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March 2014
Opening Opportunity with Logistics
By Jim Froneberger

     When you shop at your local Wal-Mart, have you ever thought about what it takes to get all those products, from factories all over America and the rest of the world, onto the shelves in your neighborhood store?

     Thousands of different products, from thousands of different manufacturers, all have to find their way to thousands of stores all over America. The process by which it all happens is a matter of logistics—the management of the flow of goods between the point of origin and the point of consumption.

     Distribution Technology is a leader in logistics, offering public warehousing, contract warehousing management, third-party distribution, cross docking, freight consolidation, transportation management, rail and intermodal transloading, and logistics consulting.

     Its clients come from a wide variety of industries including retail, consumer products, food and beverage, furniture and home furnishings, raw materials, industrial materials, automotive aftermarket, hardware, and packaged goods.

 

Keeping Pace with the Times

     Distribution Technology was founded in 1969 with seven employees and 100,000 square feet of warehouse space serving the Piedmont region. Rock Miralia, a member of that initial management team, assumed majority ownership of the company in 1974. In 1988, Rock’s two sons—Tom and Mark—joined the company.

     Tom graduated from N.C. State with a degree in nuclear engineering and had spent four years as a reactor engineer for Duke Energy at their McGuire Nuclear Station. But after earning his MBA at Queens University, he decided that he wanted to join the family business, coming on board as staff industrial engineer.

     Tom’s younger brother, Mark, went off to college at Appalachian State intending to come back and work at his father’s company. But after graduation, he decided to go to work for a similar company in Atlanta, just to make sure that was the career he really wanted. After a year in Atlanta, he had his answer and moved back to Charlotte to join Distribution Technology as warehouse supervisor.

     In 2005, Tom was named president and CEO and Mark became vice president of sales. Mark is also president of Record Storage Systems, a subsidiary that provides document storage, record management, digital imaging, document protection and security, indexing, cataloging, document destruction and delivery services in the Charlotte area.

     Up until the late ’80s, the food and beverage/grocery products channel was the bread and butter for Distribution Technology. The big food product companies needed to house local inventory for the Piedmont market, so the Miralias’ company provided those services for a diverse set of brands like Heinz ketchup, Gatorade, Van Camp, Nestle, Gallo wines, Mickey’s Moon Pies, Arm & Hammer, and Proctor & Gamble, among others.

     Trucks and rail cars of grocery products—canned goods, jars of mayonnaise, corn syrup—were unloaded at the warehouses and ultimately shipped out to grocery retailers in the Piedmont region and beyond.

     “In one two-week period, we shipped a million cases of Gatorade,” remembers Tom. “We were shipping orders where other distribution centers were at capacity, couldn’t get transportation, or couldn’t get a handle on their inventory. We were shipping all the way up into Pennsylvania and other places outside of our natural region.”

     But as the large food products companies began buying up multiple brands, they found it more efficient to consolidate all of their brands and business lines together. A large food company could collapse what might have been 15 or 20 distribution centers into a much smaller number of larger centers. They could fill up an entire truck with their multiple product lines for transport direct to a grocer’s distribution center, eliminating the need for contract consolidators like Distribution Technology.

     At the same time, technology was rapidly evolving as ordering moved from snail mail-based paper purchase orders, to fax, email, and now electronic data interchange (EDI) and file transfer protocol (FTP). Orders that used to be sent five days or more in advance now arrive electronically in the morning or early afternoon for shipping that same day.

     Over the years, Distribution Technology has kept pace, developing new relationships with industrial product companies and local manufacturers, and transitioning to support the retail flow of merchandise from suppliers to stores and distribution center networks.

     Along the way, Distribution Technology also has become proficient in processing information for clients, providing a host of electronic data flows to support the movement of goods.

 

Keeping It Moving

     Distribution Technology currently operates and manages about 1.2 million square feet of warehousing operations in the Charlotte region and employs more than 250 people. That warehouse space is split among eight facilities, most of which are located in the Westinghouse Boulevard/Carowinds Boulevard area.

     The vast majority of the shipments handled by the company pass through one of their cross-docking facilities that support their retail industry customers. A cross-dock is a building with loading docks on both the front and rear of the building. Shipments arrive by truck from suppliers on one side of the building, are unloaded, reprocessed into outbound shipments, and then loaded onto trucks parked on the other side that will be bound for another destination. The cross-dock operations consist of both consolidation centers and pool distribution centers.

     The warehouse facility the company operates in Concord for Wal-Mart stores is a consolidation center. In that facility, merchandise of Wal-Mart suppliers in this region is picked up by Wal-Mart fleet and brought to the Concord warehouse. There, the products are combined with products from other regional suppliers or importers and split out to be loaded onto outbound trucks going to any of the 42 distribution centers across the country that directly service Wal-Mart stores.

