Joe Lynch: [00:00:00] Hello, friends. Welcome to the Logistics of Logistics show. My name is Joe Lynch. Thank you so much for joining us today. Today’s topic is From Strategy to Scale: The ODW Logistics Appro- Approach to Growth with my friend Phil Schmidbauer. How’s it going, Phil?

Phil Schmidbauer: Hey, good afternoon, Joe. Doing great. How are you?

Joe Lynch: Doing great. Doing great. So Phil, please introduce yourself and your company and where you’re calling from today

Phil Schmidbauer: Yeah. So I’m Phil Schmidbauer. I am our vice president of solution [00:00:30] design at ODW Logistics, and I’m calling from Cincinnati, Ohio. And I handle our transportation solution and design work for our company. I’ve been here about 10 years now

Joe Lynch: So what does ODW Logistics do? Who do you guys serve?

Phil Schmidbauer: Yeah. So we’re a warehousing and transportation provider, so we like to call it full s- full-service solution supply chain 3PL. And we service a lot of middle-market companies, and we do a lot of retail warehousing and distribution as well as the transportation management. And our real goal is to design a supply chain, [00:01:00] not just a logistics network, but a supply chain that works for our customers all the way from distribution through transportation and delivery to their end customers

Joe Lynch: Yep. Now you, where you guys where’s your headquarters?

Phil Schmidbauer: So we’re headquartered in Columbus, Ohio and then we have our transportation head offices in Hamilton, Ohio

Joe Lynch: Yep. It’s interesting. They’re– You guys are a top 100 logistics provider, and there’s a whole bunch of top logistics companies kinda nestled down there in [00:01:30] Ohio. Just, I don’t think people realize how many

Phil Schmidbauer: Yeah, you don’t. And you don’t always drive through the industrial parks either to see where all these people are. Nobody really realizes when you’re walking through a grocery store where all that stuff comes from or through Home Depot. Where does everything come from and where is it stored and distributed from?

You don’t really think about it, but there’s a lot in Ohio, that’s for sure.

Joe Lynch: Yeah, and I say this all the time in a lot of ways when you’re part of the Midwest, especially when they call us the Rust Belt, people don’t realize that Chicago might be the freight hub, [00:02:00] but the supply chain was born and raised right here in Michigan and Ohio and still to some extent is based there

Phil Schmidbauer: Yeah. There’s a lot of traffic going down 75 and across 70 and through that corridor. So yeah, certainly a lot of freight moving in this direction

Joe Lynch: Yep. So what kind of customers do you guys serve?

Phil Schmidbauer: A lot of middle market customers looking for a lot of different industries, but our managed transportation solution is we can handle transportation for just about anybody. But we service a lot of middle market companies, and we really [00:02:30] focus on optimization and trying to drive efficiencies into their supply chain.

Our warehousing is the same. We have some larger customers we do a lot of dedicated buildings for. We also have some shared buildings we put customers in. And we really try to focus on delivering that integrated logistics solution for customers where we do warehousing and transportation and help them optimize both and planning warehousing and transportation around each other so that we can really optimize the supply chain for customers and deliver the fastest, highest quality, lowest cost, and the shortest lead time is really the goal.

Joe Lynch: [00:03:00] Yeah. We spoke the other day, so I have some notes that I’ll go reference back to. But when we talked, you said, you wanted the title to be the “ODW Logistics Approach to Growth.” So you– normally my first thought is how are you helping these companies grow? And so you guys had a good answer for that.

So I’ll ask you, when somebody says: What do you mean? I need sales to grow. Why do I need ODW to grow my business?

Phil Schmidbauer: Yeah. If you want your sales to grow, you want your customers, end customer to be happy, right? So your product needs to be on the [00:03:30] shelf, which means you need to get it to the distributor on time or the retailer, whoever that is. You need to get it there on time in the right condition and you wanna lower your cost, right?

So the more cost-effective you can be in your supply chain and deliver top-level performance, it’s really about we try to make the supply chain work in the background so that our customers don’t have to worry about it, so they can worry about marketing their product, manufacturing their product. They give it to us, and we take care of that part of getting it to the end customer.

And really it’s about having your product in the right shape on the shelf for the customer so that they can be happy. [00:04:00] Because you and I both know if products aren’t on the shelf, customers aren’t happy, and then you don’t sell more products. So that’s what it’s about

Joe Lynch: Yep. And it sounds also we touched on this again the other day, which is you’re not coming in saying, “Hey we’ll we’ll get you a better price on your truck.” It’s, “We’re gonna build you a supply chain that is optimized to the extent that it should be,” because let’s face it, not everything needs to be optimized so much that it becomes, inflexible

Phil Schmidbauer: Yeah. Sometimes chasing the bottom dollar on a truck is– I shouldn’t say [00:04:30] sometimes. Most times chasing the bottom dollar on a truck isn’t good. We just saw a Supreme Court case that, that cost a a very large broker in our environment a lot of money because they were chasing the bottom dollar.

And really what it’s about is sometimes a better rate is more about the, what you’re paying in the total supply chain, so fines, fees. And as you and I know, again, you go back to is your product on the shelf or not? Forget about all the fines and fees, but if your product’s not on the shelf, people can’t buy it, and then they’re gonna go to another product, and then they’ve built brand loyalty with somebody else.

So I, [00:05:00] I often feel like too many companies are focused on a lane rate instead of focusing on optimizing the entire supply chain. And that’s really what it’s about.

Joe Lynch: I wrote an article, and I’m gonna have to pull it up here when we’re done, and I’ll send it to you. But it was basically seven reasons why you want to pick a partner as opposed to pick a price. And I always remember and I’m sure this is true over there at ODW. I remember when I was at this little 3PL, we had customers, and they’d call and say, “Joe, that had to be here today, and I don’t think it’s gonna [00:05:30] get here.”

And they’d be angry, and I was like, “Oh, no, we already expedited it.” And they’re like now you’re gonna charge me an expedite?” I was like no, that’s our fault. We screwed up, and I’m gonna pay for that.” They’re like, “Oh, when’s it gonna be there?” I was, “You already– You should have an email in your inbox.”

And they’d be like, “So you’re not charging me for expedite?” I was thinking, “No, of course not.” Now meanwhile, if somebody had called our office and said “You’re the lowest price. You can have that lane this one time,” and [00:06:00] we screw up, whatever, it’s not gonna make it on time, and they go, “Are you gonna expedite it?

