Easy-to-understand signage can also help. “We post signs in multiple languages, says Brendan Heegan, founder and CEO of Boxzooka, which also offers training and certification testing in Spanish as well as English.
At least a few of those temps each day are working for Boxzooka for the first time, says Heegan. Boxzooka holds a meeting every morning to review rules and safety guidelines and explain the day’s tasks. Permanent staffers attend those meetings along with temps.
“We constantly train new people, but core staff has to sit through it over and over again,” Heegan says. “Constant reinforcement is part of the reason for our great safety record.”
Boxzooka uses video cameras to monitor activity, including safety violations, throughout the warehouse. “The monitors are in multiple offices, and multiple people have visibility to them,” Heegan says. When people spot unsafe behavior, they offer the worker correction right away.
Located on the east coast, Boxzooka Fulfillment and Global Ecommerce provider takes managing client requests to the next level through a one-of-a-kind tailored approach offering back office operations for online retailers, order fulfillment for both direct consumer and direct B2B wholesale order fulfillment, while providing automated, customized solutions. Through this approach, Boxzooka not only creates and maintains competitive advantage as a leader in managing the flow of goods, the company boasts an impressive volume of loyal clients who don’t have to seek outside sources to get their needs met. By taking the extra step out of the process, Boxzooka provides an all-in-one solution. The company isn’t afraid of investing more into their customer needs, as they look at the long-term impact it has on their customer base. In other words, customers always come first.
“We’ve accomplished building and maintaining a business with near 100 percent client satisfaction rate,” Founder Brendan Heegan said. “Most warehouse 3PL operations have an 80/20 rule where 80 percent of the revenue is coming from 20 percent of the clients – those are the ones that get the VIP treatment, if you will, and the other 80 percent of their clients get scattered support where some days are good, and some days are bad. They get a lot of client complaints and we don’t have that because everybody’s getting an equal amount of support and attention, just what they need and more. We don’t lose clients.”
Boasting their very own technology, the integrated game-changing capabilities built into their platforms provide customers with an unmatched global reach, eliminating the need for assistance from an outside source or 3PL. The company’s custom technology platform serves as a major differentiator among competitors and as a significant driver behind their robust customer base and retention strategy.
“We own our own technology and we developed everything in-house. Our systems are comprised of a warehouse management system that handles inventory management movements, receiving and shipping out orders. We’ve also built-in a transportation management system (TMS) – companies might use ShipStation or Stamps.com, but we have all that built in to our warehouse management system so there’s no need for a secondary system in order to perform that function,” Heegan explained. “The platform also enables retailers to open the doors to the global market with the turnkey solution that we provide. “
Beyond automation, Boxzooka fosters an environment where employees aren’t limited to one silo. By fully integrating the ins and outs of operational processes, the company fully utilizes the talents and abilities of each employee.
“We cross train everybody, all the time, on every function so that all of our people can do anything at our warehouse. They’re constantly being thrown at different things. That probably decreases our efficiency and increases internal costs a little bit, but we look at it through the perspective that if we lose a team member, then that function doesn’t break and it allows us to shift labor around, making us operationally very competitive. We have a great service because everyone can do everything in our warehouse.”
“Supply chain management is more challenging in a global economy where suppliers are spread across the world. These strategies will help you solve some of your top challenges. Boxzooka Founder, Brendan Heegan discusses with American Express ways that retailers can overcome those challenges.”
SUMMARY
Supply chain management is more challenging in a global economy where suppliers are spread across the world. These strategies will help you solve some of your top challenges. Despite new technologies that help optimize the supply chain and control costs, effective supply chain management becomes more complicated in a global and digital economy. Manufacturers and retailers are capitalizing on new opportunities like automation and expanded supplier choices. But at the same time, the digital factory boom and an interconnected supply network are adding new risks and complexities. Consider the following insights on five of the biggest supply chain management challenges.
1. Making sense out of data
The skyrocketing volume of data that businesses across all industries collect leads to data-driven decisions that improve all business aspects. The supply chain is no exception.
