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Moving from bricks to bandwidth
The view of a supply and logistics manager in a virtual company
Lew Shrubsole
Most of us at the trailing end of the baby-boom generation have certain expectations about our daily work environment. There have always been certain absolutes. Inside there are desks, computers, telephones, big filing cabinets, the trusty water cooler–and lots of office associates to keep us company. Outside, there are often racks of saleable goods, forklifts, a shipping office, pop and snack machines.
But the Internet reality of the 1990s offered profound ways to change the way we do business. For one Western Canadian corporation, it was truly time to move its market outside the box.
This company had been in business since the early 1960s, in both local and overseas markets. Called Target Products Ltd., it had experienced significant market growth as a manufacturer of redi-mix concrete, grouts and related products. A successful partnership with Home Depot solidified its market share.
The Internet allowed Target to develop a non-traditional business model in a new market: the artificial sports field business. In early 2002, it formed a stand-alone entity called Target Technologies International Inc. (TTII), which challenged the bricks and mortar status quo.
Right from its early days, the new company was known as a broker. It had a small, semi-integrated office at Target Products. From there, it began to bring sellers and buyers together.
Specializing in artificial sports field raw materials, such as silica sand and granulated tires (crumb rubber), TTII used its parent’s years of market contacts and experience to forge a non-traditional business. It soon outgrew its starter home at the corporate manufacturing office, and moved into separate digs nearby—but digital worlds away.
Long-time Target customers and associates remarked at the efficiency of the environment. But they left each time with a feeling that something was missing from the scene. Where were the pallets of product and fork trucks? They often asked, “what do you folks do here?” The seeds of a truly virtual company had been sown.
High technology
TTII is essentially a rapid-pace, reverse marketing firm. It’s built its market aggressively by convincing vendors the company is a sound choice to market their goods. It made similar overtures to encourage customers to buy. For example, a sports field project requiring silica sand in California would be logically supplied from TTII’s representative vendor in the San Francisco Bay area. Conversely, a similar requirement for crumb rubber in Texas might require supply from a vendor representative in Oklahoma or Louisiana.
With TTII acting as an agent, the vendor is relieved of the cost burden of marketing, and the associated payables liabilities.
Communication is handled through e-mail, phone conferencing and a newly developed on-line scheduling system. Overall, the goal is to employ as much user-friendly high technology communication as possible, to maximize efficiency and monitor company performance. This has led to elimination or significant reduction in the traditional costs of inventory, travel, and other office costs.
Early on, pressure to maintain (and even help finance) vendors’ offsite inventory was enormous. However, it quickly became obvious that in such a tight margin business, there was no room for such an outdated move. Rather, the skill sets of the sales and supply people were put into play, to find the most cost effective vendors to serve TTII’s customers’ needs.
The ability to convince vendors that volume sales would more than compensate for their inventory investment became a key strategy for TTII. On-site vendor visits and evaluations became the responsibility of the supply manager (myself), to ensure compliance with TTII’s mandatory quality program.
While my title is supply-oriented, my primary role is ensuring TTII’s daily operations and supply chain function at peak efficiency. Keeping our small staff focused on a high degree of customer service is paramount.
As a company with no warehouse and inventory to manage, we rely almost 100 per cent on electronic communication to distribute our products. Coming on-line soon, our new state-of-the-art web site will add time-sensitive, web-based marketing to our toolbox. In essence, TTII is evolving into a company that can be located virtually anywhere. The low infrastructure requirements pack a considerable positive punch to the bottom line. With 90 per cent of its orders received by e-mail, TTII’s physical location is irrelevant, beyond the obvious need for a reliable techno stream.
Upstart models as evidenced by TTII are usurping the bricks and mortar timepieces. Operating a business virtually takes the concept of lean to a whole new level.
Lew Shrubsole is manager of supply and logistics with Target Technologies International Inc. in Burnaby, BC.
Purchasing and supply chain practitioners interested in submitting articles for “In the Field” should contact the editor at lisa.wichmann@pb2b.rogers.com or (416) 764-1491.
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