Global Vendor Relations at Pier 1 Imports

Over 200,000 pieces of stainless steel flatware are just sitting in a Pier 1 Imports warehouse. Where did these come from? Most recently they were stocked in Pier 1 stores-that is, until a couple of customers informed store managers that the stainless steel pieces rusted. The company response? After a very rapid testing process that confirmed the customers' observations, the offending product was pulled from all stores and sent to its "resting place"-all within a two-week period. The people in merchandising at company headquarters in Fort Worth, Texas, and the local Pier 1 agent in China, now have ascertained that while there are 47 different types of stainless steel, only one-referred to as 18-8-can be used to make serviceable flatware that won't rust.

This newly recognized quality specification has been quickly communicated to all other company agents who purchase flatware, assuring that this product quality issue will not arise again. It is John Baker's responsibility to oversee the network of corporate buyers and on-site agents who are directly responsible for finding, choosing, and assuring the quality of merchandise imported from around the world. Baker, the Senior Manager of Merchandise Compliance, accepted a position at Pier 1 Imports over 20 years ago after working for various department stores purchasing "tabletop" and kitchen wares. When he first came on board as a buyer, he spent nearly six months of the year on the road, working with the agent network and finding new vendors for Pier 1 merchandise.

Today, Baker also handles the increasingly complex area of government regulations of merchandise. Because such a high percentage of Pier 1 Imports' merchandise is imported (over 85 percent), it is especially critical that U.S. government regulations regarding various product categories be studied and communicated to the manufacturers in other countries. These government regulations form one of the two measures of quality assurance for Pier 1 products. The second is that the products must conform to aesthetic standards that guarantee that the product fits the Pier 1 image and Pier 1 customer desires. It is in large part the buyer's expertise that assures that these standards are met. What is the process for finding and selecting vendors in countries other than the United States? First of all, Pier 1 depends upon a well- and long-established network of agents in every country from which they import. In some lesser-developed regions, Pier 1 agents work with governments to help locate professional exporters.

Some exporters are found at international trade fairs as well. The bulk of Pier 1 agents are native to the country in which they work, and some have been in place for as long as 30 years, with their children now taking over the local positions. The agents' jobs include finding local producers of handcrafted items that fit Pier 1 customer needs. Buyers look for new sources of products at local craft fairs and even flea markets. Right now, for example, local agents in several countries are looking for sources of wooden furniture-primarily chests and tables-because Pier 1 would like to add to this in-store category.

Based upon the location of raw materials, in this case in Italy, South America, Indonesia, and Thailand, agents are searching for just the right manufacturers to be brought to the buyers' attention. Because it is the agents based within the various exporting countries who must enforce quality requirements, it is critical that John Baker and his colleagues carefully communicate both governmental and aesthetic product requirements to the agents. The agents can then "sit down at the table" with the manufacturers and work out the quality issues. If misunderstandings occur, Pier 1 is always ready to accept some of the responsibility because they view their manufacturers and agents as their partners in this business. Because Pier 1 Imports has carefully carved out a unique niche in the specialty retail store industry, buyers are hard to hire from outside the company.

As Baker noted, "The bulk of our staff has come out of our stores. It is easy for a buyer to move from Macy's to Hudson's- the products are the same, as are most of the vendors. The Pier 1 buyer, however, must understand the Pier 1 store in order to be able to effectively and efficiently buy for it." These Pier 1 buyers, along with their agents onsite around the globe, serve as the company's primary link to product quality.

Question
1. What are the implications for sales, customer satisfaction, and profits for companies like Pier 1 (http://www.pier1.com) when low-quality merchandise is not identified early in the purchasing process?

2. Do you think that Pier 1 might have avoided this problem if it had a very aggressive quality assurance program (i.e., ISO 9000) in place?