You willing to pay for that expedite?” And they say, “No, it’s your fault.” I’m like, “We’re not working together.” I’m thinking, “I’m not working with you going forward.” I’m– I don’t have any sort of commitment. I, I– To a long-term relationship, I’ll make that investment. There’s give and take, right? And I used to say to a certain customer, I remember one of my customers moved some flatbed moves without us.

We did thousands of [00:06:30] shipments with them every month, and they go, “Yeah, we just used a guy down the street for that flatbed move.” So I was like, “I would do those flatbed moves for free if you brought them to me.” They’re like, “Why would you do that?” I was like, “I don’t want you working with anyone else. First off, it screws up my metrics.

Like now how do I put that into my metrics? My KPIs are screwed up.” Yeah, there’s so many more things you will go above and beyond for a relationship that you won’t for a transactional

Phil Schmidbauer: Yeah. [00:07:00] And I think it’s important to be able to, I believe that we should push our customers and our customers should push us to get better, right? And I think there’s that working relationship with the right customer and the right partnership where you’re all in– we’re all in this together.

We’re all delivering the same thing. We’re trying to provide a service to our customer who’s trying to provide a product to their customer, and it’s really all about working together to get better. And it doesn’t mean at all costs. It doesn’t mean that we’re gonna charge an arm and a leg for the service we provide.

But the less you’re talking about dollars and cents [00:07:30] on transactions and the more you’re talking about building a more fluid supply chain, getting the right service level. There might be some customers that don’t want high service and they just want low cost. That’s fine. There’s customers that want low cost and high service.

There’s a balancing act. You don’t get both. You don’t buy the cheapest carrier on the block and expect really high service, right? So it’s really a matter of working with that customer and having a collaborative customer that will work with you. And we can come up with some really creative ways to save money that people don’t think about.

And really our goal is be a con– take a consultative [00:08:00] approach to making the supply chain a weapon for smaller organizations or middle-sized organizations that don’t have the resources to do it themselves. That’s really what it’s about.

Joe Lynch: Yeah. There was a guy I did a little consulting project helping a very large shipper select a 3PL, and it was fantastic to be on that side. And I remember as we would visit all these different 3PLs, we visited a lot. I won’t mention all the names, but some great companies. Any one of them would’ve been an upgrade over what they [00:08:30] had.

And I remember he would say, “We’ve done a horrible job with our logistics. We have not suppo- we– First off, we picked the wrong one, and we didn’t support them e- either way. So even if they were doing a good job, we weren’t supporting.” He says, “But here’s where we’re headed. We’re going to become a world-class logistics organization.

Can you help us get there? And we’re gonna push you, and you’re gonna push us. I insist that you push us. If we’re doing [00:09:00] something that’s preventing us from getting there, let us know. I don’t wanna be, I don’t wanna be sitting here telling you to be world-class when we’re not world-class.” And I love that whole idea that we’re gonna become world-class, and I’d love to work with you, Phil, but if you don’t think you can get us there, if we’re not the right fit, send us along the way.

Phil Schmidbauer: Yeah. In the infamous words of Jim Harbaugh, “Iron sharpens iron,” right? And so

Joe Lynch: I love it. I love it. You can’t say that in Ohio.

Phil Schmidbauer: So

Joe Lynch: Yeah. [00:09:30] Anyway so tell us a little bit about you, Phil. Where’d you grow up? Where’d you go to school? Some career highlights before you joined the juggernaut, ODW Logistics, and why did you join ODW?

Phil Schmidbauer: Yeah. I grew up in Grand Rapids, Michigan. I moved around a little bit when I was younger, so I

Joe Lynch: fantastic city

Phil Schmidbauer: Yeah, it is. My family still lives there. I I think I was about five when we moved there. And so I grew up there. I went to Central Michigan University. I’m one of the very few people that I know with a logistics management degree.

Most people are– did something else [00:10:00] or are in supply chain management, but I had a logistics management degree, graduated. My first job out of college was actually doing a lot of work, a company called Trans Freight, who’s now part of Penske, but did a lot of automotive work. Did a lot in for Toyota.

I started at the Toyota Indiana plant. I loved it. I got such a great experience working there

Joe Lynch: That’s world-class

Phil Schmidbauer: Yeah. It was. And out of college I took that job specifically because my professor, Dr. Cook, who’s no longer with us, he passed away a number of years ago, but he said, he’s “You will not get, Schmidbauer, you will not get better experience than [00:10:30] going to working at Toyota and learning from those people.”

And it was phenomenal. I worked at that company for about six years or so. I moved around a couple times. I had a couple offers, went and worked at a couple other locations. Worked at Conway Freight for about three years prior to their purchase. So I got into the LTL world for a little

Joe Lynch: They got Popeye XPO

Phil Schmidbauer: Yep, when they got bought by XPO, correct. At that time I was actually calling on ODW Logistics and they reached out and they were actually obtaining a customer that they were doing some network we now, we were doing some network analysis for. And I’d done a lot of [00:11:00] network and logistics design work in my past.

That’s what my education was in, weirdly enough. And I did a lot of that at Toyota when I was at Trans Freight. And then I’m like, “Yeah let’s give it a shot.” So I came here and I’ve been at ODW for the past 10 years and grown with the organization. I’m now our vice president of solutions for the transportation segment of our business.

And, it’s the people I work with. John Ness is our owner and he’s a great guy a mentor of mine. But it’s the people I work with on a daily basis that like I told him, I said, “We’re retiring here, boys,” ’cause I don’t know that I’ve worked at a [00:11:30] lot of different companies and, like, when you have people that you can get in the room and challenge each other and you’re growing every day and you’re pushing each other to get better there’s never a better feeling.

And we have a great product that we deliver to customers. And I tell people all the time I’m biased, but I’ve worked at logistics companies for most of my career and I have never been more proud of a product and more confident. What I put on a piece of paper and deliver to a customer, what my team puts o- puts down, our operations team is gonna go knock it out of the park.

And we literally [00:12:00] measure our results. What we told you on a piece of paper, we measure those results for the first 90 days to make sure we’re on track to deliver what we told the customer we’re gonna deliver. And so the transportation solutions and the connectivity we have with our operational team is second to none.

