“Our customers are all looking for ways to reduce their supply chain spend,” notes Harlan at USCS. “Many have reduced working capital and that often means inventory level must be lowered. One way for customers to save money is to speed up their turns by shipping smaller shipments, but more often. We enable their efforts by providing cross-dock services and short-term storage programs supported by online access to inventory and order information for tracking. We also consolidate the orders into a pooled shipment to achieve lower transportation costs. Every little bit of savings is important.” Harlan believes lower inventories will be good for the PRW industry over the long term. “I think it demonstrates how much better our customers are managing their inventories than they were just a few years ago. Faster turns, smaller inventories, and higher throughputs will be better for the industry.”
Avoiding electric shock: Another concern for industry leaders is what will happen with electricity costs relative to carbon taxes. Electric costs are the industry’s second-largest (after labor), and leaders are watching this area with anxiety.
Colstor spent several million dollars over the last 10 years instituting energy-efficient programs, reports McGraw. “The utility companies serving our facilities offer attractive conservation programs in which they help pay for the installation of more efficient motors for our equipment and for lighting, for example. So we take advantage of any incentivized programs that help us conserve our power consumption.”
USCS has an ongoing focus on implementing energy-efficient technology and equipment, notes Harlan. This includes retrofitting to achieve higher-efficiency lighting and using variable-speed drives on compressors, condensers and other equipment. “We know that our ability to control energy costs is critical. So in August 2008 we began operating a roof-mounted solar system at our DC in Tulare, CA. This is an ideal application for energy generation and sustainability.”
Accommodating truckers’ schedules: McGraw at Colstor notes that many trucking companies did not survive the recession, resulting in a tight trucking market; and regulations like HOS compounded the situation. Recognizing these constraints and their effect on all players, Colstor implemented its Drop Trailer program about five years ago which allows larger companies to leave their trailers at Colstor sites. “We can load them during slow times, so they are loaded for the drivers who can just hook up, do the paperwork, and move out. Because the longer trucks have to wait, the more it costs our customers.” The company encourages more trucking companies to utilize this service.
Colstor also expanded its hours to accommodate port and trucking schedules, and some operations are open 24/7. “By the time some trucks unload in the Seattle-Portland area, they often can’t get back to our operations in time to load that day,” explains McGraw. “So we expanded our hours to accommodate the hours of operation at the Port of Seattle and Tacoma so trucks can load here twice during the day so we are not overloaded during peak times.”
Customs-bonded service: A few of Henningsen’s warehouses are customs-bonded, which helps customers free up their working capital. This is how it works: once a container from overseas is released from a port, it is brought by rail or truck to a Henningsen customs-bonded warehouse. “When it gets into our bond, the difference for our customers is that they don’t have to pay duties or taxes until containers are released to them. So the products within the container can be reworked, repackaged, or held in a bonded warehouse up to five years before our customers have to pay duties and taxes,” explains Henningsen.
Custom services: Cloverleaf offers a niche service that ties into its warehousing competencies. “Our expertise in the protein industry enables us to offer custom packaging and fabrication services at three of our facilities for meat and poultry customers,” reports Kaplan. “On the export side of our business, our customers look to us to freeze the products and then handle the export requirements, which have become very complex.”
Look for hidden opportunities: Henningsen notes that the company trains employees to spot cost-savings opportunities for customers, such as pointing out moves that can go by rail rather than truck, or by discovering backhaul opportunities within the network. For instance, Henningsen approached a new neighboring Wal-Mart with a proposition that could attract Wal-Mart’s vendors to store goods at Henningsen’s warehouse so when the retailer’s trucks drop off products at the store, they don’t have to return empty. “The trucks could pick up a load here and then return to the Wal-Mart DC with a full load,” he says.