WOW Logistics

Source: Supply Chain Digital

Date :3/18/2008 6:34:53 AM

It may sound unusual, but cheese of all things ?represents a unique opportunity for a warehousing and distribution company. Exec learns more

Written by Megan Santosus and Produced by Crias Corrigan

Cheese is one of the few food items that actually appreciates with age, and yet it needs to be stored under specific conditions. WOW Logistics, with headquarters in the Appleton, Wis.—a state aptly known as “America’s Dairyland,” has capitalized on its vicinity to local cheese makers. One of WOW Logistics’ niche offerings is cheese financing—a service in which WOW finances and stores cheese inventories until they are shipped to buyers.

WOW Logistics has been in the third-party logistics and transportation business since 1977. Originally named Warehousing of Wisconsin, the company officially changed its name to WOW Logistics in 2000. While most of the company’s operations remain in Wisconsin—13 of its 15 distribution centers that it operates are located throughout the state—WOW has branched out, opening distribution centers in Idaho in 2002 and in Illinois in 2006.

Like all companies in the logistics industry, WOW Logistics is facing higher costs. One way to combat rising costs is to grow market share, and WOW Logistics is seeking to expand its business. “We’re a mid-size company but we’re looking to continue to grow outside the state,” says Matt Oswald, WOW Logistics’ executive vice president. One of the most significant challenges to expanding is finding the right people.

As a third-party logistics company, WOW Logistics is in the outsourcing business, providing customers with warehousing, transportation, and distribution services. “When recruiting, we’ve found that many people who have experience with [in house] warehousing do not understand the revenue model or take into account costs and profits.”

As a result, Oswald says, WOW Logistics can only grow as fast as the company can find qualified personnel—a prospect made more challenging given some of the rural locales where the company operates. Recently, the company opened a new distribution center in Menasha, Wis., and hired 50 people.

As befits a Wisconsin-based company, about 75 percent of WOW Logistics’ business is in the pulp and paper, and cheese industries; the remaining 25 percent is quite diversified and includes such goods as truck parts and aluminum.

More than 300 customers in 60 different industries utilize WOW Logistics, and the company has earned a reputation for better than 99 percent accuracy in inventory and shipping.

The cheese financing program, which was launched in 1998, has proved to be a major success; in the last four years, the program has doubled in size to $75 million. To date, WOW Logistics handles more than 40 million pounds of cheese in the financing program every year.

Through the program, WOW Logistics buys the inventory from cheese makers and stores it at one of their refrigerated warehouses; WOW Logistics handles the freight and storage of the cheese, and customers pay WOW Logistics’ when they sell the cheese—typically within six to twelve months. Customers benefit from not having to spend money on inventory, as they can build those costs into the price of the cheese. “It’s a nice value-added service that we offer our customers,” Oswald says.

Currently, WOW Logistics owns and operates its distribution centers, many of which have separate spaces devoted for dry and refrigerated storage and are capable of maintaining multiple temperatures. However, the company does not own any trucks. For transportation services WOW Logistics relies on a network of hundreds of local carriers.

According to Oswald, WOW Logistics’ strategy to provide transportation brokerage services rather than to invest in assets in the form of its own fleet of trucks is a way to both reduce capital expenditures and mitigate the risks of maintaining a fleet that would be underutilized at times. “By not buying trucks, we free up a lot of capital,” Oswald says.

WOW Logistics is a mid-size company that is intent on growth. In order to achieve that, WOW has invested in information technology to streamline processes and improve accuracy.

An electronic data interchange (EDI) system that allows customers to electronically transmit order information to WOW Logistics’ computers can be used in conjunction with radio frequency (RF) scanners; both technologies enable distribution center employees to handle ingoing and outgoing items with no manual data entry.

Oswald describes the warehouse management system (WMS) and the transportation management system (TMS) WOW Logistics has deployed as “the lifeblood of the company”. The WMS tracks every order and location of items as they move through the distribution centers. Customers can view information in the WMS on-line using a secure password. The inventory information in the WMS also ties directly into WOW Logistics’ financial systems.

The TMS likewise tracks all orders as they are in transit, and both systems are integrated with the company’s backend database.

While the various technologies help WOW Logistics to reduce clerical and administrative tasks, Oswald says that IT has not been deployed to eliminate jobs. Currently WOW Logistics employs 220 people, and Oswald says that technology enables the company to grow its business without adding a commensurate number of employees.

One area that WOW Logistics is seeking to improve is its company culture. “We’ve always strived for customer loyalty and not just customer satisfaction,” says Oswald, “and we want to do the same with our employees.” He wants to create an atmosphere where people love coming to work.

WOW Logistics is working with a consulting company to create a strategic plan aimed at making the company an employer of choice. In the next few months, company executives will meet with employees and hold focus groups, all in an effort to devise new policies or change existing ones if need be.

While creating an environment that engenders employee loyalty is a good idea in and of itself, Oswald knows that ultimately it makes good business sense. “You can’t have happy customers without happy employees,” he says.

Click here to view the corporate brochure on WOW Logistics