And that’s, to me, that’s just fun. It’s just fun to be able to tell customers we’re gonna do something, deliver it, and then they’re happy with it. And the, since graduating college in 2002 now, in December of 2002 is when I graduated, I’ve been working ever since. I just I couldn’t be happier with where I’m at and the [00:12:30] kind of team we’ve built here and continue to grow.

Joe Lynch: I was just just traveling and I bumped into a guy, he had this massive ring and he said– a-and it was a Florida State ch- National Championship. And I was like he’s wearing it ’cause he wants somebody to say something about it.” So I started talking to him. He goes he’s a football player, and we’re at the airport, and he said, “Joe, ever since I was on that team, I know what a great team is.”

And he [00:13:00] goes, “Once you know that,” he said, “you can never go anywhere else.” And I said you can. That’s the problem.” And I played Little League sports. I was never playing at a high level, not like that. But I played hockey and football. My dad used to– my mom and dad signed me up for everything. I grew up in Dearborn, where I said I thought it was the law that you had to play s-sports year-round.

I remember my dad’s “Oh, yeah after your hockey game, you got a lacrosse game.” I go, “I don’t even know how to play lacrosse.” He’s “You’ll figure it out.” But [00:13:30] when I was on one or two teams in Little League that were just great, for Little League, great teams, and you forevermore, I bump into those guys 50 years later and go remember when we got five shutouts that year on defense?”

W- of course, it gets better every year. Probably a lot, for a lot of you, 20 shutouts that year. But that’s different. And once you’ve been there, you can’t– It’s really it’s stupid to leave. You can leave. It’s stupid to

Phil Schmidbauer: Yeah. Yeah, I tell people that sometimes the grass looks greener on the other [00:14:00] side of the fence, but it might just be because the neighbor’s dog is pooping it, so you gotta be careful what you wish

Joe Lynch: There’s that other one which is, hey the grass is greener where you water it, so water it, man

Phil Schmidbauer: Yeah, that’s right. That’s fair to you, yes

Joe Lynch: I wrote some down some notes the other day, so I wanna talk to you about these. So this whole idea of, okay, I’m a mid-size, I’m not a, I’m not a huge enterprise yet, but I wanna be, and it’s, I’m assuming it’s a brand of some sort that’s going to retail.

Is it beyond that? We work with auto suppliers [00:14:30] too?

Phil Schmidbauer: Yeah, we don’t discriminate as much. We have a large freight consolidation that is designed around retail. So we do a lot of Walmart consolidation, a lot of Walmart, Target, a lot of the big brand retailers. We do consolidation into there. So we have a lot of smaller customers in our Columbus campus and they might each ship two, three, four, five pallets, and we consolidate those and ship in full truckload, right?

So that consolidation is really an a form of optimization for retailers. But we have other customers that we’re shipping directly out of their plants and we’re building multi-stop truckloads, or [00:15:00] we’re doing pool deliveries out to the West Coast from the Midwest. So our mindset as an organization is all about optimization and driving the right metrics for our customers.

We might have some customers that, “Hey, we get an order today at noon, it’s gotta be out by two o’clock.” Okay there’s some things you can and can’t do to optimize that cost. And so our goal is really to work with our customers to define what they want to measure and what they– what defines success for them, and then help them deliver that.

And there’s creative ways to do it. We do have some customers that are in industrial products. We have some [00:15:30] customers, a lot of customers that are in retail. We do some customers that are food others that are just CPG products. So we do have a wide breadth of customers we work with.

Somebody once asked me this when I went and I took a job with with Aldi Corporate Logistics for a year, and they said none of your experience has been with refrigerated trucks.” And I’m like they still operate with round wheels that move over the road, and I wanna make sure there’s as much product on them as possible,” right?

So it, it’s still logistics. We’re still moving things around. I’ve done projects where I’m doing internal internal conveyance inside of [00:16:00] plants, right? It’s still logistics, it’s still moving things. So it’s still the same principles apply. It doesn’t matter what you’re moving, we can handle whether it be flatbeds or whatnot.

It’s all about optimizing the network to meet certain goals of the customer

Joe Lynch: So if I was to talk about somebody’s listening, a big shipper, m- mid-size shipper who says– m-maybe somebody who says, “We’re trying to, we’re trying to grow to be that enterprise shipper, but we’re not there yet. We’re still working on our sales.” What are the things that are going wrong right now for those brands that say, “I gotta [00:16:30] do something different”?

What would– ’cause, besides calling ODW back there’s a last straw. What are the things that are going wrong with those supply chains that make them call your team back?

Phil Schmidbauer: Yeah I think supply chains if I think about what’s going wrong, I’ve seen some customers come through where they’re distributing out of five different locations and they don’t understand the complexities of five different distribution points. And that could be a mid-size. Some smaller people come to us because they can’t grow.

They might be in a [00:17:00] facility that can only do e-com well, and they’re starting to get into retail and they don’t know how to do retail very well or vice versa. They’re in a retail environment and the people that they’re working with can’t do e-com, right? So everyone’s got a little bit different of a challenge, I would say, in their supply chain.

Some people just don’t know who to use or what– don’t understand transportation in general, and they’re trying to do it themselves. And we’ve got one guy sitting at a desk and he just doesn’t have the time or the resources to go out and figure out how to make it happen. We get customers come to us that honestly are doing a great job on their [00:17:30] own.

We validated, “Hey you have pretty good costs. If you’re okay with your process, like we may not be the best people to work with or it might not fit us.” And I’ve done network studies before for people to understand where should they distribute from. It may or may not fit our current network today, and that’s okay.

But I think everybody’s got a little bit different problem that they could come up with. But in general helping those people find what is the right answer to that problem is really what’s fun about this industry.

Joe Lynch: So one of I’m just, I’m thinking like a brand for a minute. So a stock out. [00:18:00] If I have– If I’m a, if I’m a new brand or a big brand for that matter, and I say I have lots of stock outs and I-I’m s- I’m– we’re doing great on sales, we’re doing great on marketing, but we’re not going, doing well at keeping our stuff on the shelves or supporting the factories that we support, whether it’s automotive or industrial, those stock outs are painful.

So please talk about those for a moment.

Phil Schmidbauer: Absolutely. If your product’s not on the shelf, and we’ve discussed this, if your product’s not on the shelf, people can’t buy it, right? And there’s a couple ways to improve. [00:18:30] And I go back to my days at Toyota. We had delivery routes that were delivering 14, 16, 18 times a day. And those delivery routes were designed to show up, and we had milk runs, so we were probably picking up at three or four suppliers on those routes, and we were delivering multiple times a day because we had to make sure we were feeding the assembly line, and Toyota didn’t wanna hold a bunch of inventory.

