “We are going to furlough people for two weeks”’ or “We are paying people for a month.” I wasn’t clear how people were able to set time frames like that.

We felt that because there is no clear time frame, we needed to get control of what we could have control of. The No. 1 priority was the health of our team but also the health of the business.

We took that assertive approach with the business. To pull that off and still meet customer expectations, we cut out anything that wasn’t deemed critical.

We wanted to support selling product, making that product and shipping that product. We paused anything outside of that: future product development, making catalogs, marketing efforts. The people who remained were focused on critical tasks.

RELATED STORY: Schoolhouse Electric & Supply Co. Grows a Lifestyle Brand

How are you selling the majority of your products during the pandemic?

The vast majority of sales are direct to consumer through the web. In addition to the web, we have a trade team that supports trade sales with commercial businesses.

For commercial sales, home, lighting and hardware continue to grow. People are betting on the future; they are using this time to build a hotel or a restaurant. A lot of condo projects are continuing. A lot of states deemed construction as critical; we are seeing our orders reflect that.

We have two brick-and-mortar stores; one here in Portland and one in Pittsburgh, Pennsylvania. One of our early moves was to close our brick-and-mortar stores. We did that at the same time as we did layoffs.

Do you plan to reopen your brick-and-mortar stores?

In Portland our brick-and-mortar store is in the same building as our factory. We also have a coffee shop. I absolutely expect that store to reopen in the future.

We are rethinking what it means to the business: how we allocate inventory and the value proposition of the store to our customer. But I can’t imagine the business without it. The Pittsburgh store is closed indefinitely and that is a big TBD for us.

Have you continued to purchase internationally?

Yes, and it has gone well. We have really strong partnerships. There have been some gaps there. Because we have full control of what we design and market, we can reorient the business based on where the supply is the strongest. But 88 cents of every dollar are staying in the U.S.A. International is a small portion of our business.

COVID-19 has exposed both weak and strong supply chains. It is exposing just how strong our supply chain is. Ninety-seven percent of products are available and arriving on time to our customers. That is something to be proud of in the pandemic.

What is the most important lesson you have learned as a leader of a manufacturing business during this shutdown?

Being assertive right out of the gate — that it is better to do too much too soon than too little too late. We want to come out of this as a healthy, sustainable business. We are entirely self-funded. The future is ours to make and it is ours to pay for.

We absolutely have to remain profitable at all times, including mid-pandemic. We didn’t have a lot of other choices. I am proud of how nimble we could be because, at the end of the day, that is what will save us in this pandemic.

How do you think the pandemic will change manufacturing in the U.S.?

People will be focused on risk reduction and diversity of their supply chain. Proximity [of suppliers] is an advantage. It is rare in supply chains, but it is absolutely an advantage.

To get that proximity, you are giving up lower costs. People go really far thinking they will get better costs. That is true — but for us, speed, availability, reliability and relationships are more of an advantage.

RELATED STORY: Manufacturers Rethink Global Supply Chain

Our mission is to create the next generation of heirlooms. We never sacrifice quality in any of our sourcing. We found our supply chain supports that quality.

Our partners have been able to flex with us. We have been able to have open, honest, transparent communication about how they are impacted, how we are impacted and how we can help each other.

As the pandemic exposes strong supply chains, it also exposes weak ones. I think people are trying to solve that going forward. To have a stronger supply chain might mean the ability to be more nimble, more reactive, to have better reliability and communication with vendor partners.

How much of a renaissance is there for homeware manufacturing?

COVID-19 has given everyone an opportunity to rethink what home means to them. I would hope people would want their home to be an inspiring, thoughtful place.

This is a great opportunity for the home space to become more mindful and thoughtful with purposeful design.   

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