How local small businesses identify workable logistics strategies
Figuring out the best way to get products to vendors is critical for growing small businesses.
If putting your products on the shelves of Wal-Mart, Target or Home Depot is a must, you need a friend in the logistics business-maybe not now, but soon. But finding a logistics partner that meets your needs is almost as challenging as finding that lost shipment of size 3T coveralls destined for a Babies"R"Us in Roanoke, Va.
Small businesses work hard to identify workable logistics strategies, and if they can unlock its secrets, logistics can provide a competitive edge and a huge cost advantage.
Like providers of bread, chips and snacks, Silver Bridge Coffee of Gallipolis makes direct deliveries to Kroger and other retail stores. Only two years into full-time work on the company, co-owner Lorraine Walker and her husband, Philip, still make their own deliveries. "We bring it in fresh and we bring it in ourselves," says Lorraine.
They stamp the roasting date on their product and rotate fresh stock aggressively. "With fresh coffee, you're not getting a bitter aftertaste from the oils that come off the coffee in the roasting process," she says. "Our coffee will get to a grocery store 24-48 hours after it's roasted."
But that business model imposes logistical challenges. The Walkers cover deliveries to about 40 Kroger stores in Columbus, Zanesville, Mansfield and Toledo, ensuring personally that all coffee is fresh on display shelves Kroger provides for local merchandise.
"It's important for us to get a feel for distribution first before hiring it out," Lorraine says. "We're reluctant to turn this over to someone else this early in the expansion," at least for another six months to a year, she says.
Most businesses start small and mastermind their own shipping tasks with the help of UPS, FedEx or the used truck they just bought from their brother-in-law, and logistics professionals see do-it-yourself shippers like Silver Bridge Coffee.
"I can't tell you how many people I've talked to that have been doing it themselves with their own distribution system," says Bob Parsons, managing director and partner at Dismas Distribution Services. "Sometimes the end client doesn't know that it's them (the business owners) driving the truck. They don't know it's the same person who made and packaged the product. It is risky, but eventually you have to trust someone."
Snowville Creamery started out small eight years ago, delivering organic milk, cream and other products close to its dairy between Pomeroy and Athens. After working 10 years for Safeway in Oakland, Calif., owner Warren Taylor wanted to do things differently, providing milk from cows that ate only organic food; he wanted nothing to do with the genetically modified feed stocks of cows producing standard milk.
"The distribution problem is huge. When we finally did go to Whole Foods … we were driving our own trucks, with three drivers, maybe four, and I was one of them. We made twice weekly deliveries, then three times after a couple of years," Taylor says.
Gradually, Taylor transitioned from driving his own delivery truck to collaborative schemes with Whole Foods. They've tried Whole Foods pickups in Gallipolis; Snowville drop-offs in Washington, D.C., and virtually every combination in between. Now Whole Foods picks up much of Snowville's inventory from cold rooms and trucks at the Sanfillipo Produce warehouse near Port Columbus.
It turned out Whole Foods had relatively empty backhauls to Landover, Md., and Snowville could ship via Whole Foods' 53-foot chilled semi-trailers from the Sanfillipo dock to Landover instead of 15-hour round trips that Taylor used to handle himself.
Snowville is still waiting for products to catch on at Kroger and Giant Eagle, but Taylor is patient and persistent. Meanwhile, he's growing business with upscale Heinen's groceries around Cleveland.
"For us, distribution has been a long-term game. This is not a dot-com, a pet rock or whatever. We're building our infrastructure from straggly trucks to semis-while maintaining our freshness and quality and control of our distribution costs. I enjoy this game. But we still pick up our milk from the dairy farmers that supply us," Taylor says. "We can't give that to somebody else."
Jeff Zimmerman, director of the Columbus Region Logistics Council, says companies weigh several factors on whether to distribute in-house or outsource the function. They need to determine whether they must keep control of both manufacturing and distribution and whether they have the facilities and capital to do both.
All shippers need efficiency and predictability, Zimmerman says. "Chances are the (third-party logistics) provider has perfected that model to the point where they can offer their capital and systems to let the shipper do what they do best."
There's a surprisingly wide range of logistics operations in central Ohio-from those that focus only on tracking shipments to shops that provide outsourced operations to retailers like quality control, sewing and alterations.
Zipline Logistics specializes in shipping consumer goods to retail store chains. Its staff tries to touch every shipment every day, personally contacting drivers, dispatchers, shippers and retailers to save customers money and time. Their goal is 100% compliance with retailer shipping requirements.
"About 75 percent of our business is going into retailers, grocers, or Target and Amazon, and you have to understand the requirements of each of those companies. We have experts in every kind of big box stores and shipper," says Andrew Lynch, president and co-founder.
"The size of a potential client doesn't matter. It's what their needs are," says John (J.J.) Rodeheffer, Zipline co-founder and director of national sales. "If someone is shipping something, they could be a client for a logistics company. If they make widgets of any kind, they should consider it. It's also free to test out a logistics company. I don't think a lot of the new growing companies would realize that."
Lynch adds, "We're trying to be the most driver-friendly shipper you can be. For us, it's about being the best person that driver, that shipping clerk or that dispatcher has dealt with that day."
Where the Zipline offices look like a high-tech control center, Dismas Distribution Services can look like a packaging, sewing or quality control department-it just depends on the day.
Inside its 60,000 square feet of warehouse space on Outerbelt Street near I-270 East, Parsons and his team have built a flexible operation that provides a wealth of services to customers: ticketing, size and label tagging, sewing logos onto merchandise, identifying faulty products and performing crucial alterations before clothes hit the shelves.
They're carving out a niche in e-commerce returns and restocking, too. "As a customer, I don't know if I want the red or blue blouse, so I'll order both, or I'll get a size four because I know I can just send it back if it doesn't fit," Parsons says.
Dismas Distribution has a crew of 48 part-time people who work flexible hours but meet tight client deadlines. Bath & Body Works has its own automated facilities, but if they have a one-day sale, they might be selling 54 million candles-so much they need someone like Dismas to help.
"At Dismas, you see the people, the facility and all these processes. It's like the tide of the ocean. It swings in one day with a customer, and then they have other customers the next day," says Zimmerman. "They can help people be more fully employed, whereas a shipper itself wouldn't hire those people for a day and then send them out."
Zipline and Dismas don't begin to show the entire diversity of local logistics, Zimmerman says. "The existing logistics operators continue to invest and grow, and there are more marketers coming into the market all the time."
Mike Mahoney is a freelance writer.