It’s the same thing with your retailers, right? You’re delivering to retail stores. If you only deliver to a Walmart or Target distribution center once a month from the time that stuff gets delivered to the time it gets [00:19:00] on the floor and then you reorder and you’re only replenishing once a month, you’re gonna have stockouts because you can’t– you’re not perfect at guessing what customers are gonna buy.

And we were talking about this recently as a podcast or something I was listening to where we were joking about pesky consumers. If we just actually bought stuff on a consistent basis and it was the same thing over and over as a consumer, this job would be a hell of a lot easier,

Joe Lynch: Joe, you were supposed to buy milk yesterday. Where you at?

Phil Schmidbauer: Yeah. So I think what what really drives stockouts is you [00:19:30] gotta understand the right frequency of delivery because the more f- we have customers that go in once a week to Walmart.

That gets pretty good delivery service. But we’ve got other customers that go in three times a week to Walmart. Guess what? Their on-shelf presence is amazing because if on Monday they couldn’t deliver something because they didn’t have a product, there’s another order delivered on Wednesday, right?

And so high frequency, lower lot size is all about helping to make sure, A, your inventory can be lower and your your stockouts are gonna be less. And so there’s a couple different ways to handle that. I believe that our freight consolidation when it comes to retail [00:20:00] really helps people do that because we help smaller and medium shippers ship in full truckload and it gives them better service, not damaged when it gets there delivered on a consistent basis.

Those are some of the advantages we give to the smaller shippers through that consolidation from that level of

Joe Lynch: Yeah. And since you support many other brands with– to Walmart or Target and all the other big boxes, you know what they expect. So if a brand comes to you and says, “Hey, we need to deliver to these stores,” you’re like, “We already deliver to those stores. We get it.” [00:20:30] Now one of the things you talked a little bit about the inventory, and this keeps– this sticks in my mind a lot these days is I did a podcast many years ago called Inventory is Everything.

And in the olden days, I’ll say pre-Toyota. Toyota was one of them who said, “We just are not gonna carry excess inventory.” The– everybody in automotive followed suit. And the reason you can’t hold inventory if you’re Toyota is there’s constantly part [00:21:00] updates. So somebody says, “We made these, this quality improvement,” and sometimes it’s a safety issue.

“We fixed this safety issue.” And that’s every auto, not just Toyota. This, it happens. And you say, “Hey Phil, did you get that stuff delivered?” “Yeah.” Go back and take it.” That stuff’s gotta… or it’s gotta be scrapped. And you go– then go get another truckload. And that’s an automotive. I used to ship automotive stuff to China that would go obsolete on the ocean.

Phil Schmidbauer: But we had one customer

Joe Lynch: so I would call and [00:21:30] say, “Yeah, open the, open that container,” and half of it’s gotta be disposed of

Phil Schmidbauer: We had another automotive supplier I worked for and did a consulting project for about two years on. They had painted parts that were painted in Japan and put on a container at their plant in Japan because it was cheaper by piece price to just paint them over there in Japan. Guess what happened when they came over and they weren’t done in the same paint shop and the color didn’t

Joe Lynch: Ah, yeah.

Phil Schmidbauer: And I’m like you got a paint shop right over there. [00:22:00] Why didn’t you just bring those in without being painted?” It’s just cheaper to have them painted in Japan.” I’m like doesn’t seem cheaper anymore.” So just things like that. You’re right, whether it goes obsolete. We’ve got customers that have shelf life on food.

So if you don’t, if you don’t sell that food in a certain timeframe, now you’re throwing that stuff away. And even every product has a shelf life

Joe Lynch: Oh yeah, sweaters. I bring sweaters up all the time ’cause we’re– I’m in the Midwest, you’re in the Midwest. So y- y– today it’s 60. Yesterday was 85. But you’re not gonna sell a lot of sweaters in the Midwest [00:22:30] after April because we kinda know it’s… it might snow again, but most likely it’s gonna be hotter for the next six months.

And we used to carry way too much inventory. I think all retail is trying to carry less inventory, be smarter about inventory. And I say this all the time, but I think it’s very relevant. You mentioned Aldi. Aldi’s the fastest growing grocery store, fewer SKUs. Costco. Costco is my favorite store. If they had condos, I would live there.

And [00:23:00] Costco has very few SKUs. Trader Joe has very few SKUs. Now we go to those stores for certain reasons. We also love to go to Meijer, and we love to go to Walmart, and those guys have every SKU under the sun. And of course, I expect when I go to Walmart that they’re gonna have everything under the sun.

I know they do. And so it’s a lot harder, but they also do an incredible job at managing inventory. And the businesses that don’t, and I’m from Michigan, so I saw Kmart. [00:23:30] Kmart and Target and Walmart and Meijer all started in 1962. Kmart’s not there anymore because they didn’t manage inventory well.

That was one of their big issues, and they’re gone. And one of the you might remember the blue light specials. Now everything goes on sale. Everything’s on sale. The problem with that sale is I don’t know how many I’d really sell without the sale. And co– at Walmart, every day low prices.

What does that allow you to do? [00:24:00] Manage your inventory. So I know on March 15th, I sell many– this many beans every year in this store. And,

Phil Schmidbauer: yeah, and I don’t think that people truly understand the hidden costs that come with inventory. And without going down a rabbit hole of inventory, like it’s expensive to transport inventory. My, my nephew is a, is in procurement at a large company, and I won’t name him, but he procures small items from overseas, bolts, nuts, whatever that is from overseas.

And I asked him, I said, what do you allocate for when you’re looking at the cost of it? What do you look at [00:24:30] in regards to like inventory carrying costs? How do you look at that?” He’s “Uncle Phil, I don’t look at that stuff.” Like he’s I just, he’s “I’m just looking at piece price and transport costs to get

Joe Lynch: needs ODW. They’ll look at that.

Phil Schmidbauer: that’s the operations. That’s somebody else’s problem to look at.” And I’m like, cost of inventory, cost of obsolete inventory. You gotta warehouse that inventory. You gotta touch that inventory. It’s all a cost. And so does it really make sense to buy cheaper from overseas? Or I think you see some people that are buying more local because they’re like, “You know what?

