February 2016 saw the launch of Zupplychain.com, a brand new web portal matching customers with pallets to store to warehouses with spare capacity by searching its database for the most appropriate warehousing providers.
Zupplychain’s warehouse search proposition is under-pinned by its unique Stock Database, a free to use on-line WMS-lite using a system of unique reference numbers and barcodes for each pallet. By using Zupplychain’s Stock Database, customers can have complete control of their stock in third-party warehouses, whilst warehouses can offer storage without the need to invest in systems.
Now, 15 months later, this innovative site has added another level of functionality to its system, lifting Zupplychain far above other warehouse listing sites: this month sees the launch of ‘My Stock,’ giving users an integrated view of stock in their own premises as well as third party warehouses sourced through Zupplychain’s on-demand warehousing portal.
Martin Elgood, Zupplychain Managing Director, spoke to Warehouse & Logistics News.
WLN – Martin, we spoke last year as you were starting up. What milestones have you reached since?
We started recruiting warehouses to offer storage in February 2016 and opened the site to customers in June 2016, once we had achieved a good nationwide coverage of warehouses. We secured our first contracts in August and the first user of our Stock Database in October, just after it was launched. Most people begin their search for space online, so we spent about 3 months fine-tuning our digital marketing, and have been full throttle since the Autumn. We are now receiving a steady flow of new enquiries as well as repeat business.
WLN – How many warehouses and how many contracts are on Zupplychain.com now?
We currently have about 180 warehouses and have secured over 60 contracts.
WLN – Can you remind us in simple terms, how Zupplychain.com works?
Effectively it’s an Airbnb for pallets – an online marketplace for warehouse space by the pallet. It’s built on the sharing economy model, enabling businesses to both find logistics partners and offer their pallet space for rental. The beauty of ondemand warehousing is that businesses can expand, or store products in different locations, without the burden of fixed costs and onerous leases, allowing them to outsource their logistics in the way most large FMCG and multiple retailers do. But Zupplychain goes further than just helping businesses find logistics partners – our systems enable our partners to manage their relationships online in terms of communications and stock management.
WLN – So what’s different about Zupplychain.com compared to other warehouse listing sites?
It’s definitely our Stock Database that differentiates us – it gives customers complete control and visibility of their pallets and their movements, whilst allowing those businesses with spare warehouse space to offer it for third party storage without investing in the required systems, or ‘polluting’ their own business systems with third party stock.
WLN – What kinds of companies are hiring out their warehouse space to other companies through Zupplychain?
We have a variety of warehouse providers – some are major 3pls; some are professional warehouse operators without transport services; some are distribution businesses that often have the logistics skills of 3pls but haven’t previously had a vehicle to find third party customers; and some are manufacturing or service sector businesses with spare warehouse capacity to offer. These last two categories can be both customers and providers, depending on their seasonality – they may need space part of the year and be able to offer it the rest of the year.
WLN – You compared Zupplychain earlier to AirBnB. Staying with that idea, do people use Zupplychain to find last minute accommodation for pallets or is it more strategic?
It’s a bit of both, though those with an urgent problem to solve are the first to find Zupplychain useful. We see us attracting three waves of customer types: ‘emergency outsourcers’, who have a peak or seasonal requirement; ‘tactical outsourcers’ who have outgrown their own warehousing and see that a Zupplychain warehouse increases their capacity without fixed costs or long leases’; and ‘strategic outsourcers’ who see the opportunity to use third parties for all their logistics requirements and maybe use the capital and space of their own warehouse to expand core activities. In the long term, we believe the warehousing industry could be the first B2B sector to be reshaped by shared economy principles. The growth of the e-commerce sector shows no signs of slowing and has brought with it significant growing pains for retailers, grocers, packaging businesses and ambitious SME manufacturers. With timescales of up to two years to develop, procure and deliver new industrial space, these challenges are only going to grow in scale and we think the Zupplychain model offers an innovative solution.
WLN – Based on current Zupplychain users, are enquiries for pallet storage and the availability of warehouse space evenly spread across the UK?
Not at present. Driven by the current shortage of industrial space down south, a large majority of our current storage enquiries come from customers based in the south of England, looking for warehouse space nearby.
WLN – It’s probably a naive question but why don’t people in the overcrowded and expensive south store in the north at lower cost?
Because of the usually fallacious perception that the increased transport costs outweigh the storage saving.
WLN – Go on, explain?
