Logistics - Walmart UTi

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Wal-Mart Gulf import center avoids West Coast congestion
UTi Integrated Logistics managing four million square foot facility
By Peter A. Buxbaum
Wal-Mart was looking for a way around the congestion of the Southern California ports of Los Angeles and Long Beach for transpacific imports bound for its Midwest distribution centers. Wal-Mart found an answer in a four million square foot import deconsolidation facility located in Baytown, Texas, near the port of Houston. Earlier this year, after a year-long contest, the retailing giant chose UTi Integrated Logistics, based in Columbia, SC, to manage the facility.
UTi, for its part, now relies on Wal-Mart and its Sam’s Club division for a substantial portion of its business. Of the 20 million square feet of warehousing space managed by UTi, five million are now on behalf of Wal-Mart and Sam’s Club. Before landing the Wal-Mart contract in Baytown, UTi had been operating a one-million square foot cross docking and import deconsolidation facility in Charleston, SC, for approximately five years.
UTi Integrated Logistics is the former Standard Corporation which was acquired by UTi Worldwide Inc. about two and half years ago. UTi Worldwide is a non-asset based global logistics provider with roots in the freight forwarding and customs brokerage businesses. The company runs a network of freight forwarding operations in 257 cities and manages 106 distribution centers in 54 countries, serving customers in the pharmaceutical, apparel, chemical, automotive and technology industries. Other recent UTi deals include the opening last year of a distribution center near Mexico City for a major automotive customer. A major paper and consumer goods customer also recently retained UTi Integrated Logistics to operate a 350,000 square-foot distribution center in Richmond, Virginia.
Wal-Mart’s new import deconsolidation facility in Baytown comprises four million square feet, two million each in two side-by-side facilities. “We will be serving Wal-Mart’s Midwest distributing centers,” says Bill Gates, CEO of UTi Integrated Logistics. “The idea is to take some of the congestion off West Coast ports with shipments to Houston through the Panama Canal.”
The Wal-Mart-UTi contract was announced in February, and the facility is now open and receiving product. Gates estimates that when operating at full capacity, the facility will be receiving around 2,500 containers per month and that UTi will begin shipping product to Wal-Mart DCs starting in June. The Baytown facility will be employing approximately 1,000 workers.
The year-long process to choose the logistics provider for Baytown was based on a request for information that, at first, narrowed the field of participants to eight large third-party logistics providers. “This was one of the bigger deals in this space that has happened in the last couple of years,” says Gates. “You need to offer a certain size and scope to be able to handle the kind of business that Wal-Mart can give you.”
Wal-Mart chose UTi based on a proposal that included criteria such as financial soundness, its start up plan, flexibility for seasonal requirements, and diligence over financial processes, hiring, staffing, training, and achieving required metrics. “The metrics involved a pretty substantial dashboard given the labor intensity of the operations,” Gates explains. “A number of metrics involved productivity such as cases per hour, cost per case, timeliness of unloading, fill rates on the outbound side, as well as timeliness and accuracy of shipping and accuracy of inventory management.”
UTi also had to demonstrate a familiarity with radio frequency identification (RFID) technology, Wal-Mart being one of the leaders in that field. Wal-Mart has mandated that its top 100 suppliers ship pallets and cases to the retailer equipped with RFID tags by the end of the first quarter of this year and that its next 200 suppliers come into the same compliance during the first quarter of 2006. RFID technology is designed to replace barcodes and to drive sup

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.