I can hold less inventory. I can get better…” Now, there are some things that make sense to send over there because of [00:25:00] production capacity and cost, but the cost of inventory is expensive and the cost of handling it is just as

Joe Lynch: Yes. So you mentioned supporting a Toyota plant, and they get three, four deliveries from a company in a given day. And what that tells you is they don’t want to pay for a week or a month’s worth of inventory. They did the math, and they said transportation cost is cheaper than inventory. And I think we miss that.

This is what you miss when you are looking at just transportation [00:25:30] costs or just warehousing costs. This is why, I’m not saying this to be salesy, this is why you need somebody who is a supply chain provider, like an ODW, who says, “We’re looking at the whole process from order to cash.”

Phil Schmidbauer: Yep, absolutely

Joe Lynch: One other thing, we talked about stockouts, and we talked about this before we hit the record button.

When you have a stockout, you get charged some sort of bi- bill, and you s- you call your logistics provider and say, “You cost me $1,500 by not having it on the shelves.” [00:26:00] But we also just touch-touched on it. There’s other issues related to that. So please talk about those other issues.

Phil Schmidbauer: Yeah. Yeah. So stockouts that you might get charged for being late on a delivery or late for that. But really where the pain is gonna be is if your product’s not on the shelf, the consumers won’t buy it. And if a consumer can’t rely on your product being on the shelf, they’re gonna go build brand loyalty somewhere else.

And to me, it’s really the lost sales and the lost brand loyalty that hurts people, and it’s really hard to measure. You’re gonna measure it in lost sales or not increasing your sales, but[00:26:30]

Joe Lynch: there’s reputational damage too, ’cause that Walmart or Target’s gonna say, “Why the hell are we working with these guys? They can’t keep– if they can’t bring it here, we can’t sell it. We don’t make any money, and they don’t make any money.”

Phil Schmidbauer: Right. And the buyers have to, or the company sales people have to go into the buyers and say, “Hey, we’d like more shelf presence, and we’d like to get on the, on a little bit higher shelf.” And we can’t keep you there because your on-shelf presence is terrible.

We’re not gonna give you prime space when you can’t keep your product on the line.” So that, again, that just goes back to us helping companies grow, and that’s really what our goal is. How do we [00:27:00] get… How do we help them hit those right goals? And to be honest with you, Joe, the hard part sometimes is getting customers to share the data with you.

Like, how do we know what their on-shelf presence is? How do we know when there are problems? And companies are so siloed that sometimes it’s hard to get, “Hey, can you share with us your metrics you’re getting from the retailers so we can see are we hitting the mark? Are we missing the mark?

What can we do to improve?” And then if somebody says, “Hey, we need to go into this location weekly instead of every other week.” “Okay, here’s what it’s gonna cost. You guys do the analysis, but we’re here to help. We’re here to help understand [00:27:30] some of that stuff.”

Joe Lynch: Phil, I’m a Diet Coke addict, and when you go over to the soda aisle and pop aisle, there’s a few aisles, and there’s all this, all those drinks, sports drinks, Gatorade, all that. You’ll notice a lot of those are vendor-managed inventory now. And so basically Coca-Cola knows how many units you sold, so how many are on the shelf.

So they get that information directly. So when you’re at the store, you go, “Oh, I see the Coca-Cola guy [00:28:00] or the Pepsi guy,” or… And so the very best brands are very knowledgeable of sales in that store on an up to the minute, up to the minute basis. So they say, “Okay.” And it becomes at some point a route because they know how many they’re selling.

But they do really well on that stuff, and I think that’s what we all need to aspire to

Phil Schmidbauer: Yeah, and it’s funny, that’s what my wife does for for Keurig Dr Pepper. And

Joe Lynch: Okay, so she’s doing that. By the way, I heard Dr. Pepper is the number two drink now. It beat [00:28:30] Pepsi.

Phil Schmidbauer: Yeah, so she’s

Joe Lynch: Coke versus Pepsi. Now, not anymore

Phil Schmidbauer: Yeah. So she works for works for them and sells into Kroger here, so I’m highly intimate with the details behind what that, what the challenges are with that. But you’re right, it’s all about are you on shelf? Do you have the product in the store? Especially because it’s direct store delivery.

It’s not much different when you’re going into retailers. It’s all about is your product in the right place at the right time in the right quantities? It’s the same thing. They teach us in school, but they’re dead on. It’s have your stuff where the consumer wants it

Joe Lynch: Yep. You talked a little bit about [00:29:00] ecommerce versus retail. Somebody said not too long ago to me, and again, I’m not dealing with it day-to-day. They said retailers are becoming almost like ecommerce companies in the way they manage inventory and the way they look at the world. Is that true? Do you see some of that?

Phil Schmidbauer: They’re getting it. You think about what, you think about what Amazon has done, and Amazon is competing with the likes of Walmart and Target and Kroger and all of the big retailers because you can buy food on Amazon, and they’ll deliver it to your door, [00:29:30] right? And so you look at Kroger, and I know they’ve gone around a little bit with some of their Ocado facilities and what the strategy looks like there.

But Walmart, they’ll do walmart.com deliveries right from some of the stores, right? So they’re trying to use inventory. So everybody’s really chasing the Amazon effect when it comes to retail, when you think about e-com versus retail. If it’s something that we can get delivered to the door, do we really need to drive to Walmart to get it or to Kroger to get it if it can be delivered to our front door and it’s just as cheap, right?

So when you think about [00:30:00] logistics, there’s really a battle going on right now of that e-com versus retail and what’s the best method. Shipping smaller quantities directly to somebody’s home is a lot more expensive than just shipping it into Walmart’s distribution center, right? So there’s a lot there, there’s a lot of challenges there with where is the consumer gonna go, and where is the consumer gonna allow these retailers to play and, do we wanna go shopping at the store, or do we want it to just show up at our front door?

Joe Lynch: Yeah. My, my feeling is if we leave to go to a store, it [00:30:30] has to be more of an experience. I always joke that Amazon started with books ’cause we all hated going to bookstores. No, we all hated going to buy garbage cans at Home Depot. No, no offense, Home Depot. I don’t like going to get garbage cans.

And I keep thinking they, they took books on, and right now you’ll notice a whole bunch of, I think Barnes & Noble is growing their retail footprint, and it has to be unique. I think what they’ve also done is [00:31:00] they said every store is different in terms of what they carry ’cause there’s different interests places.

