Retail Report: Helping the Little Guy
How CaseStack helped Advanced Beauty Systems streamline its logistics operations.
By Jennifer Kwok, Managing EditorIn the beauty market, small and mid-sized brands are often at a disadvantage. For one thing, these firms operate with less capital and fewer resources than large multinationals. One such instance is with product distribution. While large brands often have their own warehouse, technology, and distribution networks to deliver products to retailers, small brands often don’t. Instead, smaller brands try their best to fulfill orders from their own facilities. Some smaller brands, such as personal care company Advanced Beauty Systems (ABS), have found another option—outsourcing distribution to logistics providers.
ABS has marketed product lines such as Bodycology and Cantu since 2003. Initially, ABS handled its own logistics operations. It shipped orders directly to customers from its headquarters. However, the in-house inventory management required a lot of the company’s time and money—resources that the company wanted to instead devote to developing its products. “We are primarily a sales and marketing company,” says ABS CEO Chris McClain.
Last year, ABS hired logistics provider CaseStack (Santa Monica, CA). Logistics providers like Case-Stack provide marketers with many services, including warehousing and shipping products to retailers.
One of the benefits of working with logistics companies is that these providers have the up-to-date technology that many of today’s retailers require—and that most small companies can’t afford.
“Larger manufacturers tend to have invested several millions of dollars a year in logistics and supplychain technology, which allows them to improve service to their retailers and minimize costs by optimizing their shipping methods,” says Dina Kundar, vice president of sales and marketing for CaseStack. “For small and mid-sized companies, however, there’s often just no ROI for these technologies themselves.”
CaseStack uses several highly sophisticated technologies, including advanced shipping notification (ASN), electronic data interchange (EDI), and radio-frequency identification (RFID). These technologies are part of the supply-chain requirements of many retailers such as Wal-Mart. CaseStack’s customers have the option of incorporating these technologies into their logistics programs.
Logistics providers such as Case-Stack also help brands like ABS create optimal shipping programs that reduce costs and reduce damage to shipped goods. To accomplish this, CaseStack helped ABS go from less-than-truckload (LTL) shipments to full-truckload shipments.
An LTL shipment is when a company’s shipment isn’t large enough to fill a delivery truck. If shipments are too small, for cost reasons, products are instead shipped using various carriers. During this time, products are handled at many shipping stations. By contrast, if a company’s order is large enough to fill a truck, the truck can be driven directly to the retailer, saving freight costs and minimizing potential product damage. “Larger competitors are able to ship in higher volumes, which basically gives them a lower cost per case,” says Kundar. “Cost savings like these are reflected in the retail price, so small and mid-sized companies are at a cost disadvantage because of their smaller scale.”
To help create full-truckload shipments, CaseStack consolidates the shipments of several of its customers into one large shipment. “There might be products from six vendors on one truck, and they are all saving costs by shipping together,” says Kundar.
CaseStack says that other logistics providers did offer ABS consolidation services, but that these providers would have required ABS to store its inventory in warehouses across the country. CaseStack provided a single storage location in Dallas, which was located near ABS’s headquarters so that ABS could inspect its inventory whenever it wished.
According to McClain, aligning with CaseStack helped ABS meet its business goals. Freight claims were reduced by 80%, delivery compliance rates have risen by 20%, and order-fill rates have exceeded 95%. “We used to spend hours tracking our freight,” says McClain. “We are now focusing on how to increase revenue rather than looking for ways to reduce costs.”
Kundar says that the number of small and mid-sized companies outsourcing their logistics operations is growing, as is the number of logistics providers to serve them. “Until now, providers have been focused on providing solutions to those Fortune 1000 companies while the middle market just kind of gets ignored,” she says. “This is a relatively new concept for mid-sized brands. It’s something that retailers are actually taking notice of. They’re noticing smaller companies getting product in faster and getting it in on time.”