Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Unlike other segments of the logistics field, warehousing has avoided the dreaded fate of "disruption" from newfangled business models. Since people began erecting physical structures to store stuff, capacity has been leased under multiyear contracts with fixed rates, terms, and conditions negotiated up front. Long-term deals foster security, stability, and strong customer-provider relationships, the maxim has held.
While long-term deals aren't going away, there may be room for an alternative approach. And it has come from a Seattle-based startup called Flexe Inc. Founded in August 2013, Flexe has created a spot market for warehouse space in an effort to exploit inefficiencies in a static environment. Flexe's platform matches companies with excess space or periodic vacancies with those who need space quickly, usually for a short time period, but who don't want or need the obligations of a long-term lease.
Today, the Flexe marketplace consists of more than 85 warehouses in 20 cities in the U.S. and Canada. The company doesn't operate any warehouses, and there are no leases involved; each facility is operated by the business with the available space. Flexe markets and advertises the space, defines the scope of each party's responsibilities and liability through a uniform contract patterned after standards developed by the International Warehouse Logistics Association (IWLA), and deploys cloud-based software that manages delivery scheduling, inventory tracking, and billing, among other tasks. A prospective user can name its price for the specific services it wants to take advantage of. The provider's proposal, once submitted, is non-negotiable. The user pays Flexe, which then cuts a check to the provider minus its commission.
Flexe's customers include third-party logistics service providers (3PLs), manufacturers, retailers, and wholesalers, all of which could be on either end of the transaction depending on the circumstances. What they have in common is that they work with a flexible and scalable model that, until now, has been largely alien to warehousing. The typical duration of a transaction on Flexe's platform is four to six months.
FOR WINE TOOLS FIRM, ROOM TO BREATHE
One of those customers is True Fabrications, a 12-year-old Seattle-based manufacturer and wholesaler of wine gifts and accessories, which has been with Flexe for about two years. Dhruv Agarwal, True Fabrications' co-founder and managing director, said the company made Flexe its sole warehouse partner after running out of space in its own facility and growing tired of competing for a fixed amount of excess capacity made available by its former vendor, a 3PL. The problem was especially vexing during the holiday season when True Fabrications generates about 40 percent of its revenue and its demand for warehouse space spikes.
Agarwal also saw little value in committing to a fixed long-term lease when it was impossible to predict where his business would be by the end of the contract term. Add to that the millions of unoccupied square feet available in the Seattle market, and, to the company, the move was a no-brainer.
Agarwal said the Flexe model offers True Fabrications a wide range of warehousing options at a competitive price. It can view its nationwide inventory flow from a single software platform. Rather than building and operating a larger warehouse of its own, True Fabrications leverages other people's space and shifts around labor and inventory when it's needed. "The cost that [the platform] is showing to us is similar to what it would cost if I had my own warehouse, only I don't have to sign a lease," Agarwal said.
A NEED FOR FLEXIBILITY
Karl Siebrecht, Flexe's co-founder and CEO, is an IT guy and not a warehouseman. So he approached the issue from a different perspective. Siebrecht discovered that virtually all warehouse space came to market in "big fixed chunks" and as part of long-term leases. Even subleases rarely ran less than a year, Siebrecht found. At the same time, millions of square feet nationwide sat unused and burned up capital. Providers of space, he reasoned, would rather have some cash flow for their assets than none at all, and would be willing to structure deals of a short-term and flexible nature.
Meanwhile, users who find themselves short of capacity for any number of reasons, or perhaps want to capitalize on a quick-hit opportunity in a market, would want a bit of warehouse space for a short-term ride. Bringing surplus capacity to those who needed it fast seemed to be a natural fit, Siebrecht believed.
It is impossible to quantify how much warehouse space across the country is unoccupied on any given day. Flexe last spring conducted a survey (albeit from a small sample size) of businesses that operate as users and providers of space. About 20 percent said they "always or often" needed warehouse space on short notice, while 60 percent answered that they needed it "sometimes." In addition, 40 percent said they frequently have excess capacity available.
Not everyone is enamored of the concept, however. Jack Rosenberg, Chicago-based national director, logistics and transportation, for Colliers International, a real estate advisory firm that manages about 1.7 billion square feet of industrial property worldwide, said the Flexe model would be "disruptive to 0.001 percent of the market." He said most lessors could not justify the costs of insurance and deal documentation for arrangements of a short duration. In addition, short-term deals don't compensate the lessors for the risk of having a recalcitrant tenant that doesn't vacate on time, or the potential for a fire or a hazardous materials spill, he said.
"Very short-term requests are common for TV shoots, advertising stills, video shoots, and movies," Rosenberg said. "My clients don't want the bother." In response, Siebrecht said the contract's language addresses as many negative scenarios as can be imagined. He added that Flexe does not accept transactions involving hazardous materials storage.
