Executive Briefings

SPECIAL ISSUE: GLOBAL SUPPLY CHAIN PARTNERSHIPS

Con-Way Logistics: New Operating Unit Builds a Business From the Ground Up

To throw a party, first you rent the room. Then you wait to see if anyone will show up.

Which is something like the situation Con-Way Logistics found itself in, when it began operations four years ago as a new unit of Con-Way Transportation Services Inc., part of CNF Inc. "We had zero customers and three empty buildings when we started," says Randy Mutschler, director of sales and marketing with Aurora, Ill.-based Con-Way Logistics.

Of course, the first question was where to put those three buildings. Con-Way Logistics wanted substantial coverage for potential key customers from day one. And it needed a strong base on which to construct a fast-growing business. At the top of its agenda, then, was a nationwide site review that was both fast and thorough.

It wasn't a job that Con-Way intended to undertake alone. On the contrary, the company was too busy looking for charter customers to get involved in the fine details of a facilities hunt. It turned that task over to NAI Hiffman, a commercial real-estate services firm based in Oakbrook Terrace, Ill.

NAI immediately launched a search, based on Con-Way's request for three full-service logistics centers spaced strategically around the country. Following a quick review of possible locations, it conducted a series of site tours. The job fell to Gerard J. Keating, executive vice president of NAI, who had worked before with Mike Bare, Con-Way's vice president and general manager. "He understood the direction we were going," says Mutschler.

Per Con-Way's instructions, NAI embarked on a hunt for sites on the West Coast, East Coast and in the Midwest. The process began in the fall of 1998. By the following spring, NAI had nailed down properties in Cranbury, N.J.; Mira Loma, Calif.; and Aurora, Ill. (near Chicago).

The actual search took only about 30 days, with the remaining time given over to lease negotiations. All were for existing, empty buildings. Con-Way's basic requirement was for a 100,000-square-foot facility with room for expansion, suitable for a multi-customer operation. Other criteria included good local transportation infrastructure and availability of labor.

Although it was engaged in a strenuous marketing effort, Con- Way had no particular customers in mind for the new facilities. "There was some nervousness about that," admits Mutschler. Still, the startup went as planned. The three distribution centers all opened at about the same time.

And the customers showed up. The first was in place in less than 30 days. Within 60 days, says Mutschler, all three facilities had business.

In fact, Aurora quickly exceeded its capacity, Mira Loma is nearing that point, and Cranbury, while not yet full, has already expanded from 100,000 to nearly 240,000 square feet.

"The speed at which they established themselves is unusual," says Keating. Con-Way subsequently added four new locations in Dallas; Tigard, Ore.; and Clayton County, Ga. - for a total of seven facilities in just 36 months.

The distribution centers provide a wide range of services, including receiving, putaway, inventory control and management, pick/pack operations, labeling, kitting, subassembly and transportation management. All of that is Con-Way's job. But NAI remains in the loop: It provides full-scale property management, acting as intermediary between Con-Way and its landlords. Still, says Keating, "Con-Way makes all the decisions."

For Con-Way, the seven facilities are just the first stage of a business plan that will take three to five years to execute, depending on customer demand. Mutschler says the provider expects to have between 20 and 30 facilities in operation by the time its network is complete.

Precise locations have yet to be mapped out; NAI will likely be asked to find new sites on short notice. Says Mutschler: "I can call Gerard this afternoon, tell him I need to be in a particular area within 30 days, and he'll have a list. It's not a problem." Keating adds that NAI can respond to such a request within 24 hours.

Future sites will focus on the import and export sectors. Con- Way is looking to handle its customers' business from origin to distribution, Mutschler says. At the same time, it wants to be able to enlarge existing sites.

"Expandability is one of the key components of our strategy," says Mutschler. "We work with major developers who understand our need to grow."

To throw a party, first you rent the room. Then you wait to see if anyone will show up.

Which is something like the situation Con-Way Logistics found itself in, when it began operations four years ago as a new unit of Con-Way Transportation Services Inc., part of CNF Inc. "We had zero customers and three empty buildings when we started," says Randy Mutschler, director of sales and marketing with Aurora, Ill.-based Con-Way Logistics.

Of course, the first question was where to put those three buildings. Con-Way Logistics wanted substantial coverage for potential key customers from day one. And it needed a strong base on which to construct a fast-growing business. At the top of its agenda, then, was a nationwide site review that was both fast and thorough.

It wasn't a job that Con-Way intended to undertake alone. On the contrary, the company was too busy looking for charter customers to get involved in the fine details of a facilities hunt. It turned that task over to NAI Hiffman, a commercial real-estate services firm based in Oakbrook Terrace, Ill.

NAI immediately launched a search, based on Con-Way's request for three full-service logistics centers spaced strategically around the country. Following a quick review of possible locations, it conducted a series of site tours. The job fell to Gerard J. Keating, executive vice president of NAI, who had worked before with Mike Bare, Con-Way's vice president and general manager. "He understood the direction we were going," says Mutschler.

Per Con-Way's instructions, NAI embarked on a hunt for sites on the West Coast, East Coast and in the Midwest. The process began in the fall of 1998. By the following spring, NAI had nailed down properties in Cranbury, N.J.; Mira Loma, Calif.; and Aurora, Ill. (near Chicago).

The actual search took only about 30 days, with the remaining time given over to lease negotiations. All were for existing, empty buildings. Con-Way's basic requirement was for a 100,000-square-foot facility with room for expansion, suitable for a multi-customer operation. Other criteria included good local transportation infrastructure and availability of labor.

Although it was engaged in a strenuous marketing effort, Con- Way had no particular customers in mind for the new facilities. "There was some nervousness about that," admits Mutschler. Still, the startup went as planned. The three distribution centers all opened at about the same time.

And the customers showed up. The first was in place in less than 30 days. Within 60 days, says Mutschler, all three facilities had business.

In fact, Aurora quickly exceeded its capacity, Mira Loma is nearing that point, and Cranbury, while not yet full, has already expanded from 100,000 to nearly 240,000 square feet.

"The speed at which they established themselves is unusual," says Keating. Con-Way subsequently added four new locations in Dallas; Tigard, Ore.; and Clayton County, Ga. - for a total of seven facilities in just 36 months.

The distribution centers provide a wide range of services, including receiving, putaway, inventory control and management, pick/pack operations, labeling, kitting, subassembly and transportation management. All of that is Con-Way's job. But NAI remains in the loop: It provides full-scale property management, acting as intermediary between Con-Way and its landlords. Still, says Keating, "Con-Way makes all the decisions."

For Con-Way, the seven facilities are just the first stage of a business plan that will take three to five years to execute, depending on customer demand. Mutschler says the provider expects to have between 20 and 30 facilities in operation by the time its network is complete.

Precise locations have yet to be mapped out; NAI will likely be asked to find new sites on short notice. Says Mutschler: "I can call Gerard this afternoon, tell him I need to be in a particular area within 30 days, and he'll have a list. It's not a problem." Keating adds that NAI can respond to such a request within 24 hours.

Future sites will focus on the import and export sectors. Con- Way is looking to handle its customers' business from origin to distribution, Mutschler says. At the same time, it wants to be able to enlarge existing sites.

"Expandability is one of the key components of our strategy," says Mutschler. "We work with major developers who understand our need to grow."