New Kinds Of Malls Being Built Here

December 10, 2004
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GRAND RAPIDS — Late in the last century, the automotive industry began combining warehousing with a certain amount of product preparation work.

Now a local firm called Supply Chain Solutions Inc. (SCS), is trying to get area manufacturers and suppliers to take advantage of the idea in connection with its own innovation: the multi-client site, a.k.a. the supplier mall.

Les Brand, the CEO of SCS, says the innovation combines the notion of a shared warehouse — a facility in which several firms warehouse common parts or product — with the premise that, rather than just passively occupy space, certain materials can undergo limited production preparation.

Brand told the Business Journal a number of important advantages can accrue to suppliers that employ the supplier mall concept.

“In a vertical industry where you have a common supply base — where the OEMs have the same or similar kinds types of suppliers — we are collecting those in one single, multi-client site.

“And there’s some benefit for suppliers to work with more of their clients out of one site.” Likewise, he said, suppliers’ clients benefit because the malls put goods and services closer to the consumption point, reducing time constraints.

He said this is particularly true in the office furniture industry.

“They’re all moving to the lean manufacturing model, for the most part,” he said, “and lean really demands smaller quantities of supply more frequently.”

And that can imply some problems, he said.

“The office furniture industry is spiking right now,” he explained. “Their sales depend on what project they have that month or that week, so — because office furniture has no consistent demand — the suppliers have a hard time managing that demand.”

But Brand said that if a supplier happens to be servicing Steelcase, Herman Miller, Haworth and Trendway with almost identical product — a raw material or a common component — a supplier mall simplifies things for everybody.

He said a multi-client site enables suppliers to put more material into an area and balance and meter those flows into each OEM, so if the requirements of one firm are down, it can be offset by the demands of others that happen to be up.

“Otherwise, the supplier — especially if he’s further out — is asking himself, ‘Do I keep this stuff 1,000 miles out or 500 miles out and try to get it there just in time? Or can I manage a location where I can put it all together and have all my things there for that market segment?’”

He said a supplier mall replaces four forms of inventory.

“Typically, a lot of these plants used to house this (material) inventory,” Brand said.

“Then the supplier had extra inventory, and there was inventory in motion, inventory in storage elsewhere. You had all these inventories. But plant space is just too expensive today. So you free up plant space by moving that inventory back out to one centralized space that costs the lowest amount.”

Brand said SCS’s newest supplier mall on

52nd Street
in Kentwood is for Weyerhaeuser. And it features what he terms “the other piece” about supplier malls: the value-added center.

“We manage the inventory,” he said. “And sitting right there in the middle of all this inventory is a cutter, an employee of an independent contractor that we brought in.

“So we break the inventory down so the cutter can do his activity. Then we capture those yields, re-inventory them and plan all the efficient routing into those plants that are consuming that wood product.”

And Weyerhaeuser isn’t alone in the “mall.”

“We house other like commodity groups in alongside Weyerhaeuser,” Brand said, “so that they can flex their space and be more efficient. The other clients are buying down some of the technology and some of the labor and assets and the overhead.”

He said the idea is working well enough that SCS clients are outgrowing the 40,000 square foot facility. “We’re probably going to need to move to a site served by rail,” he said, “and we’ll need 100,000 square feet plus.”

In other multi-client settings, he said, a variety of value-added activities can take place.

“You can do line-ready racking,” he said.

“Or, say the material comes into the warehouse in big tubs. So you break that tub down into a more consumable work cell configuration so that it can be wheeled right to the work cell. They can consume it and that makes it fairly efficient.”

Most of the value-added work done by SCS handlers, he said, entails such handwork as shoving casters into chair bases, or preassembling a base. 

“If it’s not too highly specialized,” he said, “we’ll take that on ourselves and set up an inspection point to make sure it’s done right.

“If it is specialized — for instance, measuring for quality, or something like the specialized work and machinery at Weyerhaeuser — what we typically do is go find that specialty. We get the best of the best and bring it into that center so the product doesn’t have to be moved again. The work can be done right there at the center.”

Brand said SCS has 20 people in the consulting, assessment and design end of things and 20 others who are material handlers and inventory managers.

He and his partner, Jim Ward, founded the company three years ago this month. He said sales this year would wind up at about $5 million.

Ward and Brand are looking forward to a new project for which Delphi has retained them.

It would entail establishing a transloading center, possibly with value-added components, near California’s Long Beach port.

The firm will devise ways to strip out ship-container loads in-bound from Asia. Cargo from five 40-foot containers, Brand said, will fit in 53-foot trucks. Truck transportation will reduce costs by sharply cutting shipping times.    

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