ILMA Compoundings March 2018 - 27

"The robots will work side by side with
humans, and they are fairly inexpensive and easy to justify." - Shimon Nof,
professor of industrial engineering,
Purdue University
diesel costs. "If you don't have to spend on diesel, that is
attractive," he said.
Meneses thinks it will be a while before this scenario
becomes reality, though.
"The equipment is there. It has to be tested. But is society
and the legislation ready for it? I think there has to be a ton
more work to get this in motion," he said. "But the future is
going to be electric."
What he believes will come sooner is increased speed
to market, driven by data analysis. "You have to be fast to
anticipate sales and push sales," he said. "That requires a
fast system and analytical data that tells you who is buying
what and where, and what and when that customer will buy
again. ... The warehouse is just a piece of it. The entire supply chain has to be able to maximize warehouse resources."

Making warehouses a profit
center
For the last eight years, Amtecol, a Richmond, California, manufacturer of high-end lubricants, has been making its warehousing
operation pay off, says Production Manager Peter Nguyen.

Department of Transportation's Federal Highway Administration predicted
a 44 percent rise in long-haul trucking
tonnage from 2007-40. That's not the
only positive; let's consider how, by
extension, trucking employment is
changing as well.
Because of the inability of globalization and automation to overtake
trucking (thus far), truck drivers are
increasingly in high demand. The
economy still depends largely on truck
drivers to keep supply chains flowing.
According to the U.S. Bureau of Labor
Statistics, truck driver employment is
projected to rise about 6 percent from

It has done this by establishing two Amtecol wholesaling
affiliates - one in Paramount, California, and another in
Phoenix. These two businesses, operating as USAS LLC,
have their own sales and marketing teams and are run independently. They sell not only premium Amtecol products,
but also lower-priced lubricants to customers mostly in
Utah, California and Arizona.
"It allows us to capture all sorts of markets," Nguyen said.
"Some shops only want brand names, and some don't. This
way we can provide whatever they want."
Nguyen says the warehousing business in Paramount
came first. "It was successful, so we expanded."
The independent structure allows Amtecol to keep its distance from competitors but still profit from customers who
want a product that is less expensive than Amtecol's own.
Nguyen said that together, the two businesses are worth
about $10 million a year to Amtecol.
Nguyen believes that Amtecol's warehousing operations
aren't particularly unusual. "I believe it is fairly common,
but companies just don't come out and say it."

What comes next?
Increased open-mindedness about adopting modern
warehousing techniques might be good for the lubricants
industry, according to Shimon Nof, a professor of industrial
engineering at Purdue University.
"We are working with companies in the Midwest that are
using traditional warehousing techniques and wasting time
and money because they are disorganized in the warehouse,"
Nof said. "If they used better techniques, they would be able
to save both in spending and in time."

2016 to 2026, with potential further
increases because of drivers retiring in
the coming years.
Another aspect of the shipping process that Amazon has prompted is the
creation of more fulfillment centers
and warehouses, lessening the cost
of shipping altogether, but especially locally. Deliveries are requiring
less mileage, and to the benefit of
customers, packages are arriving
earlier. On top of that, more fulfillment
centers and warehouses have enabled
Amazon to offer free or inexpensive
shipping, something not every
e-commerce outlet can afford.

So, while Amazon has been the one
company to revolutionize the way
shipping and fulfillment are managed
logistically, it certainly isn't the only
company that has benefited from
adaptation. For ILMA members, it's
one thing to understand the extent
of e-commerce, but it's another to be
ahead of the game in the lubricants
industry, which holds a great potential
to benefit from these advancements in
business. The ultimate lesson is to continue giving your customers more of
what they want: affordability, quality
and efficiency in the digital age. Plan
your strategies accordingly.

ILMA Compoundings March 2018

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