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Filling In The Gaps

Posted Aug 3rd, 2016

With climate change, fluctuating dollars and increased security due to outside challenges, saying that doing business is more complex would be an understatement.  Canadian businesses, regardless of size, must understand changing global markets and invest resources to achieve success.  Large businesses have an infrastructure to absorb such costs but small/medium size companies don’t have access to the same level of resources.  They have to rely on partnerships in order to evolve and grow.

This is where progressive logistics partners can help “fill the gaps”.

WP Warehousing began over 8 years ago as your standard 3PL (third party logistics) company.  We offered storage solutions for local industry in both heated and temperature controlled environments.  By using a 3PL service, companies could expand and contract their inventory to adapt to peaks and valleys in their yearly business cycle.  By using such a service instead of investing in staff and property to do it themselves, they moved the costs of doing business from an overhead expense to a cost of goods sold.  This switch in inventory control allowed smaller companies to compete more effectively against their larger counterparts.

As WP Warehousing began to grow, we listened to our clients in order to find additional services to help us be a better partner to them.  One thing we heard was the challenge to the cost of shipping goods, primarily in the wine industry.  Due to the small window to supply our LCBO, many wineries found the cost of shipping increased if they needed trucking with limited notice.  WP had already invested in a few trucks to support cross docking for the local paper mill between rail cars coming into our location with pulp and the need to get it up to the mill for production.  WP hired more drivers and now offered our trucking services to the wineries at a consistent rate regardless of the timing of the loads.

A few years later, the business environment for wineries changed again.  The laws changed to allow the shipment of wine through the mail to consumers in many areas of the country.  Our winery partners were interested in taking advantage of this change but were concerned with the logistics of such a program.  Many wineries have limited staff and building a wine club would mean that someone would have to take on this duty.  It is fine in the slower periods but during production and other busy times, it would be hard to maintain.  WP took the initiative and developed a safe shipping package which wineries could buy as they needed them.  We also approached both Canada Post and Federal Express for volume discount rates which brought the shipping costs down for each winery.

Through our work with wine clubs, WP started attracting other local businesses who wanted to take advantage of our volume discount on shipping.  Many companies find it hard to establish an online e-commerce solution due to the high costs of postage.  Large companies offer free shipping by absorbing their volume discounted postage into the price of the goods they sell.  WP’s model of having many smaller companies working together to create volumes allowed these local entrepreneurs to appear bigger than they are and compete more effectively.  The only challenge left was how these businesses would ensure that they could meet demand for their products.

Many of our clients are artisan food companies who either produced from their homes or in local kitchens in churches.  These environments aren’t effective for larger production runs and often lead to bottlenecks which reduce production and raise the costs of goods sold.  WP came up with a solution which would allow these companies to accelerate their growth through shared production space.
The original part of our building was built in 1943 and was a food production space.  It has low profile ceilings that were never conducive to storage.  We decided to develop this space into a series of stand alone food production facilities.  Each production “module” would be fully secured to meet the standards of both the CFIA and FDA, and still be accessible to WP Warehousing and all its 3PL services.  When goods are produced, they can leave directly from the production area to storage or out the door to their clients.  These spaces let our clients ramp up production without the investment in building infrastructure.

We have two models for our food accelerator: Tenant Occupied spaces and General Kitchen spaces.

The tenant occupied spaces are areas where WP rents out to a single user.  They run the space independently of WP and decide on the external client services they will offer.  WP supports their business efforts through introductions to other companies looking for co-packing opportunities.  As of June 2016, we have two such production areas in full operation.  The first is a viscous fill line operated by Oliv Tasting Room.  They mix and bottle viscous liquids such as oils and balsamic vinegars, and are expanding the services to do other liquid fills.  The other area is run by Wrap It Up Raw, a raw vegan food producer.  This area is a dehydration kitchen with industrial dehydrators to make wraps and other dried materials.

WP is currently working on the third facility which will be a general purpose kitchen which will include dedicated areas for jam, jellies, sauces, preserves, baked goods and other commercial food preparations.  These areas will be available for rent by the day to allow smaller companies access to quality kitchens.  Our target audience is companies who have already had success with their products and need space to accelerate their growth potential.  By being able to rent only the days needed, these companies don’t restrict cash flow by paying for space or equipment they aren’t able to use on a monthly basis.  WP’s goal is to work with these clients to develop access to export markets so that, eventually, they outgrow this space and need a more permanent production area like Oliv and Wrap It Up Raw.

By working together, WP and our clients are developing a community that will help everyone involved to grow their companies through the sharing of resources.  WP’s commitment to our partners is to continue to evolve our business to support their growing needs by discovering cost effective solutions.  We have already begun exploring cold and freezer storage as well as reaching out to export landing points to evaluating the interest in locally produced items.  By “filling in the gaps”, WP plans to be part of the food production renaissance that is long overdue in Niagara.

Author: Kevin Jacobi, Owner/General Manager, WP Warehousing Inc.

August 1, 2016