Cheaper, Faster, Better

Business owners have long sought to run their companies more efficiently, reduce costs and improve their products. For manufacturing companies, an increasingly popular method of gaining efficiency while reducing costs is outsourcing their packaging, repackaging, warehousing and shipping needs to third-party logistics (also sometimes referred to as brokerage or fulfillment) firms.
Rather than lease or contract trucking and storing services, companies can hire logistics brokers to provide these services for them.
Logistics companies handle the warehousing, ordering, shipping, consolidation, packaging and re-packaging of products for manufactures. Outsourcing these services to a third party can save a manufacturer time and manpower, said Bob Kroblin, marketing director for United Warehouse, a logistics company that has been operating in Wichita since 1915 and also has facilities in Tulsa and Little Rock.
“Manufacturers find they can be more efficient when they are doing what they know best to do,” Kroblin said, “and that is manufacture goods.”
United manages both inbound and outbound materials, parts, supplies and finished goods. While declining to mention specific names, Kroblin said United counts as its customers the nation’s top sports beverage company and the nation’s top paper goods supplier. United warehouses, repackages and distributes the companies’ goods.
“Typically, manufacturers are experts in manufacturing, and manufacturing offers plenty of its own unique challenges. Warehousing and shipping require completely different skills and experience. In order for manufacturers to handle these functions inhouse, they must acquire considerable building space, hire the people knowledgeable in this type of industry and establish oversight and accountability for this new side of their business,” said D.J. Webber, who is the Administrative Manager for Buske Logistics.
“Outsourcing allows them to pay those who are already experienced in these issues to handle this all for them and, since they already have that working knowledge, (they) should be able to accomplish their requirements at a lower cost,” Webber added.
Buske’s customers, Webber said, range from food and beverage container manufacturers to automotive and medical suppliers. Buske, whose headquarters are based just outside of St. Louis, opened its original Tulsa facility in 2002 and expanded in 2004 to its current 300,000-SF location.
Mark Westby is president and founder of Mark Westby and Associates, a logistics firm whose core business is full-truckload truck transportation. Westby opened his Tulsa offices in 2003 and, since then, has also opened facilities in Atlanta and Tucson.
Westby says the trucking and logistics industries are growing and that “the truck transportation industry is a huge part of the Tulsa area’s economy.” He attributes the industry’s steady growth to a business model that is essentially free of assets.
He also said that the recent credit crisis has had a tremendous affect on the industry.
“Many of our customers happen to buy products from overseas on letters of credit and import them through different U.S. ports… For the past few weeks, they have had problems getting credit,” Westby said.
“On the other hand, our truckers are having the same problems getting credit. They have to buy fuel as needed, pay for repairs as needed…”
Westby said the credit crunch adds pressure to collect payment from customers in order to pay truckers quickly and keep their business.
Having a logistics company to deal with these pressures means that the manufacturer doesn’t have to. Kroblin said that, when companies hire a third party for their warehousing and distribution needs, they know how much those services will cost them and they can budget accordingly. They don’t worry about the sporadically rising and falling fuel prices, for example.
“If they attempt to perform all these functions themselves, they might not allocate the costs of that function. It may be a little vague as to how a product is made and stored—and how much time it takes to ship to the customer,” Kroblin said.
“If you hire someone (to perform these functions), you know exactly how much you are spending,” he continued. “You send them 100 truckloads of product. It will cost this much; it will take X amount of space, so you will know ahead of time. Companies have found it easier to use third parties.”

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