“As we have much more data in all the systems, we can start doing … much better forecasting and much better optimization of prices,” says Mike Callender, executive chairman for the REPL Group, a world-leading technology consultancy that specializes in workforce and warehouse management and works with smaller to global retailers and manufacturers.
“As you move data quicker and have more visibility within the supply chain, you can make quicker decisions so you can reduce your lead times,” he says.
The companies that are creating winning strategies are those that not only optimize the movement production and movement of goods in supply chains but also optimize the movement and allocation of cash.
—Matthew Stammer, vice president of marketing, Taulia
The result for manufacturers is not only less cash tied into raw materials and inventory, but also reduced warehousing space.
Lack of consistent and accurate data, however, makes supply chain management more difficult.
“The supply chain is becoming more connected digitally, which is reducing some of that risk, but it still needs to be quality data,” Callender says.
Using automation—technology like API (application programming interface)—improves data quality. Callender also recommends working with the suppliers across the entire supply chain to ensure data is correct and consistent.
2. Optimizing staffing
The move to boost minimum wages puts pressure on manufacturers and retailers to follow suit. That’s in addition to many states introducing higher minimum wages.
According to the Economy Policy Institute’s minimum wage tracker, 27 states and Washington, D.C. have increased their effective minimum wage since January 2014 (as of Jan. 8, 2019). Additionally, 41 cities and counties have gone beyond their state’s minimum wages.
“As we see minimum wages come into effect, it’s forcing people to do much better predictions about their demand for employees,” Callender says.
Businesses have to spend more time to solve demand fluctuations as well as accommodate for seasonal changes with the right mix of staffing resources in their warehouses.
“You need to have a mixture of permanent, full-time staff and contingent staff to have the flexibility with your workforce,” Callender says.
Warehouse automation is another solution. Callender expects to see it more in medium and large warehouses, and says it’s best to automate “in small chunks.”
“Maybe automate just the physical packing or transport from the pick line to the dispatch line, and choose a certain product or certain area of the warehouse,” he says.
3. Controlling operating costs
Rising freight costs, labor, and commodity prices, among other things, continue to put pressure on cost controls. On the retail size, one way to reduce shipping is by optimizing warehouse locations, says Brendan Heegan, founder of Boxzooka, a fulfillment and global e-commerce company.
As one example, Heegan says the market for high-fashion or luxury goods is on the coast while low-priced, commodity-type goods are more in demand in the middle of the country.
“If you know that much going into the game, then you would position your distribution on the East Coast if you’re a luxury retailer, and if you’re selling more commodity products, you may be better off in Ohio or Illinois to have cheaper shipping costs to your customers,” he says.
He also notes that simple savings can add up fast. Even eliminating some sales flyers or making a package half an inch smaller could result in hundreds of thousands of dollars saved in postage in large-scale shipments.
Outsourcing fulfillment is becoming more common, and Heegan says that especially makes sense for smaller businesses.
“The rent, insurances, labor, utilities and other costs that go with opening a brick-and-mortar facility, even a small one, can easily run away for a retailer that’s trying to scale and grow,” he says.
4. Streamlining working capital
While giving manufacturers and resellers access to higher-quality goods at better prices, the globalization of the economy has also lengthened the supply chain. Other factors like a credit crunch or high interest rates have also played a role.
The inability to manage the cash movement through the supply chain—both for themselves and for their suppliers—can lead to downfall for some companies, says Matthew Stammer, vice president of marketing for Taulia, which provides payment processing solutions.
“The companies that are creating winning strategies are those that not only optimize the movement production and movement of goods in supply chains but also optimize the movement and allocation of cash,” he says.
He adds that higher interest rates in a more robust economy can add more risks.
“Solutions like supply chain finance can play an important part in mitigating these risks,” he says.
5. Reducing security risks
The digitally connected supply chain, while a boon for data-driven decisions, has created a problem entirely new to supply chain management: a risk of data breaches and compromised sensitive information.
In 2019, large-scale cyberattacks are in the top five global risks in terms of likelihood, and seventh in terms of impact, according to the World Economic Forum’s 2019 Global Risks Report. Of 916 respondents across a broad range of sectors, 82 percent expected cyberattacks to result in increased risk to data theft, and 80 percent to disruption of operations.
