You might be able to build your own logistics network. And it might even work. But is logistics what you want to invest in being good at?
This question confronted Batteries Plus Chief Executive Officer Russ Reynolds in 2002 as he tried to manage his company's rapid growth. Ron Rezetko had started the retail battery replacement chain in Green Bay, Wis., in 1988. After adding five stores by 1991, company leaders decided to franchise. Ten years later, Batteries Plus had grown to 200 stores.
Batteries Plus had put together a logistics system to support the growth, but it wasn't working. Too many distributors were involved, and the available shipping information was insufficient and irregular. Stores were receiving as many as 40 shipments a week, and store managers were spending eight to 10 hours a week dealing with the paperwork.
An internal solution seemed within reach. But was it worth it? "We decided we didn't want to become transportation and consolidation experts," Reynolds says. They instead asked UPS Supply Chain Solutions to make things work.
Seamless integrationIt was a good fit. UPS had been delivering packages for Batteries Plus from the beginning. Adding UPS Supply Chain Solutions meant less paperwork, as well as more reliable service. Today, UPS provides true port-to-door service for Batteries Plus, using air and ocean freight to move batteries from suppliers in Asia to the company's distribution facility in Waukesha, Wis. UPS then moves the batteries to stores and customers across the country.
Logistics manager Rick Follette monitors shipments from the overseas port to delivery in the United States. He also can see all associated invoices and documents from the shipments. As soon as a ship sails, its cargo – already labeled for delivery to individual customers – becomes part of his dispatched inventory, and he is able to bill the recipients, shaving three days off the old billing cycle. Without UPS visibility tools and the reliability of UPS shipping, this wouldn't be possible.
"UPS has been with us since day one," says Follette. "We're able to integrate all these systems into a seamless supply chain."
A successful franchiseA strong franchise has been integral to the company's growth. Its solid business model and operating systems help attract the very best franchisees. "They know that corporate is going to be able to support them with supply-chain logistics," Follette says. "We support them so they don't have to do everything."
There are other benefits. Sometimes batteries are shifted between stores to balance inventory. Under the old distribution model, transportation charges were simply divided evenly among all franchisees. But the depth and detail of information available through
UPS CampusShip® now allow Follette to charge the receiving store for each move, which ensures a more equitable distribution of costs.
Now more than 315 Batteries Plus stores nationwide are supported by a web of reliable UPS services. "UPS takes a whole level of worry away because we know packages will arrive on time," Follette says. "Our network depends on it. Fast, reliable shipping allows stores to maintain a leaner inventory. Maintaining less inventory means lower operating costs, which allows for reinvestment in the company's growth."
Reynolds has long consulted with UPS experts to validate his business decisions. Based on the experience UPS has had with other companies, he's been able to identify points where change might be necessary.
"Our relationship with UPS is strategic, not just tactical – and we need both as a growing business," Reynolds says. "The data UPS tools provides is important, but access to their experience of working with other customers is critical."
Strong links in chainThe responsiveness of the supply chain is crucial to getting batteries to customers as quickly as possible.
UPS air and
ground services get the products there, and visibility tools keep Reynolds's employees and customers informed.
"We take care of the battery part, and UPS takes care of getting it to the customer when and how they want it," Reynolds explains. "Anybody running a small business knows that every hour you take away from serving customers is an hour you're not growing revenue. UPS lets me tell my folks, 'Don't worry about it. Go sell.' "
This story was originally published in the Winter 2008 print version of Compass
.