And I keep thinking if I leave the house to go shopping, it should be something you go, “Yeah, I love going to that store.” Not monotonous, not, “God darn it, I gotta go over there and get this.”

Phil Schmidbauer: Yeah

Joe Lynch: Costco’s that way for a lot of us. I love Costco. You go over there, there’s always something new. It’s too crowded sometimes, but you go, “Oh my God, they’ve got free food.”

There’s a lot of great things to go to Costco [00:31:30] for

Phil Schmidbauer: It could also be that people like me who just wanna get away from the five teenagers in the house for an hour. I got no problems going to the store.

Joe Lynch: Exactly. Exactly. I always remember when my kids were young, arguing with the wife whether, “No, it’s my turn to go to the store.” You’ve mentioned– we talked about ecommerce. Do you guys manage ecommerce for a number of brands, and do you also do the retail for those, or do they not have retail in all cases?

Phil Schmidbauer: Yeah we have customers that do both. We have customers that will do e-com and retail, and yes, we do manage that. [00:32:00] Sometimes it’s kinda separate operations, right? Because if you’re case picking it’s gonna be a lot different than e-com, where you’re pulling each’s out or a specific product out and putting one product in there.

So a lot of times it’s somewhat of a separate operation, I’ll call it because you don’t run e-com in the same type of environment you would run a retail environment. But yes, we do both for customers. We have the capability to do that and set that up for customers. And it’s interesting, some customers lean more towards the e-com and some lean more towards retail.

We have a customer that started as ma- [00:32:30] mainly retail, or sorry, e-com, and now they’re kinda pushing into retail and distributing into some of those, so we’re helping them make that conversion. Now, where that balance lies is gonna be different by customer, by product, but it’s kinda interesting to service customers and kinda see how that flows for them.

Joe Lynch: Yeah, so I think it’s Warby Parker. They had glasses that were– They were online initially, so they were all e-com. Then they started opening stores. And I think there’s certain brands, I think I’d have to double-check on if they continued, but Purple started selling [00:33:00] mattresses online. One of my daughters said, “Oh, I bought this mattress online.”

And I was like, I just can’t see that for myself. I’m sleeping every night, so I gotta go lay down. I, I– Last time I bought a bed, I was at the mattress store once a week. I think they thought I was trying to move in. I was over there constantly trying out all the beds. I can’t imagine myself buying a, an online mattress

Phil Schmidbauer: That’s why Costco doesn’t have condos because they don’t want you sleeping there.

Joe Lynch: Exactly. So if, so those Purple mattresses, they started being in stores, and I think [00:33:30] they even opened up their own retail

Phil Schmidbauer: Yeah, I have seen them in stores. I actually have one. I bought one online a number of years ago, and I love it. But you’re right, like a lot of people like to go see it, feel it, touch it. I’m that way with clothes. I

Joe Lynch: On that way with the laptop too I wanna go touch the laptop before I buy it. I bought plenty online, but I prefer going in. Sometimes it’s just the, what is the weight? If somebody says, “Oh, it’s two pounds,” I need to know what that feels like in my hand. So it’s an interesting, it’s an interesting thing because we saw tradition- not traditional.

We saw [00:34:00] ecommerce stores, ecommerce brands that became retail, whether on their own stores or in the big box stores, and I think everybody’s trying to learn where they belong. And I think consumers want to buy it from wherever they wanna buy it. If they wanna buy it from the TikTok shop or from Facebook, you gotta be able to support every one of those channels.

Phil Schmidbauer: Yeah, that’s right

Joe Lynch: You mentioned before we hit the record button that you guys have warehousing facilities all over the [00:34:30] country, and some of them, I don’t know if you can mention names, but you guys were opening up stores that were Or not stores warehousing and distribution centers that were basically for some of your customers.

Phil Schmidbauer: Yes. Yeah. So we have we do warehousing for different customers. Some of them we’re out in Redlands, California, and Chino, California. We have, And I think we’ve shared this online, so I don’t think it’s very secret, but we run a warehouse for Haribo of America when they brought their manufacturing up to Wisconsin.

And so

Joe Lynch: a cult.

Phil Schmidbauer: we support some gummy [00:35:00] bear manufacturing plant up in– Yeah and I didn’t know this before we started working with them but, like, all gummy bears used to be manufactured overseas, and it’s like they couldn’t keep up with demand over here in the US. And gummy bears are one of those things that, again, another interesting fact I learned from Haribo they’re recession-proof though, because you can always buy a really small pack, and even during a recession, people want sugar candy.

And so gummy bears, like they don’t, they’re not– They’re recession-proof. And yeah we support them out of Wisconsin. We have a facility up there, manufacturing [00:35:30] support. We have other customers that we do dedicated facilities for them in Jackson Jackson, Tennessee. And then we have another facility down in Memphis.

We’re actually getting ready to upgrade for a customer there. But then we also have shared facilities and dedicated facilities in Columbus, Ohio as well. So

Joe Lynch: Before we got to the ecommerce era, if somebody said, “I need distribution in the US,” you would say it’s gonna be somewhere between, I’ll say Columbus and Chicago. And there’s just a ton of [00:36:00] distribution centers that popped up in Indiana. Not so much Michigan, that’s a little too far, but definitely around Chicagoland, definitely in Indiana, definitely in Ohio.

And then all of a sudden same day, next day hit. And so if… You can probably support, what, two-thirds of same day, next day from Ohio just because most of the people still live on this side of the Mississippi

Phil Schmidbauer: Yeah, I do a lot of network analysis. Just did one for a customer this morning actually and sent one off. But yeah, when you think about Columbus, it’s very [00:36:30] well positioned to where your next day all the way to the East Coast of New York City where a significant population, you can get to Chicago.

So when you think about Columbus, it’s a good center of gravity to not only touch that New York City, Chicago area with- within a day or day and a half or two days max

Joe Lynch: too. We still count.

Phil Schmidbauer: We can’t leave, we can’t leave Detroit out. But yeah, Columbus is a really good center of gravity location. And I say we were probably kinda lucky in where we land as an organization because it just happens to be a really good spot.

And then when you [00:37:00] couple that with Southern California, that dual node between Southern California and Columbus covers so much of the country, it’s it’s really a good setup for us, so

Joe Lynch: Yeah, and I think one of the other challenges is if you get– there’s a lot of large warehousing companies, and a lot of them are tech-centric where they have a shared technology and they say these are individually owned warehouses. So they say, “So we can get you four or five s- warehouses around the country,” and maybe that’s appropriate.

