A&A Total Warehousing Site Visit 1-2005

Total Warehousing Posed to Move Up

Phoenix, Arizona USA

January 18, 2005

Richard Armstrong

Key Personnel:

Jim Updike, President & CEO

Eric Ritz, COO

John Bollman, Director of Business Development

Jeff Updike, Sales Director

Phoenix-based Total Warehousing operates 30 warehouses and has reached $65 million in revenue. Total has a new owner, Fenway Partners, and a key group of managers in their thirties ready to move ahead. In addition, its new sister company Transport Industries, one of the nation’s largest dedicated contract carriers, offers Total the opportunity to market larger, integrated solutions.

Total was started by Randy Knight, an owner of Knight Transportation and Jim Updike. CEO Updike hired Eric Ritz early on. Ritz, COO, and Updike have built the business steadily. The compound annual growth over the last five years has exceeded 20% a year.

Total expanded from Phoenix to California, Texas, Nevada and even has a St. Louis operation. The stage is set to move to the next level geographically and expand its presence to other verticals.

Total’s largest customers represent major drug chains, pet food manufacturers, electronics, grocery, beverage (full and empty containers), medical supplies, and pallets (Chep).

The Chep facilities handle millions of pallets a year. Pallets are unloaded, sorted, inspected, and repaired and painted as needed and based on specific Chep criteria. Pallets are then re-issued to customers in truckload quantities.

Close to Phoenix headquarters, Total provides store replenishment services for a major retail company. First shift operations involve de-containerization, re-palletizing, barcoding, RF scanning and put-away of approximately 10,000-15,000 cases per day. Second shift predominantly involves wave picking over 5,000 SKU’s for multiple retail locations. Each case is individually labeled with a store locator number and specific routing number. Orders are then consolidated and floor-loaded onto trailers for multiple stop deliveries. Total is responsible for maintaining over 99.9% accuracy in this narrow-isle racking configuration.

Total also provides a number of VAS services for a major electronics retailer in a Ft. Worth, TX facility. Services include returns processing, refurbishment services, repair, light assembly, labeling, and kitting. Product is received into an integrated JD Powers WMS system. Daily cycle counts and KPI reporting are performed to maintain inventory accuracy. Outbound order processing consists of special labeling, UCC 128 requirements and Sensormatic tagging. All product is then RF scanned and consolidated into trailers for both international and domestic shipments. Freight consolidation and optimization is performed using i2 load planning software. This operation runs 24/5.

Total maintains a flexible infrastructure by leasing some of its facilities on a short term basis. With rented warehouses and flex labor, the company can expand and contract faster than many of its competitors.

Total operates a fleet of company owned tractors and trailers in support of its warehousing operations. Many are dedicated to JIT operations for their beverage operations. Total also operates a small freight brokerage division to handle long distance and over-flow loads. This brokerage will expand to transportation management programs, some of which will be in conjunction with its sister company, Transport Industries (TI).

TI, based in Mesquite, Texas, operates over 3000 tractors in dedicated contract carriage. TI services Wal-Mart, Kroger, Target and other retail customers extensively. Joint offerings between TI and Total can be expected in the future.

Updike, Ritz and company are ready for the new challenges.

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