Dale S. Rogers, professor of logistics and supply chain management at Arizona State University and an adviser to Flexe, said the model best functions as a supplement to a company's existing warehouse infrastructure and not as a stand-alone operation. "It won't replace the traditional warehouse network. But it gives you the flexibility to do certain things" such as penetrating a hot market on a moment's notice, he said. For his part, Siebrecht said Flexe's customers are best served "putting a flexible and elastic capability on top of an existing infrastructure."
Rogers added that negative comments from industrial developers are rooted more in their disdain for short-term arrangements than in Flexe's strategy and tactics. "No industrial property developer wants to work with short-term leases where they have to turn over property so rapidly," he said. "They want the predictability and security that come with long-term arrangements."
"LONG-OVERDUE" MOVE
Shanton J. Wilcox, vice president of supply chain management for Capgemini Consulting N.A., said Flexe is no different from companies in other industries who create "secondary markets" to inject liquidity into an otherwise illiquid asset. For example, in the auto leasing business, a secondary market exists for one party to assume a car lease from another, Wilcox said. The same principle applies in high-density urban areas like New York, Chicago, and San Francisco where apartment subleasing is commonplace, he said.
Wilcox added that the time and conditions are right to apply the same model to the warehousing sector. "I would say that it is long overdue in this area," he said.
A team from the University of Tennessee, Knoxville, walked away with top honors at this year’s event. It was the school’s first time competing in the scholarship competition, which was held during IANA’s Intermodal Expo in September.
The winning squad included students Jaren Bussell, Elizabeth Shuler, Brock Sooley, and Kathryn Whittaker and was coached by Dr. Donald Maier, associate professor of practice–supply chain. “It is exciting to see what the students can achieve in five hours. Each team reads, analyzes, and prepares a presentation with no faculty input,” Maier said in a release.
In addition to UT, participating schools included the California State Maritime Academy, College of Charleston, Georgia Southern University, and SUNY Maritime as well as the universities of Arkansas, Maryland, North Florida, North Texas, and Wisconsin at Superior.
IANA’s scholarship awards support curriculums designed to attract students to careers in freight and intermodal transportation. Since the program’s inception in 2007, IANA has awarded over $5.3 million in scholarships.
Family-owned business Cibao Meat Products, a producer of Hispanic-style sausages and deli meats, has long prided itself on staying true to the traditions and values the company was founded on in 1969—like a commitment to high-quality ingredients and a family workplace atmosphere. Less of a source of pride, however, was its continuing reliance on the same, mostly manual, processes and data management techniques used at its inception.
With the company now selling its meats to retail giants such as BJ’s, Sam’s Club, and Costco as well as 500 supermarkets and restaurants across the U.S., Cibao president Heinz Vieluf Jr. knew that it was time to take the company into the digital age. “As a third-generation leader of a multigenerational company, I put an emphasis on bringing our business into the digital future and utilizing technologies that will help propel success,” he said in a statement.
IN WITH THE NEW
In Cibao’s case, that would require modernizing its data-collection practices. Because the meat producer still relied on legacy processes, its company data and customer data were siloed, scattered throughout departments from sales to manufacturing to accounting. Teams were manually gathering information and creating reports on a weekly or biweekly basis. As a result, company leaders had no real-time visibility into business-critical operations. On top of that, creating those reports ate up hours of team members’ time each week.
For help bringing all of its organizational data into one central location, Cibao turned to the Slingshot work management platform from software company Infragistics. In October 2023, the company began working with Slingshot to compile data from multiple sources into a centralized hub that would be accessible to every employee.
Today, with the new platform in place, Cibao is benefiting from enhanced data transparency across the company and from accelerated data-reporting capabilities. Employees can now create reports within minutes, eliminating the biweekly reports in favor of daily assessments and unlocking insights needed to make critical decisions 10 times faster than before—saving 120 hours a month, the company says. For example, now that it has real-time access to its customer payment data, Cibao’s accounts receivable team has been able to detect any discrepancies in real time. This has allowed the team to check in with customers as soon as they notice a potential issue, which has increased the company’s cash flow by $40,000 a week on average, or up to 65%.
STRENGTHENING THE BOTTOM LINE
With teams saving hours each week on reporting, Cibao employees can now concentrate on higher-value tasks. For instance, they have more time to connect one-on-one with clients and develop relationships, instead of getting held up on the back end. They can also focus on new marketing efforts and promotions, not only boosting customer satisfaction but also helping to grow existing customer relationships and develop new ones.
“We created Slingshot to bring together data that has traditionally been spread across departments into one completely accessible space so that companies can better drive productivity, insights, and ultimately business results,” said Dean Guida, founder of Slingshot, in the statement. “By bringing its data into a central location, Cibao Meat Products has unlocked insights that have allowed [it] to move strategically and at a faster pace, strengthening the company’s bottom line.”