     The company operates a pool distribution facility serving Bed Bath & Beyond adjoining the company’s corporate offices in the Westinghouse area. There, products arrive from a variety of suppliers, importers, or other warehouse consolidation points, all destined for Bed Bath & Beyond stores in the region. The incoming products are offloaded and palletized with other products going to the same destination and placed on trucks for delivery.

     Distribution Technology also provides a similar pool distribution service for Sam’s Club stores. Together, Wal-Mart/Sam’s Club is their biggest client and they are the top logistics operator in the nation according to Sam’s Club operating metrics this year and Wal-Mart statistics last year.

     While cross-docking represents the vast majority of their volume, those activities take up a small percentage of Distribution Technology’s 1.2 million square feet of warehouse space, because the merchandise is not stored for long periods of time. In many cases, the shipments are in and out in the same day.

     The vast majority of their physical space is devoted to merchandise warehousing—providing an inventory distribution center for a variety of clients. They store a wide array of items from “lunch meats to specialty chemicals,” according to Mark. But the company still tends to focus on items that move in and out as opposed to long-term passive storage.

     “A large portion of our square footage is devoted to multi-user distribution centers where we manage inventory for our clients,” explains Mark. “We promote service and activity with those clients, because we understand there is little value in inventory that just turns once a year. That doesn’t really leverage any of our expertise.”

     “Our greatest strength shows when we have daily activity—daily inbound and daily outbound, whether it be in retail, manufacturing or supplier channels,” adds Tom. “We are extremely good at high volume with high service requirements. That means flowing information in a timely fashion, flowing it accurately, staying on top of the details, staying out front, and controlling costs. That’s our niche and it’s a great fit.”

     In addition to the basic provision of warehousing and distribution services, Distribution Technology also can help companies develop an integrated logistics program where they handle not only warehouse management, but also transportation management. They say it is ideal for small- to medium-sized clients who can leverage the company’s logistics expertise to deliver best practices, allowing them to focus on their core business rather than distribution.

     “The combination of warehousing services and transportation services is where we can add a lot of value for our clients,” says Mark. “We can do the storage and handling in the warehouse and then we can design a transportation network for them. We have a small fleet of our own trucks that serve our immediate region and then we can contract out to truckload carriers and less-than-truckload carriers to supplement that and for national coverage.”

 

Keeping It Up to Speed

     As Distribution Technology has evolved, they have continued to look for new markets, including importers/exporters with local offices. While the majority of food products are manufactured domestically, the reality is more and more consumer products come from offshore. With the company’s client mix shifting away from food over the past 20 years, embracing the consumer products import market has become increasingly important.

     Distribution Technology serves as the operator of Charlotte’s Foreign Trade Zone #57 and has about a half million square feet of warehouse space that can be activated as a Foreign Trade Zone whenever the need arises.

     Because of Charlotte’s proximity to ports in Charleston and Savannah, and location alongside or near three major north-south/east-west Interstate highways—I-77, I-85, and I-40—Charlotte is an ideal inland import processing center. Trucks leaving Charlotte can service markets as far north as Pennsylvania and New Jersey, and as far south as Alabama and northern Florida, same day. By contrast, a distribution location in Atlanta can’t service the population centers of the northeast same day because Atlanta is too far south.

     The Miralias believe that Norfolk Southern’s new Charlotte Regional Intermodal Facility at Charlotte-Douglas International Airport is a positive for the region. They are also hopeful that the expansion of the Panama Canal will be a positive if that helps bring larger ships into Charleston, Savannah, and other east coast container ports.

     “The bottom line is the new intermodal center should be more efficient because it was designed from a blank sheet of paper and seems to be the perfect layout for what they want to do there,” offers Tom. “And if the new Panama Canal makes it more attractive to run some less time-sensitive freight by water all the way to the east coast instead of landing it in L.A., we could see a little bump from that, too.”   

     One limiting factor, Tom explains, may be the lack of integration between the railroads, N.C. and S.C. governments, and the Charleston port itself. For instance, the Wando container terminal does not have direct rail access, meaning that all the containers have to initially be moved by truck. Also, the lack of the main rail line out of Charleston that runs straight through to Charlotte. An alternative route through Columbia gets considerably less use.

     Whether it’s import/export or domestic logistics support, the Miralias say their focus will always be on the client’s needs and adapting their offerings to those needs. Growing companies often choose to outsource distribution so they can focus on their core business and preserve capital. Tom and Mark assure their seasoned team of professionals offer a level of expertise that can make a difference for those clients.

     “We want to help our clients grow their relationships with their own customers,” says Tom. “When we do a good job, they can make more sales and gain market share. When they grow that way, we grow along with them.”

     “Our service values are what our father has driven into us from the very beginning,” attests Mark. “The nature of our business is always changing, so we never want to sit back. We always want to have a challenge in front of us, and we’re very, very good at facing those.”

Jim Froneberger is a Greater Charlotte Biz freelance writer.
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