WHOLESALE DISTRIBUTOR USES FLEET OUTSOURCING TO GROW

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Charleen Grant
5 years ago
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1 S O L U T I O N S H O W C A S E WHOLESALE DISTRIBUTOR USES FLEET OUTSOURCING TO GROW It s a defining moment for businesses when they realize that unless they change the way they have been managing their fleet, they won t be able to keep up with the growth they are experiencing. It generally takes a leap of faith to outsource some or all of their transportation functions, but the rewards can be impressive for those willing to try a new solution. In this report, we show how a Ryder ChoiceLease solution helped Lewis grow, save capital, reduce debt, and provide exemplary customer service. FLEET LEASING & MAINTENANCE DEDICATED TRANSPORTATION SUPPLY CHAIN SOLUTIONS

2 THE OUTSOURCING DIFFERENCE * Since outsourcing its fleet to Ryder, Lewis: Achieved savings within the first 6 months of 3% percent in cash flow Achieved a 1.5% reduction in debt within the first six months Savings and debt reduction increased as fleet grew Improved customer service Gained the ability to grow routes and locations *Lewis estimates of savings.

Norine Miller remembers a defining moment in the history of Lewis, a wholesale distributor, when a crucial decision was made about how to keep pace with business growth. The stakes were high.

3 Norine Miller remembers a defining moment in the history of Lewis, a wholesale distributor, when a crucial decision was made about how to keep pace with business growth. The stakes were high. To provide the exceptional customer service that had led to the Wheeling, Illinois-based company s success, Lewis would have to find a different way to manage its transportation network. If the company didn t make a change, chances were good it could not keep delivering on the promise that differentiated it in the marketplace: Providing products just when required so customers don t have to carry the cost of inventory they don t need yet, or find space for it. We opened in 1982 as Lewis Paper Place and the company had one pick-up truck. That was a problem in winter, says Miller, Vice President and Comptroller of Lewis. We evolved into Lewis Paper, and over the next 10 years purchased a few trucks as the business grew. But at one point we needed more, and the cash flow simply wasn t there. We decided we would look into leasing to see if it would be beneficial for us. Miller, who has been with the company for more than 25 years, recalls having significant doubt about whether the company could find a transportation partner that would be sufficiently committed to its business. Outsourcing was not a strategy the company had tried. What vendor would be as customer-service focused on our customers as we are? We always made a promise to our customers that when they needed something, they would get it fast, says Miller. We don t have time to wait for trucks that need to be repaired, we need vehicles always ready and at a cost that makes sense. We weren t sure that we could find a company that could do that for us. We knew from that exercise and our experience that we really don t want to be in the trucking business. But were worried about hidden costs; some companies had over-miles and management fees, and we didn t want to risk that, says Miller. In the end, we had one critical question that we asked every company: If our truck breaks down, can you get us a replacement truck within an hour? The only company that said yes was Ryder. When we started, we were doing $30,000 a year with Ryder. Now we have 35 trucks and do more than $1 million a year. Do the math and it s easy to see where the savings mattered. Reluctantly, Miller and the rest of the Lewis team decided they would try leasing with Ryder rather than owning their fleet. They began with one truck in The reality was that it was getting to the point that orders were coming in and we were growing, but our trucks couldn t keep up, says Miller. It was very nerve-wracking to make the change, though. We were very nervous about whether Ryder could live up to their promises. Will they step up and have trucks when we need them? The answer to that question, Miller says, is an enthusiastic yes. Lewis executives interviewed and received bids from several transportation companies, including Ryder. It was a lengthy process and we looked at it in great detail. We spent hours calculating the financing and maintenance costs leasing versus owning.

They know we need a replacement truck immediately if one goes down, and they get it to us within an hour always, says Miller.