As autonomous systems take on a bigger role in logistics and industrial production applications, the race is on to make the equipment smarter, more efficient, and safer. To accelerate work in this area, the German lift truck and logistics technology vendor Kion Group is partnering with a local university to support expanded studies on artificial intelligence (AI) and autonomous systems.
According to Kion, Peitz’s work will focus on the development of autonomous systems that operate intelligently and safely for all parties involved, with a particular focus on autonomous mobile robots, forklift trucks, and AI-based systems that are used in logistics and production environments.
The objective of the endowed professorship is to advance the field of research at the highest international level, Kion said in a statement. In close collaboration with research networks and other partners both within and outside TU Dortmund University, such as the Fraunhofer Institute for Material Flow and Logistics IML and the Kion Group itself, the professorship will form a “hub” for digital and intelligent logistics, the company added.
American skin-care company ET Browne—best known for its Palmer’s Cocoa Butter—has trimmed costs, boosted revenue, and increased profits thanks to a recent IT upgrade from its longtime technology partner Syspro, a global enterprise resource planning (ERP) software provider that specializes in serving manufacturing and distribution businesses. ET Browne has run on Syspro software for 25 years and racked up some of its biggest year-over-year improvements following a 2023 upgrade to the latest version of Syspro ERP—an enhancement that allowed it to leverage the platform’s material requirements and planning (MRP) capabilities to build a just-in-time inventory system.
The net result? A smoother-running supply chain.
“We’ve successfully relied on [Syspro] for more than a quarter century while both growing and aligning our business to take advantage of the [platform’s] enhancements,” Pieter Goes, ET Browne’s vice president of IT & BI (business intelligence), said in a statement describing the project. “After bringing in [Syspro] to do native demand forecasts, we were able to better evaluate key markets and key customers, enabling our forecasting and capacity planning to be much more accurate. As a result, we can achieve a fill rate of greater than 95% and are able to process our purchase orders much sooner, resulting in better supply.”
NEW CAPABILITIES, BETTER OUTCOMES
Syspro’s MRP capabilities allow companies to balance supply and demand for materials and components so they can accelerate manufacturing production. With the system upgrade, ET Browne was able to take advantage of those capabilities to gain better visibility and control over inventory and the supply chain. As the companies explain, this allowed ET Browne to predict demand, understand how filling the projected sales pipeline would affect production schedules, and anticipate the peaks in demand it would need to buffer.
Leveraging those demand forecasting and supply chain management capabilities, ET Browne created a just-in-time inventory system that has dramatically reduced the amount of raw material and product it keeps on hand—a move that is translating into increased profits: Since implementing the upgrade, ET Browne has reduced inventory by 22% and increased profits 113% on 7% revenue growth.
ET Browne’s leaders say they intend to leverage Syspro to manage emerging challenges as well. Those include meeting growing consumer, distributor, and government demands to use recycled materials in packaging, while also making sure the company first uses up the materials it already has on hand. That transition will increase complexity within the company’s bill of materials, something Syspro’s management capabilities can help it navigate.
“[Syspro] ERP provides much more than just financial management,” Brian Rainboth, CEO of Syspro Americas, said in the statement. “Our platform empowers mid-market manufacturers to create accurate demand forecasts [and] project exactly how much raw material they’ll need to order and how much product they need to make to meet demand. We’re proud to celebrate 25 years with ET Browne and look forward to enabling future growth and profitability as the company deploys additional capabilities with [our] platform.”
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Illustration courtesy of Clean Energy Fuels Corporation
For consumers, the car-buying process generally includes a test drive so they can see if the vehicle lives up to its hype before they plunk down any money. But the process can be a little more difficult for commercial fleet managers.
The 2025 Peterbilt 579 day cab tractor, branded in Clean Energy’s signature green, will be available for fleets to test on their normal routes for up to two weeks. And if you don’t happen to have an RNG fueling station in your own yard, that’s no problem: The fleets testing the demo truck will be able to use Clean Energy’s fueling infrastructure, which consists of over 600 stations across North America, 200 of which have public tractor-trailer access.
First in line to try the new rig—which can haul heavy loads for an 800-mile range—is transportation and logistics giant J.B. Hunt Transport Inc. After Hunt completes its trial, the truck will make its way through large and medium-sized heavy-duty trucking companies in California, Arizona, Texas, Oklahoma, Ohio, Michigan, Pennsylvania, and Florida. Clean Energy says it expects to run the X15N demo truck program at least through 2025.
“Vehicles powered by renewable natural gas produce significantly less carbon emissions throughout their lifecycle and are more compatible with today’s available infrastructure than most competing emissions-reduction technologies,” Greer Woodruff, executive vice president of safety, sustainability, and maintenance at J.B. Hunt, said in a release. “The new technology and supporting fuel network in this pilot have the potential to be a viable, cost-effective solution for customers wanting to decrease their carbon footprint in the near term.”