Third-party risk was a defining issue of 2018 because almost all biggest breaches resulted from a company’s compromised partner, says Alexander Heid, chief research and development officer at SecurityScorecard, which offers a security-ratings platform.
“The interconnected nature and default trust between organizations creates an ecosystem whereby attackers can tunnel and thrive through the exploitation of ‘the weakest link,'” he says.
Reused passwords and poorly designed or secured web applications linked to confidential databases are among the weaknesses that hackers can exploit.
“The bulk of major breaches over the last two years started from access gained via password-reuse attacks, as more than 12 billion credentials have been leaked and circulated in the hacker underground,” Heid says.
He advises any business that relies on critical third-party vendors to continuously monitor the supply chain for weaknesses.
“While a company may be confident that they are doing everything they need to do in order to secure their digital assets,” he says, “it must rely on much more than hopeful thinking when it comes to the security postures of each individual entity they do business with going down the supply chain.”
As the outsourcing operation for the vendor, Boxzooka inspects all return goods and either places it back in stock for resale or puts it on hold if damaged. Commenting on the nature of returns, Heegan said “returns are an ugly business for both the retailer and 3PL alike. We’ve built tools in our proprietary warehouse management systems that allow us to easily identify a return, the original order contents, and match them easily for fast processing.”
Multichannel Merchant, who reaches key decision makers responsible for e-commerce, management, marketing and operations at companies that sell merchandise through multiple channels including eCommerce, mobile, social, and catalog has selected Boxzooka as one of its esteemed Top 3PL recommendations in the US for 2019.
“We can do anything. We’re not in the ‘no’ business. Other third party logistics are in the no business.” — Brendan Heegan.
Not every business can be as big as Amazon.
And those niche mid-sized manufacturers and retailers need a way to get their goods from the warehouse to their customers.
Boxzooka, which is based in Secaucus, has made that process its specialty.
Now, Boxzooka is preparing to sell the technology it honed running its warehouse to other businesses about the country.
It plans to license warehouse management software it developed to other warehouses, a move that could have a big impact on one of America’s fastest growing industries — third-party logistics.
Third-party logistics is the unseen infrastructure that supports billions of dollars of online shopping. They are the businesses that warehouse the goods sold on the websites, pack and ship orders and handle returns.
The country’s biggest third-party logistics provider currently is Amazon Marketplace, the platform Amazon runs that allows businesses to sell directly to online customers through the Amazon website. Amazon chief Jeff Bezos reported this year that more than 300,000 U.S.-based small and medium business use Marketplace to sell their products.
But Boxzooka has targeted the niche market of manufacturers and retailers who want a more customized shipping experience, and with its software, the warehouses that serve them.
“Most of our customers are luxury fashion, brand-conscious retailers that want to sell on their website versus letting Amazon rule their world,” said Brendan Heegan, founder of Boxzooka.
Amazon Marketplace is the right fit for some retailers, Heegan said, and Boxzooka does fulfillment for some clients who sell there. But Amazon’s fees can cut into margins.
“So a retailer has to decide if they want to be brand-conscious and create a lifetime customer and sell directly on their website, or if they’re selling a commodity where they need high volume and the margin can be low,” he said.
The clients of mid-size third party logistics providers like Boxzooka typically are manufacturers and retailers that have grown too big to handle shipping and online orders themselves, but are too small to open their own corporate warehouses and shipping centers.
Boxzooka, offers a glimpse into how eCommerce operates, in that middle space between giants like Amazon and Walmart and startups where the chief executive does double duty as shipping and handling supervisor.
The business started as a software company, giving manufacturers and retailers the technology they needed to do currency conversions, and calculate taxes and duties on international e-commerce orders.
Then, as it began getting requests from clients to handle their fulfillment — a term that covers everything involved in getting an online order from a manufacturer to a consumer, and getting returns ready for resale — it opened its own warehouse in Secaucus in 2015.
