Third party logistics happens when a company like Ramp Logistics, an action sports focused crew, takes over the handling of product in order to free up brands’ time and space, minimize costs, increase efficiency, and limit liability. The idea is to help a growing company with product fulfillment, leaving the brand with more time for design, development, and picking up clientele—in other words, the things it does well.
Chris Smith is the director of client services at Ramp, and TransWorld spoke with him to find out exactly why and how they are helping action sports brands save money and gives some advice on reining in costs for companies small and large.
Give me a brief history of the company.
Ramp was founded in 2002 by two childhood friends in Costa Mesa as a way to subsidize the logistics costs of their t-shirt lines [and their] friends’ collections; Creative Recreation, Trovata, and Livity. The business expanded quickly via word of mouth and soon other brands were using our services. Several more clients and larger warehouses came over the years and we continue to grow each season. Darren and Lulu Crawford, Joe Dikdan, and I comprise the current management team.
Why did you feel there was a need to launch this type of company in the action sports realm?
Most growing brands are focused on other aspects of their business: marketing, design, sales, et cetera, and underestimate their logistics needs. Also at the time, most of the existing 3PL’s didn’t focus on the pick & pack aspect of the business but rather larger orders that handle cross-docking cartons and palette shipments. We saw a niche for inventory management with a detailed operating procedure that integrated seamlessly with these brands. We combined this with our intimate knowledge of the apparel industry along with our logistics experience to accommodate our clients and their needs.
Could you expand a little on the pick and pack aspect?
When handling larger volumes going to major retailers, we will take ten cartons from a freight truck and then re-send it from there. But if we are doing a pick and pack job, we will open all the ten cartons, check the inventory of everything that came from the truck, and then we will pick and pack for all the smaller retailers and boutiques. A lot of 3PL’s were doing big volumes and no one was targeting that small to mid-size brand.
Why target this particular market? Do brands typically not do a good job of this?
Key members of our staff have years of combined logistics and industry experience. We understand the unique needs of this industry and can relate to our clients challenges/requirements of shipping their goods to various retailers.
Most designers’ strength isn’t logistics/operations, we can really help a brand grow much quicker than if they did it on their own, we take a lot of pride is seeing brands we work with blow up in a short time and know we had a part in their success. For older, mature brands, typically they can take advantage of our procedures and efficiencies while limiting the exposure/liabilities of payroll and leases and not having to manage that aspect of their business. In either case, our services allow brands to focus on growing their business and continue to do what they do best branding, design, marketing, and sales.
What are the biggest pitfalls you see from small to midsize companies hosting their warehouse logistics in house?
Small to midsize companies underestimate the costs and complexities of setting up and running a properly functioning warehouse and shipping department. By outsourcing, a brand can take advantage of an infrastructure that can ship 2,000, 20,000 or 200,000 units. It feels the same to them remaining a line item expense rather than having to forecast staff and space limiting their liabilities and allowing for expansion or contraction depending on market conditions.
What kind of costs are we talking here? How does it compare to doing it in house?
Every case is different. Some [brands] are real good [at logistics and] some are terrible. Sometimes we can save them up to 60 percent, sometimes more like 20 percent, and some break even because some are doing it very well; but that is kind of more of the exception.
If you are doing it yourself and shipping 2,000 then after attending ASR you got an order for all PacSun doors, you wouldn’t be able to do it. For example there is one company that went from shipping 15,000 a year to shipping to 15,000 a month. They never would have been able to do it.
What suggestions do you have for different sized companies for enhancing their operations?
Startup companies should focus on their strengths and seek expertsfor building a strong foundation so they don’t have to rebuild their infrastructure once [they’re] already in the marketplace. Growing companies should be constantly looking for ways to streamline the back end of their business model while protecting their bottom line. Established larger companies can enhance by staying on the cutting edge of technology using their spending power to maintain market share.
Has The Recession inspired these companies to trim the fat, lopping off seasonal expenses for warehouses that are sometimes empty?
Yeah, I think it has made people more aware of it. When they had a full 10,000 square-foot warehouse, it was no problem, but the recession has contracted [business] ten or 20 percent and now they are looking at a empty warehouse and look to outsource. I think the bottom line is [the recession] is just making people more aware.
If you were talking to a brand, what tips would you have as far as easy first steps for improving their logistics?
First inject infrastructure by implementing an ERP system they can grow, and second try to implement procedures that can handle ten times their current volume. Or just outsource it to us, and we’ll handle it all for them!
I saw that you provide help for your clients with e-commerce – is that for retailers selling direct or independent retailers?
Mostly our clients are selling direct to consumer on their Web sites but we can also act as a distribution center for retailers as well.
How is your fee structure broken down? Is it per order/et cetera?
The majority of our fees are broken down by piece in/piece out and storage.