Alternative education company K12 is changing a few old-school rules and growing rapidly.
K12, a Washington, D.C.-area company, sells online educational products and services designed to be alternatives (and supplements) to the traditional brick-and-mortar school model. The for-profit company serves students from prekindergarten to grade 12.
Managing costs and keeping overhead low do not mean cutting corners.
With double-digit growth each year since its launch in 2000, the K12 model gets an "A" by any achievement standard. The company currently tops $800 million in annual revenue, and anticipated growth in high school and pre-K enrollments promises a tremendous future.
K12 works this way: The organization creates and develops curriculum, then partners with public virtual charter school operators or traditional district operators to provide online, nontraditional students everything they need for learning – instructional materials, textbooks, online materials and physical course materials. Also, depending on the arrangement with a school, K12 provides a student with a new or refurbished computer. In most cases, K12 sends the device to a student's home – where most K12 students take classes.
A schooling in logistics
Along with computers, K12 ships out a massive volume of educational materials to start each new school year. The peak-shipping season, summer, requires exacting plans and precision.
In summer 2013, K12 shipped 600,000 material course kits, along with 400,000 textbooks and stand-alone items, such as microscopes and lab materials. Each kit contained, on average, six items, such as math materials, maps and workbooks. In all, K12 shipped 6 million items in 2013 to eager students, parents and teachers.
"We send everything you can think of that would be in a classroom except a fire extinguisher," says Scott Balwinski, senior vice president of operations at K12. "We even send a whiteboard."
Use that whiteboard to do a little math, and you'll see the cost challenge in sending multiple materials to hundreds of thousands of unique students at hundreds of thousands of unique addresses.
"K12 actually outgrew its own infrastructure," says Brittany Caskey, director of business development for UPS global logistics and distribution. "The company suddenly realized that to provide students with a world-class education, it also needed a world-class logistics and returns solution."
UPS moved to the head of the class.
Making the grade for K12
Managing costs and keeping overhead low do not mean cutting corners. Cost management simply means finding inventive new ways to work more efficiently, to keep the cost of education low.
UPS immediately began to add value to its traditional transportation services, introducing efficiencies that helped K12 simultaneously grow business and control costs.
First, UPS took over the bulk of K12's materials supply chain by providing a centrally located warehouse with 200,000 square feet in Elizabethtown, Ky. There, UPS employees use large conveyor belts to fill online orders, picking and packing education kits with the right books, workbooks and lab accessories for any student, anywhere. Today, UPS teams can pack and send 19,000 kits a day.
To further economize on operations, UPS worked with K12 to identify a West Coast warehouse site. The new Mira Loma, Calif., distribution center receives and warehouses assembled course kits from Elizabethtown. Those materials can then quickly be delivered to students who place orders in the West, especially in California, Arizona and Nevada, sites of three of K12's biggest online public schools.
The move from multiple suppliers to one capable carrier changed the back office, too. Before UPS came in, K12 spent 40 hours a week monitoring chain of custody and solving problems that arose. UPS inventory control made that fretful task – and its cost – go away.
"UPS brought efficiency to the transportation network, leaned down our distribution system, and relieved us of inventory control," Balwinski says. "This allowed us to focus on ways to grow."
Going for green
UPS also brought to light new sustainability options and ways to improve previous vendors' returns operations.
UPS showed K12 a high-tech side of sustainability: a Louisville operation that receives returned computers from customers and repairs and refurbishes them for new use.
"UPS suggested that we expand the rework process," Balwinski says. "Now we can rebind books and fix damaged microscopes and give another student much of the material that would have been discarded – and it's in first-class shape. It saves significantly on repurchasing costs."
UPS showed its creativity, too, by suggesting that K12 put a special security tape on all boxes returned with a complete inventory of items. Intact tape means a returned box is uncompromised. The school can avoid the cost of going through 10 or 15 items in a returned box, one by one, and putting them back in stock.
"We're now seeing close to $1 million total in cost avoidance with the security tape alone," Balwinski says.
From K12 to tomorrow
Is K12 the education model of tomorrow?
It's at least an option, if continued excellence in education can be balanced with expansion and a strong bottom line.
"The business model is getting more complex and will just get more so with greater size and complexity," Balwinski says.
"We recognize that the flexibility of UPS absolutely gives us our best chance to simultaneously serve our growth and serve our students."