RATIONALES FOR OUTSOURCING fulfillment usually boil down to three. When a company wants to do business beyond its traditional operating radius, outsourcing logistics functions to a local 3PL often makes more sense than building, staffing, and equipping a new facility. Or a 3PL may serve a marketplace for which it possesses expertise that is lacking in the companies contracting its services. Third, and perhaps most important, 3PLs that focus on fulfillment must be fully vested in all the technologies that make it work, from cutting-edge warehouse and transportation management solutions to the latest generation of material handling hardware.
COTTON TO POLYESTER
Standard Integrated Logistics Corporation of Columbia, SC, is a star performer in all the areas listed above. Standard has over 3,000 employees, and it maintains 57 facilities in 15 states. Major clients include DuPont, Home Depot, Wal-Mart, the Robert Bosch Corporation, and polyester producer KoSa. Standard was recently acquired by UTi Worldwide, a customs brokering and freight forwarding company with offices in 146 countries.
“Our roots are in the cotton business,” says distribution group president Bill Church. “We warehoused cotton and nothing else for more than 80 years. Then the 1970s came along, and with them the polyester revolution. DuPont was a polyester pioneer, and one of the first major U.S. companies to outsource material handling. Over time, DuPont passed other support functions to us as well — just about everything, in fact, that was not core to their business.”
Standard’s capabilities grew significantly in the following years. “In 1989 we hired a guy named Bill Gates, a former Wal-Mart executive,” says Church. “Like that other Bill Gates, Bill was a real go-getter. He grew Standard from an $8 million dollar company to $150 million over the course of just a few years. He also helped evolve us beyond our traditional role of 3PL into a primary logistics provider (PLP). As a PLP we are managerially involved in all the processes of fulfillment, particularly information flow.”
FOCUS ON BOSCH
Robert Bosch Group is an international manufacturer of auto parts, power tools, and major home appliances whose North American World Headquarters is in Farmington Hills, MI. Standard performs fulfillment services for the Bosch Corp. at two South Carolina facilities. The first, located on North Charleston’s Appian Way, measures 157,000 sq. ft. The other, known as the Pepperdam facility, measures 96,000 sq. ft. The two warehouses really function as one, since they are tethered to each another technologically and administratively.
O+F asked general manager Randall Waldrup to describe Standard’s Bosch-related operations at its North Charleston warehouses.
We began working with the company about 13 years ago. Bosch is a manufacturer of automotive parts, household goods, and electric tools. It operates 27 plants in 11 countries. We managed their overflow at first, but when the economy went global, Bosch began to bring in inventory from countries all over the world. It was at that point that our role changed. No longer were we simply managing overflow. Instead we were supporting the company’s importing business. Standard currently handles Bosch’s automotive piece, which consists of about 1,000 SKUs. At the moment the Appian Way facility services 61 [of Bosch’s] tier-one customers at 167 ship-to locations. The operation has migrated from “pallet in, pallet out” to “soup to nuts.”
Standard is moving in the direction of handling all the freight, freight forwarding, and customs brokering for our customers. This is what is really meant by the term “primary logistics provider.” In a few short years, 3PLs have migrated from overflow managers to supply chain administrators that oversee the supply chain at each level.
Bob McCulloch, vice president of distribution group operations, describes Standard’s distribution channels and the methods and technologies used to put them all together.
We use Robert Bosch systems at the Appian and Pepperdam facilities, both of which use SAP-based business enterprise packages mostly geared to manufacturing. Bosch runs its whole operation on SAP, and most of the companies they do business with do the same. There’s a WMS module within SAP with features like directed putaway, receiving, and pick-to-zone. In non-Bosch warehouses we employ a solution called the “Standard Logistics System.” We also use Andlor Logistics Systems support for public and shared warehousing environments, and EXE for our most sophisticated warehousing centers.
The two North Charleston warehouses are not very automated. We use RF, but like the WMS, it’s tied into the SAP. We use forklifts, but not conveyors, carousels, robotics, or anything like that. Just about everything we move here is in full-pallet, which breaks into smaller units. We’re not a pick-and-pack operation. We’re not doing shoes, clothing, CDs, or anything else that may call for the use of sophisticated material handling technologies. Some of our other facilities, the ones that service clients like Home Depot, Wal-Mart, and Sam’s Club, do employ them to a greater or lesser extent depending on the needs of the customers.
O+F queried distribution group president Bill Church about Standard’s value-added services.
The just-in-time phenomenon has worked its way through the automotive industry. Because dispensing with packing material can slow an assembly line, it’s become common practice to break down a pallet into many smaller shipments. We use a returnable tote, which the customer sends back to us for refill. We also do quality checks on specific items. A radio/CD player made in Portugal, for example, goes through 32 checkpoints before it’s sent to the customer. We do value-add at our other warehouses as well — “kitting,” where you combine two or more items in a merchandising display; subassembly; and handling, testing, and paperwork for the chemical industry. We’ve established procedures for everything we do, and this has significantly contributed to our efficiency.
D. Douglas Graham is a freelance writer based in St. Louis, MO. He can be reached by e-mail at email@example.com.