Third party logistics: Back to warehousing basics
June 15, 2010 - MMH Editorial
When he retired, my Dad was invited to join the board of a publicly-traded company. He was flattered, but also a little flummoxed about why they wanted him. “They’re a big company and I ran a little industrial packaging business,” he told me before his first board meeting. Afterwards, he had a different perspective. “They’re dealing with the same problems I dealt with for thirty years,” Dad said. “Theirs just have more zeros.”
I told that story the other day to Carl Beede, the founder of MVS Fulfillment Services (603-357-9690, http://www.mvsfulfillment.com), as we toured his 27,000 sq ft warehouse in Swanzey, New Hampshire. As part of my job at Modern Materials Handling, I get to visit some pretty spectacular distribution centers; when you spend your time touring highly-automated facilities in excess of 500,000 sq ft, its easy to forget that the industry is still rooted in small companies like MVS Fulfillment, a third party logistics provider that does warehousing basics like assembly, packaging, public storage and order fulfillment for manufacturers. A family operation, Beede runs the nearly 20-year-old company with his son, who looks after the operations, and his daughter, who handles the marketing. Right now, he has a staff of about 25; in the past, he’s had as many as 80 employees spread out over three shifts.
Yes, it’s a small shop. MVS sports about 500 pallet storage locations versus Bon-Ton Stores, our June cover story, which is handling more than 3 million cartons a year from just one location. Materials handling is primarily handled by a lift truck or two and complemented by shrink wrappers, a high-speed packaging line, an electronic scale and an orbital stretch wrapper that Beede bought for a song at an auction. Over the years, he’s taken on everything from packaging Frisbees to putting together and packaging plastic bird feeders to kitting for the medical industry. But as we talked, I realized Beede is wrestling with many of the same challenges as the vice presidents of supply chain that I regularly talk to. They just have more zeros.
He’s now operating in a just-in-time world, facing charge-backs from big box retailers if he doesn’t get his customers’ products delivered on time. And, he has to meet shipping and labeling requirements dictated by his customers. He realizes those go with the turf today. “We’ve built our business on customer service and accommodating those kinds of requirements,” Beede says.
He also understands that information is king. The company developed its own inventory management system rather than put in a packaged WMS because there is a lot of variation in his business dictated by his customers. “The system keeps track of everything we do,” Beede says. “At 4:30 in the afternoon, I can see what we’ve processed, for whom and how much cash it generated.”
The recession has taken it’s toll, as I’m sure it has on other small operations. And, Beede’s been impacted by off-shoring, losing a good account that is now doing its assembly work and packaging in China. At the same time, off-shoring is providing an unexpected source of new business. While I was there, MVS’s staff was reworking product that had been manufactured and labeled incorrectly in China. MVS’s job was to disassemble the product, fix the problem, re-label, shrink wrap and tag it; get it in a carton, and then palletize and stretch wrap the reworked goods for shipment.
The facility is small, but he’s ready to do business with more zeros. “What we’re really looking for is a manufacturer who wants to establish a footprint in northern New England and will let us run their warehousing and packaging operations,” says Beede, who did just that for a medical products manufacturer in a previous business life. “We’ve got the capabilities. We just need someone to dance with.”