An industry resource to help promote, exhibit, and sell your products.

Tips for Laying Out a New Warehouse
By Jason Bader—Managing Partner, The Distribution Team

If you are like many of my distribution clients, you would love to change the layout of your warehouse to make it more efficient. Unfortunately, creating wholesale changes in the facility would be too expensive and disruptive to your current business. You tweak what you can and ponder what could be.

What if you had the opportunity to start fresh? What would you do differently? Recently a client sent me a note asking for some advice. He is moving into a new facility and would like to give the warehouse folks the best opportunity for success. Rather than just send him a note with a few suggestions, I thought it would be appropriate to share it with all my readers. I am sure that you can come up with more ideas, but these should give everyone plenty to consider.

Supersize the Receiving Area

When my partner Scott and I used to help clients design a new warehouse, the first thing we would do is draw up an obnoxious amount of space for the receiving function. We knew full well that the client was going to cut it down and throw up more product racks, but we wanted to stress the importance of the space. Receiving is the most critical function in the warehouse. One mistake here generally translates to ten additional errors before you get it corrected. Let me take a moment to translate. An error in distribution means a reduction to your net profit.

Think about all the activities that a receiving team must do. They break down pallets. They count the items and reconcile with the manufacturer’s packing list. Sometimes they add barcoded labels. Occasionally, the manufacturer makes a shipping error and the team needs to stage the product. Items come in to fulfill customer back orders. We need a place to accommodate this type of cross docking activity. When we force the team to work in cramped quarters, mistakes will occur.

Keep Shipping and Receiving Separate

Just like in receiving, this function needs to be given adequate space. Take a look at some of the functions in shipping. We often have a double check system. We may be building pallets for common carrier shipment. We may have to prepare small packages for UPS or Fed Ex. If we are using our own vehicles to deliver products, we need to have staging areas for each delivery run.

When we try to combine the space, using only one computer terminal, the processes become really confused. Confusion leads to errors in the warehouse. Ideally, shipping and receiving would be set up at separate ends of the facility.

Create a Dead Stock Graveyard

This is one of the parts of a perpetual dead stock management plan. Many of us have a difficult time addressing our dead stock problem because it is carefully hidden amongst the living, breathing inventory. Out of sight, out of mind. I suggest that you designate an area where your entire dead inventory resides. When you are actively liquidating this inventory, it is much more satisfying to see a visual representation of your progress as opposed to numbers on a spreadsheet. Read the story in full.

Company: A. Winther A/S

Time as an NSSEA member: Since 1997

Biggest challenge of the new year: This year has been challenging so far. Our customers react with a wait-and-see attitude and seem to be uncertain on what will meet them this year.

Biggest praise for the education industry in the new year: It would be nice if there could be less focus on price/discount and people would pay more attention to having products of a high quality.

Toughest challenge during harsh economic times: The uncertainty in the market makes customers more cautious when or if placing orders.

New education/learning product you are most excited about: We have recently presented two new trike ranges: Circleline and Duo. They are highly competitive and still of good quality too. We have great expectations for these on the American market. Read more about these products on our Website at www.a-winther.com.

“Green” policy you are most proud of: All our products conform with the strict Danish environmental requirements. We hold an approval from the local authorities, which includes the physical as well as the working environment. They also conform with the rules, bans, regulations and standards administered by the CPSC. And of course they neither contain phthalate nor lead.

If you are a supplier company that would like to be featured in the next issue of SM, we would love to hear from you. Shoot us an email and be our next company of the month.

To Help Collect the Bills, Firms Try the Soft Touch
By Simona Covel and Kelly K. Spors

Small businesses, hit by a wave of customers postponing payments because of the recession, are struggling to find ways to come up with enough cash to stay alive.

The companies are hugely dependent on their cash flows. But if they push their slow payers too hard, they risk losing customers. Hiring collection attorneys is also expensive, and if late payers are pushed into bankruptcy, their small-business creditors may find themselves empty-handed, waiting at the end of a long queue.

"The last thing you want to do is get in an adversarial position with your great clients; they're your lifeline," says Charles Doyle, managing director at Business Capital, a San Francisco company that helps businesses restructure their debts.

That's why many businesses that are owed money are relying on cooperation rather than strong-arm tactics. "If you're going to make it through the next 18 to 24 months, you've got to be open for alternative ways to get paid or you're not being a realist," Mr. Doyle says. Read the story in full.

The New York Times, 1/22/09

Rock-Bottom Energy Prices Won't Last
By Jim Ostroff

Gas pump prices are unlikely to be this cheap again for years to come. They will be heading higher by early March. But the increases will be modest with no repeat of 2008's eye-popping hikes from the year's first half that left many motorists outraged. Gasoline prices soared 40 percent to more than $4.11 for a gallon of regular unleaded on average nationwide in July and just shy of $5 a gallon in many metropolitan areas.

We see gasoline prices bottoming out sometime in February at about $1.60 a gallon on average nationwide. Then as usage ticks up seasonally, they'll probably climb a few cents each week or so through Memorial Day weekend, cresting near $2 a gallon. Barring a massive oil supply disruption, gas prices should in fact average around $2 a gallon for the year. That would be the lowest since 2004, when motorists paid $1.85 on average for the year. Last year's at-the-pump tab averaged a record $3.27 a gallon.

The difference between last year and this one is the recession's impact, which will weigh heavily on oil prices, trimming prospects for big price hikes at the gas pump. "Nothing depresses energy prices more than a dismal employment outlook that curbs fuel usage, and the ongoing job loss numbers are mind boggling," says John Kilduff, a senior vice president with MFGlobal, a commodities trading firm.

Oil traders remain glum, expecting perhaps a marginal boost in oil demand on the heels of a nearly 6 percent plunge in 2008, the first annual decline in nearly 20 years. With speculators all but sidelined, oil prices should remain in the neighborhood of $40 to $60 a barrel this year, despite production and export cuts by the Organization of the Petroleum Exporting Countries.

It will take a while longer for diesel prices to reverse course. They should slide $0.20 to $2.25 a gallon through spring before heading toward $3 a gallon in the summer. Don't count on diesel fuel reverting to its decades-long pattern of being substantially lower cost than gasoline. Environmental regulations adopted by the U.S. and Europe a few years ago make it more costly to refine the fuel. China is playing a part, too. Its industry gulps diesel to power portable electric generators, a proxy for inadequate grid power in many rural areas. China's economy is slowing, but it will remain one of Europe's largest customers for diesel fuel, competing directly with U.S. refiners.

Lower winter heating bills are in the cards, too. Retail heating oil prices should decline from about $2.25 a gallon to $2 by spring and average $2.30 for the year. That will be down nearly one-third from 2008's $3.30 average price. Natural gas prices are set to swoon 40 percent by spring to $3 per million British thermal units (MMBtu). The fuel is being hammered by recession-dented industrial demand and huge supplies, as new natural gas projects planned years ago have started producing. Prices will average $6 per MMBtu this year, down 30 percent from 2008.

Across-the-board bargain prices won't persist over the long haul. Tight oil supplies that have increased oil and motor fuel prices since 2004 are masked now by the recession-induced demand drop. Supply adequacy will be a potentially bigger headache when recovery hits its stride. "At the first signs of a real and sustained improvement in the economic outlook, oil prices should rebound and [there will be] a run-up to $70-a-barrel oil, and that will happen quickly," says Kilduff.

The Kiplinger Letter, 1/21/09

Suppliers' Monthly Editor: Tai Oyegunle

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