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Logistics experts: Organization lessons translate to smaller businesses

With one of the biggest shipping operations in the country, Savannah is known for its port, warehouses and operating logistics. Some of the area’s best logistics experts say the lessons from the large endeavors will translate to making any size business run as successfully and efficiently as possible.

Justin Redmond says one key to building a business is accurately anticipating growth. Redmond serves as president of Distribution Services International Inc., a Savannah-based company that operates 1.2 million square feet of warehouse property in Savannah for warehousing and logistics services.

“Especially for a small business owner, growing a company is extremely time consuming and can be very difficult,” Redmond said. “You need to model what your growth looks like and think ahead through the next steps of your growth phases, such as capital investments and how to build your team.”

Redmond said it’s crucial to make good partnerships in the early stages of starting a business.

“You need to establish solid accounting, legal and banking partners who understand your business and vision,” he said.

In addition, a good technology platform that is scalable will help businesses of any size with their organization efforts. Redmond said there are many new online software tools for small businesses, particularly for record keeping.

“There are a lot of different ways to manage growth and a combination of things you can implement,” Redmond noted. “Business owners and managers need to decide what they want to do in-house versus what they want to outsource, and this will change over time. This will have a big impact on head count, such as the people you need to hire and the necessary workspace that they should have.”

Space to grow

“Knowing you’ll need to get additional space as you grow is important,” he said. “It requires thinking ahead, which is hard to do when you’re growing quickly, but it’s really important, so you don’t outgrow your ability to provide good services to customers.”

In 2008, Redmond thought he had enough space to run DSI’s corporate functions along with the daily operations. Today, he said, the company is figuring out how to expand again and re-align their team to prepare for the growth they’ve experienced.

“You have to be able to adapt and be ready to change, and continue to evolve your space,” Redmond added.

In terms of managing space of a warehouse, Redmond said there are design principles that his company uses for inventory management and moving stock.

“You need to design a layout based on the lot sizes you anticipate so you don’t waste space, as well as ensure that inventory is accessible, so you don’t waste time and effort,” he said.

A business owner also needs to consider environmental factors. “Where are you going to meet with clients? How close to your operations do you need to be?” Redmond posed. “If you’re managing locations that are out of town, you’ll need the best possible strategy for managing those locations remotely using technology, and you’ll also need to know how you’ll get back and forth in the quickest, most efficient way possible.”

Understand your processes

Ray Summerell, who owns EIPCI, a business and facilities efficiency consultancy based in Savannah, said one of the most important ways to organize a business is to streamline processes and use of facilities for maximum efficiency, saving time and money.

EIPCI identifies, models and implements solutions for sustained growth, financial controls and operations management.

“There’s a time and money construct here; it is very intense around port facilities and warehousing operations where throughput and efficiency quickly translates to dollars,” Summerell said.

Typically, a large organization’s biggest expense is payroll. The second, Summerell said, is facilities and infrastructure.

“This not only means buildings, but, for logistics operations, includes forklifts, overhead cranes, etc. That total facilities cost is substantial — a warehouse is not just a roof over a box,” he said. “It is a process-driven facility and if you create improved efficiencies of just one or two percent, that translates to potentially huge returns to the bottom line, sometimes millions of dollars.”

Summerell uses an example of using tracking technology to manage time.

“If a container can arrive at a port a day to two before its designated ship leaves — rather than weeks before — that helps cut total costs, from transportation to storage to carrying costs for goods. Technology is a key factor in this. We couldn’t (account) for this level of sophistication with manual records, alone. Today, large shipping companies have thousands of containers in movement every day. It’s only through enabling technology that they can be managed through a logistics end-to-end process,” he explained.

Summerell observed there are mountains of shipping containers at Savannah’s port, either being queued for outbound ships or waiting to be sorted for further disposition.

“When a container is taken off a ship or is ready to be loaded on a ship, there’s a requirement to minimize how many times it has to be moved before it gets to be where it needs to be. Every time you move it, it’s time consuming and expensive,” he said.

Similarly, when goods come off a ship, the container will be moved by truck, rail, or have its contents temporarily stored in a warehouse. But, time is money and the longer goods wait, the higher the carting costs for both owner and transporter.

Managing throughput is vitally important in productivity, Summerell advised.

“The idea is to maximize efficiency by minimizing time and repetitive handling … the less time a container or its contents sits idle or is warehoused, the more money owners and shippers are making,” he said.

Summerell said one of the issues to be aware of is the amount of time a product spends in storage.

“Most warehouses in Savannah are large staging platforms where products move from shipping containers to rail or trucks to go inland (or the reverse),” he said. “So, the goal is to have inflow and outflow synchronized so that materials spend as little time in transition as possible, get moved around as little as possible.”

A warehouse, Summerell explained, is, by definition, a process-oriented space. The logistics processes that occur on an open lot or use a warehouse roof is a core business function.

“The warehouse itself is simply a tool, a means to an end,” he said. “A building takes time to build, is expensive and doesn’t have wheels — if you build it in the wrong place, you can’t move it around.”

“Similarly, if you look at an owner constructing a million square feet of a warehouse, they’re having to size their facility based upon forecast business volume in a particular location. They don’t want to build for today’s requirement and in a few years, only doing half of that volume, or, twice that volume. If a warehouse is sitting empty, owners are hemorrhaging money in total operating costs. And if growth forces a partial expansion in a different location for added capacity, they’ll likely add complexity and cost to moving goods between and operating multiple buildings.”

Non-stop is success

Page Siplon got his start in logistics in Savannah and today is CEO of TeamOne Logistics, a company that moves cargo all over the nation in 111 locations in 44 states.

“Logistics is a really big word,” said Siplon. “Basically, there is stuff that moves and stuff that gets stored. And, essentially, the best operations never have to stop.”

“There are a litany of companies in the logistics industry trying to figure out how to make this work with technology, with, for example, automation, self-driving trucks and Uber Freight,” he continued. “But at the end of the day, it’s about people. This a people business.”

A company can have great technology and great transportation, but these things don’t happen completely by themselves, Siplon explained. The better people a company employs, the more successful a company will be. It’s not a secret, but it’s a tip that’s overlooked often.

“Be honest and clear with your employees and people you’re interviewing when you’re growing your business,” Siplon suggested. “If it’s a trucking job, don’t tell them they’ll be home every night. Again, logistics is a big word, the jobs are very different and people will want to do different things. Find out if they’re a good fit for that particular position you’re creating. Don’t fake it; it will hurt your business.”

The shipping industry gets hung up on putting bodies in the industry, Siplon said, which is why it has a notoriously high turnover rate.

“Set yourself up with a good core and a stable workforce,” Siplon added. “This will help your company grow.”

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