Now, warehouse management software Boxzooka developed to use with its Secaucus operations could become its biggest source of growth, as it prepares to begin licensing the software to other warehouses this fall.
The software allows the Boxzooka warehouse to track online orders as they are received, packed, and shipped, and also lets Boxzooka’s clients monitor how much they are selling and who is buying or returning goods.
“We’ve been utilizing the software for the better part of the last three years,” Heegan said. “It’s taken us that long to make this perfect for us.”
Research firm IBISWorld reports that there are 14,385 third-party logistics businesses in the United States and forecasts that number will grow by an average of 3.6 percent a year over the next five years.
Most of those businesses, according to IBISWorld, are small to medium warehouse operations that serve specific regional markets, the group most likely to be customers of Boxzooka’s software.
Heegan says running a warehouse and fulfillment center has turned out to be a benefit as the company has developed that software. Seeing real time problems and needs his warehouse clients faced in filling orders has helped the company tweak and improve its workflow.
Having a warehouse with its own proprietary management software has been a boon to clients too, he said.
Brands that are growing “have to pivot all the time” Heegan said. “If you’re working with a third party logistics provider who has to outsource their technology and use another vendor, it’s very hard to accommodate those changes for the retailer when they need to pivot,” he said. “Having our technology in house means we can accommodate and be very fast and very nimble.”
An example of that was when one of the fashion brands that uses the Boxzooka warehouse got a rush order for Neiman Marcus with special shipping and labeling requirements that required on-site tech support. Boxzooka learned about the order on Wednesday and was able to ship it by Friday.
The Secaucus warehouse now has more than two dozen manufacturing and retail clients from New Jersey and New York as well as a number of international clients.
On a typical work day the warehouse handles between 6,000 to 10,000 units of merchandise. That number swells to 15,000 to 20,000 during peak seasons around holidays.
The company employs 22 to 25 people, including executive, administration, tech and warehouse employees.
IBISWorld, in its report, noted that in the highly competitive world of third-party logistics, warehouses and fulfillment centers that can offer custom services are more likely to succeed.
Boxzooka specializes in custom requests from clients. Some clients want orders shipped in their own branded boxes and wrapped with branded tissue paper or ribbon. Others want Boxzooka to procure the boxes and shipping materials for them.
Being a smaller warehouse means “we can do anything,” Heegan said. “We’re not in the ‘no’ business. Other third party logistics are in the no business.”
Heegan, who has close to 20 years experience in transportation and logistics-related companies, said when creating the Boxzooka warehouse in Secaucus he and his team wanted to learn from the mistakes and the successes of other warehouses.
One way they wanted their fulfillment warehouse to be different was they wanted to make it a place their customers could visit anytime, or where they could come for the day, plug in their laptops, and get work done.
“Usually fulfillment centers don’t like to have customers come in and visit, Heegan said.
“They’ve got to tuck in their shirts. They’ve got to clean the place up. They’ve got to hide something they’re doing wrong. So we said let’s have a place that’s always clean. Our shirts may not always be tucked in, but we’ve got nothing to hide.”
The upper floor of the warehouse has a lounge area where clients can work and a space for photo shoots if a client needs new product images for its website.
How does a small retail e-commerce business know when it is time to stop doing their own shipping and outsource to a business like Boxzooka? “I ask people what is the cost of your time if you’re the owner of the company,” Heegan said. Does the CEO and top tech staff have to spend all day Monday scrambling to fill a backlog of orders that came in over the weekend? If that is the case, think about the cost of how those employees are spending their time, Heegan said.
“You have to find where that line is and know when to step over it and outsource,” he said.
The cost to outsource to a warehouse fulfillment service will depend heavily on factors like your current sales volume, geography, and the amount of inventory you need to store. But you can get a sense of your potential costs by following this formula.
Bins on top of bins upon shelves on top of shelves at the Boxzooka fulfillment warehouse are filled with products ranging from next season’s winter parkas to the newest cinema releases on DVD. Boxzooka, a global eCommerce fulfillment company headquartered in Secaucus, stores the goods for manufacturers and then ships them when orders come in.
