A&A DSC Logistics Site Visit 2004

DSC Logistics – The Change from Warehouseman to Supply Chain Manager

September 15, 2004

Richard Armstrong

Key Personnel:

Mark Schroeder, SVP – Operations & Sales

Richard Hamilton, VP – Strategic Relationships

Jon Fieldman, VP – Enterprise Integration & CIO

Shari Kathe, Controller

JoAnn Lilek, CFO

Carla Novak, Director – Supply Chain Support

Adrian Potgieter, VP – Sales

DSC Logistics is not Dry Storage Corporation anymore. Founder Jim McIlrath’s warehousing soul is still around the place, but the company’s vision, spirit and heart are in supply chain management. The new DSC is a well integrated transportation manager and distribution center operator with a list of value-added capabilities. It’s IT is very well integrated as is its communications with customers. Tough hiring practices have created a well educated executive/director group that can embrace change. In addition, growth in new areas has gone well.

Several key personnel decisions made by Ann Drake after she joined Dry Storage Corporation in 1994 have turned out very well. Mark Schroeder, now COO, also came aboard in 1994. The CFO and Controller, JoAnn Lilek and Shari Kathe were hired within the last two years. This pair has good educational and work experience. They keep a tight reign on cash and profitability margins. Two attorneys have been converted to key positions and have done a good job. Jon Fieldman is a bright CIO and is in charge of integration. Carla Novak is the director of transportation management support. Transportation management is a strong service offering built over the last four years. There are now 37 employees in transportation management (TM). This centralized operation relies on i2 software which is completely integrated to other key DSC programs. TM is handled at the “National Service Center” (NCS). This unit is heavily involved with ASK!, DSC’s web-based supply chain management tool.

The NSC handles 3,000 shipments per day split fairly evenly between less-than-truckload and truckload. (Truckload includes intermodal.) Contracts are maintained with 100 carriers. About 20% handle 80% of DSC shipments. For its largest customer, a paper products company, DSC provides integrated control over transportation management and distribution center operations. Transportation planning, execution and reporting are done for inbound and outbound, including international. DSC controls plant and distribution center operations.

DSC’s 30 distribution centers are all connected to DSC’s proprietary warehouse management center. This in-house WMS just added directed put-away. Interleaving is scheduled for next year. We have verified that DSC’s use of proprietary WMS is cheaper than what it could buy. It also allows for modest customization by one DSC client which we view as a significant advantage. DSC is good at integrating with customers and EDI. As a result, it has been very successful at avoiding the cost and confusion of running a large number of WMS programs. This advantage allows DSC to have its integrated WMS/TMS solutions readily available for new customers.

New customers and verticals are part of the change at DSC. While preserving its penetration of the food, consumer goods and paper markets, DSC has added electronics, tobacco and some new healthcare accounts. The combination of new vertical activity and integrated supply chain solutions makes DSC a stronger, modern competitor.

To better serve its customer base, DSC is expanding to new locations. The new Joliet distribution center is one million square feet. It is well designed for flow-through and quick turnaround. Security is tight with the main entry point a “Welcome Center” which captures inbound shipment and carrier information. Not only is an unloading door assigned at this first stop, but the WMS is alerted to assign an unloading employee and provide him a load sheet. Outbound shipments are handled in a similar, controlled fashion. The facility has parking for 300 trailers and a host of other modern features.

The Joliet distribution center is located next to BNSF’s new Chicago land intermodal/automotive hub. This location offers excellent opportunities for DSC’s new integrated supply chain management.

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