What can a large logistics operation do for a company in this economy? Much more than moving boxes around, as it turns out.
Take the Dollar Tree’s logistics team as an example. Over the years, the diversified discount store has invested in the kind of logistics partners that keep the company financially sound while keeping their customers happy, even at Virus Times.
To give you an idea of the scope of the supply chain task, here are some dollar tree facts. Most importantly, the majority of the products the company sells come from abroad. Dollar Tree imports more containers per $100 million in sales than other major retailers.
“We have a significant impact from increasing the cost of freight” on more than 90,000 containers each year, says CEO Michael Wittinsky. Higher transportation costs have brought back an additional $200 million annually.
Pipeline inventory costs have also ballooned. “Transit times from Shanghai to Chicago more than doubled to 73 days from 35 days,” Witynski says. In the past, the company has stated that the liner will honor 85% of its contracts. These days, it hovers around 65%. Converting to air freight is not an option due to the mercurial increase in air freight rates, limited capacity in those lanes, and “dollar” products sold by stores.
Despite these challenges, the company is doing very well in terms of earnings, sales, expansion plans, share price and earnings performance. What explains this shining beacon of supply chain success in tough times? The reason has been years in the making.
From the CEO and across the C-suite, management praises skill, spirit, and a single focus on supply chain and logistical excellence. Given Witnyski’s proud statements and the respect he places on the company’s logistics professionals, he appears to be a member of the logistics team.
Can a great logistics operation and a great logistics team keep stock levels at the right size for customer service? Could. Can the logistics team that is at the forefront of its game keep prices low enough to satisfactorily serve the cost-conscious segment of the buying public? Yes they can. Can an excellent logistics team give you the financial stability to invest in expansion, add more retail outlets, and adequately sized inventory to avoid stock outs and supply chain disruptions in a pandemic global economy? Yes, yes, and yes. How about satisfying Wall Street and its investors? Yes she can.
If this sounds like a commercial for the Dollar Tree, it isn’t. It’s a commercial to invest in logistics and appreciate, respect and reward logistics professionals who make it work – before it gets to the fans. The Dollar Tree is an example that companies of any size can follow.