Now, the company that’s called Secaucus home since 2015 is looking to expand its role in the burgeoning eCommerce industry. Come September, it plans to offer its software for sale to other fulfillment companies.
Brenden Heegan, founder and director of marketing and sales, said the warehouse management software his company’s developers created has been part of an efficient and sustainable business model.
“The WMS is really the core of our business,” he said. “Whatever helps us out generally helps out our customers, too. If they do well, we do well. We truly believe that.”
According to Business.com, the United States had the second largest eCommerce market, behind China, with a total of $340 billion in 2017. And Secaucus is a hub for dozens of warehouses because of its location near major roads and New York City.
As the landscape of business is moving to eCommerce and online shopping, companies like Boxzooka are creating software to ease and organize this transition for companies.
Boxzooka’s software is built to be adjusted to the customer’s needs and keep up with the changing landscape of retail marketing that Heegan said he thinks makes the business model sustainable.
“Most companies have two things in common: they lack resources and they change their minds every day,” Heegan said. “They have to be changing all the time, coming up with new this, new that and they need us to execute them, and it all comes back to the software.”
Clients can view report statistics including revenue, discrepancies, customer ranks, product ranks, the shipping process and other reports through the online software, Leo Fernandez, director of Client Services, said.
The staff at Boxzooka consists of Fernandez; an accountant; two software developers; Heegan; warehouse manager Carlos Hernandez and approximately 22 full-time laborers, Fernandez said.
Clients pay to store their merchandise, which varies from apparel to cosmetics to DVDs, in bins, Fernandez said. The price also varies, depending on amount and volume, Heegan said.
Heegan said he has made deals with start-up companies in the past that were unsuccessful, which hurt Boxzooka because they had leftover merchandise still stored in the warehouse. As a result, he said the team at Boxzooka has to be selective about what clients they make deals with.
“There’s so many companies out there that think they can have a beautiful product and put up a beautiful website and if they build it, people will come, and it’s not the case,” Heegan said. “We’ve seen ’em.”
Brendan Heegan knows more than a thing or two about calculating costs during e-commerce fulfillment deliveries.
As the founder and owner of Boxzooka, a warehouse fulfillment and global e-commerce center in Secaucus, some of the $5 million in annual revenue he racks up comes from international orders. And those orders, he said, are not easy to fulfill.
“Landed cost, duties, taxes, currency issues — all of things that make it a roadblock for retailers to embark on selling internationally — we solve those problems,” he said.
So, when Heegan hears that Thursday’s Supreme Court ruling — one that will allow states to collect sales tax on all orders shipped inside their borders — he doesn’t necessarily buy the argument that it will be hard for small businesses to keep track of all taxes owed (as was stated here). Heegan lives in that world every day.
“When people buy from overseas, more often than not, there’s going to be duties or taxes assessed with the import of the item,” he said. “If they don’t know that up front, if the retailer just sells internationally and doesn’t include the duties and taxes up front, sometimes the consumer will feel it’s bait and switch or they’ll get sticker shock when they realize they’ve got to pay more.”
That, he said, can lead to big problems. “They might refuse it and have it sent back,” he said. “That’s a chargeback risk to the retailer.”
Heegan admits calculating all of the necessary taxes isn’t easy, but he feels there is enough software available for domestic purchases that retailers will be to handle the expected coming new regulations.
“From a domestic standpoint, sales tax has been assessed by states for as long as the United States has been there,” he said. “They change from time to time. We’re used to it. Every software out there generally has a function to be able to charge the local tax within the U.S.”
Heegan said the ruling makes sense. “At the end of the day, it brings transparency and it levels the playing field,” he said. “And I don’t think there’s anything wrong with that.”
Boxzooka client Molly Howard isn’t into doing the trendy thing, so it makes sense that she launched a women’s apparel brand dedicated to a classic motif: the stripe.
Howard — along with former Vogue editors Meredith Melling and Valerie Macaulay — started La Ligne, French for “the line,” in 2016, after spending three years as head of business development at Rag & Bone. Prior to that, she worked as an investment banker at Credit Suisse in the Financial Sponsors Group.