There’s a trade-off between the increased transport cost to ship product further away and the lower storage cost, but it’s a trade-off that usually favours storing cheap! In the North West, for example, – the average storage cost per pallet per week on Zupplychain is £1.15; in the South East, it’s £2.50, a difference of £1.35 per pallet per week. Not surprisingly, handling costs are lower in the North – roughly £3 for combined in and out compared to £4 in the South. It costs about £200 to send a full load a few miles away, and about £400 to send one up north. That means it only takes about 4 weeks’ storage before the storage saving outweighs the cost of transport. It’s an irony that warehouses are being built in the south whilst space exists in the north and one of our missions is to reverse that trend!
WLN – What could the saving be in hard cash?
If 100 pallets are stored for 6 months before being brought back, the total of the higher transport cost and lower storage cost would be over £3,000 less on average in the North versus the South East. In addition, when outbound volumes are by order fulfillment via carriers or pallet networks, the saving increases as the distribution cost for carriers and pallet networks is pretty much the same – regardless of geography – but the picking costs are lower.
WLN – Going back to the Stock Database, how do you use it?
The customer sets up their pallets for dispatch and the provider is notified. The customer then prints the Zupplychain labels with the URNs on them and attaches them to the pallets. On dispatch, the customer marks them as ‘in-transit’ and the provider is again notified and provided with the confirmed date of the delivery. When the warehouse receives the pallets, they simply book them in by checking the URN on each pallet – no need to understand difficult and long customer product codes or batch numbers. When the customer wants to dispatch some pallets from the third party warehouse, they use the information they have inputted – codes, descriptions, batch numbers etc – to choose the relevant pallets. All the warehouse then has to do is find the pallet with the relevant URN (and he can use our system to record his location codes also). The warehouse then confirms the pallets as booked out and dispatched.
WLN – So in theory, with Zupplychain can everyone with a warehouse become a warehouse space provider?
Yes, they can. For non 3pls to offer space, they need two things: the systems to re-assure potential users of their efficacy in storing and picking pallets; and the ability to manage their third-party storage clients alongside their core business, without systems investment. That’s what our Stock Database allows, by putting the customer in charge of the information. After all, he’s the expert of his own product!
WLN – So what’s new with ‘My Stock’?
‘My Stock’ is a major addition to the Stock Database, and does what it says – a business can now use our system to manage pallet stock in its own warehouses, transfer product between warehouses and then use it to manage stock in third party Zupplychain warehouses also. So we give businesses complete visibility of their stock across all their locations. This could, for instance, allow an SME to set up a proto-RDC network using pallet space in Zupplychain warehouses around the country and have information access via our system to the whole network, enabling them to dispatch out of the RDCs and between them at the touch of a button.
WLN – Is there any limit to the number of pallets you can manage like this? What about the type of goods? Can it cope with mixed pallets or half pallets?
There’s no volume constraint – we have built the database on SAP, so there’s plenty of capacity!! Equally, the goods can be anything, provided they are palletized. Mixed pallets or half pallets are treated like full pallets. WLN – Can you handle storage enquiries down to single pallet level? No – we’ve now set a 10 pallet minimum.
WLN – How quickly can you respond to an enquiry?
We usually get back to customers with proposals within 48 hours but can do it on the day if that’s what the customer needs. We had one recent enquiry come in at 12.30 and by 4.30 the same day the customer’s pallets were safely in the warehouse.
WLN – How do you charge for using your service?
At present we are still investing in, and refining, our offering. Until we’ve got more of our support services in place, we are offering the service, and access to the Stock Database, for free. After that, we will fund the business via a mark-up on warehouse prices. However, we still expect these prices to be amongst the most competitive available.
WLN – Do you have any customer case studies you can tell us about?
Yes, we do. An early adopter of the Stock Database was J Stell & Sons, a cardboard tubes manufacturer based in Keighley, West Yorkshire. They had an opportunity to win some new business up in Scotland and the Scottish client was looking for regular small pallet deliveries. At first, they didn’t think they’d be able to make it work because of the potential transportation costs, but they managed to use the Zupplychain system to source space in Paisley. The Zupplychain system allowed Stell to quote quickly and secure the business.
WLN – It certainly sounds like this system could transform the way warehouse space is used. Or is that over the top?
Not at all! We believe Zupplychain is changing how those with space to spare and those in need of space think about their supply chains and cost-bases. Fundamentally, businesses can stop adding their own space as they grow and use space that already exists, at much lower cost and, possibly, in a better location, such as near a customer or a port.
Tel: 0161 705 4326