Sometimes it’s [00:37:30] appropriate. One of the issues you run into, though, is again, back to inventory. Do I want to have to– what level of inventory do I wanna be able to have at every facility? And if it’s newer product, you don’t know exactly, so you put a bunch of them in there. And I think this is where SKUs matter, and I think this is what we’re all– you mentioned the Amazon effect.

One of the things Amazon learned is we can’t have anything that sits on the shelf. If you wanna sell through amazon.com, this is [00:38:00] not a, this is not somewhere where you’re gonna store your product at our facilities. It either moves or it’s gone.

Phil Schmidbauer: Yeah. Yeah. And inventory is key, and people don’t often realize the hidden costs of inventory and the amount of locations of inventory you’re managing and how difficult it is. Some of my– One of my most fun projects that we worked on for a customer was they were in five different locations, deliv- distributing from five different locations.

And that’s great. Your outbound cost you think is really [00:38:30] good until you realize how much wasted transfers you, how many wasted transfers, how much wasted inventory because you can’t ever have the right product at the right place. When you’re in one node, it’s a lot easier to do that. So I’m not suggesting everyone should be in one node, but I think everybody needs to understand the right size for them and just how much waste is in the network.

And a lot of that depends on your suppliers and where the product’s coming from and reliability. So it’s definitely an artwork, an art form. There is no clear-cut answer for anyone, but network design is an art form. And I think people often say [00:39:00] can you just give me the one answer?” I said, “There is no one answer.”

There’s a lot of it depends here, right? And I can’t give you that. Now, you build your strategy, and I can help you build your strategy, but you have to execute it. And so I think it’s really important for people to understand. That’s where I think a lot of people fall down, is really understanding the strategy they wanna go with and why they’re doing what they’re doing.

Joe Lynch: Yes. And I’ve also heard people say this about I don’t know if you use this term, but I’ve heard people say, “We’re e-com and we sell maybe through walmart.com, amazon.com, our [00:39:30] website, TikTok, whatever, and each channel has its own demands. So we’re fencing off product so I don’t all of a sudden have a run at walmart.com and then I disappoint Amazon my own website,” because you get dinged on these websites.

If you don’t do well, you get– don’t get to sell. And that’s why, by the way, that’s why we shop on walmart.com or amazon.com ’cause when I buy it, I know it’s there. There’s [00:40:00] nothing worse than saying, “I have two of those,” and it says, “You have none of those.” I’m like

Phil Schmidbauer: Yeah.

Joe Lynch: ‘Cause a lot of times when I’m buying something, I’m just going to repeat.

I was like, “Look at my last order. That’s what I’m buying.”

Phil Schmidbauer: Yep, yep

Joe Lynch: Yeah. And so do you guys end up fencing for your customers or is that not necessary in ombre case?

Phil Schmidbauer: Every customer’s gonna set their own strategy. But yeah, sometimes they will. Sometimes they’ll set aside inventory for a certain customer. And, sometimes

Joe Lynch: speaks to the one node. That’s why I would want one node bec- if I c- I [00:40:30] want minimum nodes because

Phil Schmidbauer: It’s easier to manage them

Joe Lynch: if I have 10 locations, how would I keep that much inventory everywhere?

Phil Schmidbauer: That’s right. That’s right. It’s, it’s– Look, simple is easier to manage. Now, you still have to make sure that you can do the outbound delivery and the lead time, right? Amazon’s not gonna get away with one node because they have too many picky customers that want product same day or next day or

Joe Lynch: that’s all of us.

Phil Schmidbauer: but that’s right. So it’s got… You gotta understand your business and your end customer, but generally speaking, like one node is just easier to manage. So we do retail deliveries out of one node [00:41:00] today with very good success for customers

Joe Lynch: Yep. I wanna wrap this up, but before we wrap this up talk about your services one more time. What are your services? What problems are you solving for your customers? And then who are your customers typically?

Phil Schmidbauer: Yeah. So we, a lot of middle market customers that are, retail is a large sector, but I would say that mid-market customers that don’t really have the resources to go manage their own transportation and distribution network themselves and we try to help [00:41:30] optimize the entire supply chain.

I don’t like to say we just do warehousing and transportation, right? Because there’s more than that. We’ve given customers recommendations on “Hey, go to your shippers and instead of– if there’s 50 cases on a pallet, tell them not to sh- give you an order for 47. Give us an order for 50 so we can ship the whole pallet instead of case picking all,” right?

So there’s little things we do that we try to take a consultative approach to delivering a more efficient supply chain for our customers. We are w- w– like I say, I like to say we’re [00:42:00] consultants to our customers and we want them to push us as well to get better and think differently and think outside the box.

So we do warehousing and transportation. We do transportation only. We do warehousing only. Our best value is when we can pull that all together for a customer and help them make an efficient supply chain.

Joe Lynch: Th- when you s- when you said this the other day, you used the term, “We’re not a logistics company, we’re a supply chain company,” and that speaks to that. And I also have written down here, you guys have t- 27 warehousing [00:42:30] locations? So you’re pretty much everywhere.

Phil Schmidbauer: Yep

Joe Lynch: And again, I think this is the opportunities between the boulders.

When somebody says, “Oh, warehousing is here, manufacturing’s over here, transportation’s over here,” the handoffs are where we oftentimes drop dollars on the ground

Phil Schmidbauer: Think about a relay race. Like you drop that baton and you’re cooked, right? So yeah, it’s just like a relay race. Like how do you make a really good connection, a really good relay to make sure the supply chain is flowing?

Joe Lynch: [00:43:00] Yep. So I’m gonna do the best I can to summarize our conversation. Then I want your final thoughts on the topic. So I’m talking to my friend Phil Schmidbauer. We’re talking about from strategy to scale, the ODW logistics approach to growth. And cool, we talked a lot about some of the problems.

So stockout being one of the big problems. And again, this is harder than ever because we’re trying to do it with less inventory than ever. And the reason we’re doing it with less inventory is because managing inventory is really difficult and it’s [00:43:30] expensive. We learned during COVID how bad that was.

