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Choosing an In-Country Logistics Provider

With warehousing and logistics operations in numerous countries, Greg McKinley of InComm shares his experience and advice on how to select a reliable in-country vendor.

Choosing an In-Country Logistics Provider

InComm is the company behind many of the prepaid cards in today's markets, whether purchased by consumers in a retail environment or distributed by businesses as incentives or rewards. "InComm acts as a hub," says McKinley, vice president, global warehousing and logistics. "If you purchase a $50 iTunes card at Walmart, for example, the card is swiped through the cash register at checkout. It hits our telecom equipment, we send out to Apple for an okay, then we go back to Walmart with a validation and the card is activated in 1.5 seconds," he says.

The company stocks cold or unactivated cards all over the world, with three warehouses in the U.S. and 13 abroad, which are operated by local vendors. "Rather than set up and manage our own warehouses offshore, we outsourced to vendors in country and we have been successful with that strategy," McKinley says.

Companies often are hesitant to begin global operations because of worries around setting up facilities in regions where they don't understand employment laws or leasing practices or pricing, he says. "Then there is the issue of spending tens of thousands of dollars for the equipment necessary to open a distribution center." Partnering with an established in-country vendor is a good alternative, he says.

InComm honed its process for selecting vendors as it grew. "At first, we would send out an RFQ, but that did not provide us with enough detailed information to select the best vendor," he says. Over time, the company developed a five-phase system "that works really well for us," McKinley says.

The phases are:

" Qualification of vendors based on capabilities and requirements

" Pre-implementation, which includes legal work and developing an understanding of what the true costs will be

" Selection of vendor

" Implementation, which includes setting up SKUs and communications and integrating systems

" Post-implementation, or making sure what was agreed to is being properly executed

This last phase includes having a good understanding of logistics, says McKinley. "It is one thing to set up a warehouse in another country, but there is a lot that goes into shipping from one country to another, so you need a really good understanding of the logistics."

This process cannot be done long distance but requires a visit to the country and to potential vendor partners, he says. "I would not buy a $100,000 sports car if I didn't have a chance to go look at it very closely or have it looked at by mechanics, so I am not going to put millions of dollars of products in a warehouse that I have not seen. It is very important to go to the country and tour the warehouses and meet with management. There is nothing like sitting in a conference room in an actual facility and talking to people one on one."

McKinley also stresses the importance of written processes. "We developed a business requirements document that details every single thing that we are looking for from a vendor and we give that to prospective partners prior to qualifying them," he says. InComm also shares written standard operating processes. "We use this document to go over with each vendor what we expect when an order comes in and how we expect them to process and ship that order," he says. "If you have written processes in place and vendors know you expect them to go by this, you are much more successful."

Follow-up visits, perhaps once a year, are important in the post-implementation phase, says McKinley, as are quarterly business reviews and KPI reports. "If you let things go astray, it can become too difficult to fix, so the key is follow through, follow through, follow through," he says.

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