Successful Inhouse Distribution, It Pays to Do It Yourself

SUCCESSFUL INHOUSE DISTRIBUTION, IT PAYS TO DO IT YOURSELF

BY: BILLY JOE MCCARTY

Fort Worth, Texas

June 2003

OUTLINE

Introduction:

I. Third Party Distribution Service Structures and Costs (Models)

A. Structures

1. Small-scale

2. Large-scale

B. Costs (Models)

1. Small-scale

2. Large-scale

II. Managing Your Own Distribution

A. Infrastructure

1. Facilities

a. Building Lease

b. Equipment

c. Other Requirements

2. Systems (Warehouse Management/Inventory)

a. Small-scale

b. Medium

c. Large-scale

B. People

1. Management

a. Who to Hire

b. How to Evaluate Performance

2. Hourly Employees

a. Who to Hire

b. How to Evaluate Performance

i. Attendance

ii. Productivity

iii. Quality

iv. Safety

Conclusion:

SUCCESSFUL INHOUSE DISTRIBUTION, IT PAYS TO DO IT YOURSELF

INTRODUCTION: “Distribution is not our core competency”. This is the most common reason given by companies for not managing their own distribution centers. Because of this, these companies believe that it is more cost effective to hire a Third Party Warehousing/Distribution Provider to manage their distribution centers. They are mistaken. All third party providers are in the business to make money. It stands to reason that if these third parties can make a profit by managing companies’ warehouses, that those companies can manage their own distribution for less than it would cost to hire a service provider. All that these companies need to do is to understand distribution management and to do it themselves.

I. Third Party Distribution Service Structures and Costs (Models)

A. Structures: This describes the typical Services Contract structure for Third Party Distribution Services. The major difference between Small and Large scale distribution is that in small-scale distribution, the costs for infrastructure (warehousing space, systems, equipment, etc.) is included in the handling and storage costs, whereas in large-scale distribution the infrastructure costs...