Actually, we learned it again this year with the tariffs when somebody said the tariffs are going in effect, bring me a ton of inventory and then we won’t buy anyone for the rest of the year.” It sounds like a good plan. It’s not easy. It doesn’t work as we think it’s going to. There’s a lot of unintended consequences to this.

Stockouts mean I upset the br- if you’re a brand, you upset the retailer you’re sending it to or [00:44:00] maybe you upset the factory. You know this, Phil, if you worked at Toyota, if you stop an assembly plant in any automotive facility, they threaten you, in a way that is scary. They– I hear people say, “We’ll chop your head off.”

I’ve heard that many times.

Phil Schmidbauer: I never saw anyone get injured, but based on the reaction

Joe Lynch: they always say, you owe… I re- I’ve done it. I’ve shut the plant down. That was when I was in engineering. They say it’s a million dollars a minute. They bring in these enormous numbers. Stock-outs [00:44:30] are a huge problem, but so is e- extra inventory. So it’s it’s a balancing act.

We talked about the difference between ecommerce and retail a little bit, what the retail customers are expecting, and retailers becoming more and more like e-com and e-com becoming more and more like retailers. But to manage e-com, you have to be, usually it’s in by 2:00, in, ordered by 2:00, it goes out that night.

I just heard this big re- big big company, I’m gonna talk to them [00:45:00] soon, told me, “If we get the order by 5:00 PM, it goes out that night.” And again, that’s a Fortune 500 company. That’s crazy. But those are the expectations that go higher and higher every day. And I think not every warehousing company says yes to ecommerce because they go, “We’ve been doing it this way.

We understand LTL many times a week to these retailers. We don’t get the 8,000 orders it, that came in [00:45:30] at 1:55 that have to go out at, by the end of business.”

Phil Schmidbauer: a lot, yeah, a lot of times automation lets you do that, but yeah, it’s complex. It’s complex

Joe Lynch: Yep. And we’re all picky end consumers. I just said this on one of my recent podcasts. I ordered something that said it’ll be there in a week, and I was like, “They’re just saying that. It’ll come today.” I was like, I, I– even when they managed it, they were trying to manage my expectations, I was like, “No, it’s coming today.”

And there was a knock at the door, I was like, “See?” I was [00:46:00] like, “It’s here.” And it wasn’t. But I keep thinking that same day, next day, we drove that, and it’s the same with retail. We expect when I go to Meijer or Kroger or wherever we go, that these products are always there. We talked about warehousing in the nodes, so important, but also the more nodes you add, you have to manage the complexity.

And this is where you need a partner who says, “We manage that complexity every single day for dozens and dozens of [00:46:30] companies just like you.” So when you say, “I think I need eight locations,” you might say over at ODW, “We got you. It’s actually four locations. Let me show you what four locations you need, ’cause we’ll do the network design for you.”

And that’s a higher level of service than saying, “Let me save you 50 bucks on that shipment.” And again, you’ve made the point over and over throughout this conversation is that where ODW fits best is for a company that knows they’re leaking money [00:47:00] and that is trying to grow, but they’re being prevented from growth because they haven’t designed their supply chain, and they need help with that.

Enough of my blather. Put a big old bow on this one, Phil. Final thoughts on the topic

Phil Schmidbauer: Yeah. Look, at ODW our goal is to really allow our customers to focus on their core business. There are logistics providers across the country for a reason. It’s because it’s not easy, there’s a ton of complexity, and every day is different. Our goal as an [00:47:30] organization is to let our customers go focus on their core business, focus on manufacturing and selling their product, and we will focus on the delivery to the customer and an efficient logistics supply chain.

It’s a consultative approach we take. We are not right for everybody, and everybody’s not right for us, and that’s okay. But we are really good at what we do when it comes to delivering ideas, delivering solutions for customers, and helping them achieve their goals. And so I think that’s what it takes, is finding the right partner, somebody you fit with, where your goals align as organizations, where geographically you align [00:48:00] from a setup standpoint and then, find somebody you can work well with.

It’s kinda like a dating game and finding the woman of your dreams, like you find the right partner and it can be a lot of fun. So that’s really what we’re about is finding the right partners in supply chain and helping deliver supply chain solutions so they can focus on their core business.

Joe Lynch: Yep. I love it. I love it. Phil, I’ll make sure I put a link to your LinkedIn profile, a link to your website. Any other links you and your go-to-market team give me, I’ll make sure I put those in the show notes so people can reach out to you. If you guys have any webinars or white papers or case studies we’ll [00:48:30] have– we’ll put those in the show notes if you give them to us.

What conferences will we see you and the fine folks from ODW Logistics at? That’s where I met you guys. I met John over at TMSA, which is coming up. TMSA is coming up. That’s Transportation Marketing & Sales Association coming up here in Colorado this year. Hallelujah. I can’t make it, but I wish I was.

There’s nothing better than Colorado in summertime

Phil Schmidbauer: I love it. So John Meyer keeps a list of all of those locations. I personally, I go to [00:49:00] SMC SMC3 Conference, and then I’ll go to the FreightWaves conference in Chattanooga usually every year. So Joe and I will attend that Chattanooga conference. Our sales team goes to a lot of conferences.

They’re almost– They’re gone a lot. And I don’t– I know we were at Manifest,

Joe Lynch: yeah. You guys are at all of the conferences. I go to the… I go to a lot and I see you guys there.

Phil Schmidbauer: Yeah. I’ll be at Chatteno- I’ll be at Chattanooga and I’ll be at SMC next year. I may be at Manifest next year as well. We’ll see

Joe Lynch: Yep, me too. Yeah, there’s a lot of great conferences coming up, so I’m gonna– I’ll just mention the ones I’m going to. [00:49:30] I’m going to the Trimble conference, which is coming up here in September. It’s in San Diego. God darn it. And then I’m going… I forgot the name of the conference, but I’m going to Rod Lentz from…

There, there’s a investment banker conference coming up in Chicagoland, so it’s always good to get the Chicagoland one because that’s where seems like about a quarter of our business lives.

Phil Schmidbauer: Yeah. Yep. Okay

Joe Lynch: Any- anyway, thank you so much. I I really enjoyed talking to you, and again, I’ll make sure I put a link to [00:50:00] all of those good things so they can reach out and talk to you.

Phil Schmidbauer: It was my pleasure. Thank you, Joe. Appreciate

Joe Lynch: Yeah, thank you for your time, and thank all of you for listening to my podcast. Your support’s very much appreciated. Until next time, onward and upward