4 You have hired expertise that is unbelievable, and you never have to worry about your fleet, you just can t put a value on that. Norine Miller, Vice President and Comptroller, Lewis Year after year Ryder has out-performed on their promise to us. They know we need a replacement truck immediately if one goes down, and they get it to us within an hour always, says Miller. They are a true partner because they have taken the time to understand our business. Because they have done that, they are able to give us what best meets our needs. Ryder now provides Lewis with 35 trucks operating out of eight locations: Wheeling, Chicago, Addison, and Tinley Park, Illinois; Portage, Michigan; South Bend, Indiana; Denver, Colorado; and Fort Collins, Colorado. Lewis has a Ryder ChoiceLease Full Service, which has bumper-to-bumper maintenance, including tires and brakes, for its NON-CDL straight trucks and light duty Isuzu trucks. If a vehicles breaks down, replacement vehicles are immediately available, and all Department of Transportation compliance work is done by Ryder. We never miss delivering an order, no matter how tight the schedule is, says Miller. In fact, we are so comfortable knowing that our fleet is dependable, we don t even think about that anymore. Lewis pays one, low monthly payment for its trucks, complete maintenance, and administrative services. In addition to Lewis lease, Ryder also provides the company with fuel, which allows Lewis to leverage Ryder s bulk buying power to receive it for a price that is lower than retail. Having reasonable and predictable fleet costs with no hidden costs or maintenance surprises - is especially important to Miller s financial planning efforts, she notes. This is particularly so when Lewis is in acquisition mode. Through organic growth and acquisitions, Lewis has become one of the largest wholesale distributors in the Midwest of quality paper, envelopes, breakroom, janitorial and packaging supplies. This was achieved through a strategy of offering next day delivery, unparalleled service, nationally recognized brands, customer-focused flexibility, and competitive pricing. We could not have grown our business, hired a fleet manager, and bought nearly 40 trucks. As we acquired businesses that owned trucks we could see how this wasn t working for them. It takes a lot of time and money away from a company, says Miller. Ryder was able to change with us as our business changed, and that was how we could grow. That change included the company s rebranding effort.

Looking back on the process Lewis went through to decide whether leasing a fleet was right for them, Miller advises other companies to do the same, and to start looking for savings early in the lease

5 When we rebranded, Ryder was able to find us a company that could wrap our vehicles for half the cost of re-painting them, she says. There are also other hidden benefits that Ryder gives us, like helping with the safety and training of our drivers. Looking back on the process Lewis went through to decide whether leasing a fleet was right for them, Miller advises other companies to do the same, and to start looking for savings early in the lease process if leasing is the choice. Within the first six months of leasing with Ryder, Lewis experienced a 3 percent savings in cash flow and a 1.5 percent reduction in debt. When we started, we were doing $30,000 a year with Ryder. Now we have 35 trucks and do more than $1 million a year, she says. Do the math and it s easy to see where the savings mattered. Miller also advises doing your due diligence and looking at the financing costs of loans and depreciation versus leasing with maintenance: Ask yourself: Are you in the business of maintaining trucks? Do you have a fleet manager? In the end, we had one critical question that we asked every company: If our truck breaks down, can you get us a replacement truck within an hour? The only company that said yes was Ryder. How are you going to sell vehicles when they fully depreciate? Can you make your deliveries if a truck breaks down? There are so many what ifs you really won t have to deal with if you lease with the right company. For Lewis, outsourcing its fleet is just like hiring the right employee, she adds. You have hired expertise that is unbelievable, and you never have to worry about your fleet, you just can t put a value on that. About Lewis Founded in 1982, Lewis is a leading distributor offering quality paper, envelopes, breakroom, janitorial and packaging supplies to businesses. With the simple strategy of offering next day delivery, unparalleled service, nationally recognized brands, customer focused flexibility and competitive pricing, Lewis has become one of the largest wholesale distributors in the Midwest. About Ryder System, Inc. Ryder is a FORTUNE 500 commercial fleet management, dedicated transportation, and supply chain solutions company. The 80 year-old business is among FORTUNE s World s Most Admired Companies, and been recognized for its industry-leading practices in third-party logistics, environmentally-friendly fleet and supply chain solutions, and world-class safety and security programs. ryder.com Ryder and the Ryder logo are registered trademarks of Ryder System, Inc Ryder System, Inc. Ever better is a trademark of Ryder System, Inc. PT

FLEET LEASING & MAINTENANCE DEDICATED TRANSPORTATION SUPPLY CHAIN SOLUTIONS

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