Wholesaling, innovation

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Essendant is innovating through partnership, execution, and developing the next generation of supply chain professionals

As every performer knows, what your audience sees may thrill them, but the real magic takes place behind the scenes. And when it comes to world-class wholesale distribution, Essendant makes an incredible amount of magic happen for their customers, whether they’re a small family-owned business or one on the Fortune 50 list.

With a portfolio of at least 50 thousand products, the Deerfield, Illinois company partners with distributors, resellers, retailers, e-tailers and other organizations to efficiently extend their supply chains, stay at the pinnacle of customer service, and meet their growth goals.

As a distributor of business products and other essential items, their supply chain ecosystem is sweeping, complex, and diverse. Specializing in less-than-truckload, less-than-full pallet, and less-than-full case distribution brings unprecedented flexibility to the suppliers and customers with whom they partner with.

Dedicated to partnering with their supplier community and powering customers to reach their customers, Essendant leverages a topflight national fulfillment network and league-leading sales, marketing, and digital tools to be the business partner everyone dreams of having.

We recently spoke with Tim Engstrom MS SCM, MBB, to get his insights into the transformation of the Essendant supply chain, as well as his views on the metamorphosis of the industry. As senior vice president of supply chain, Engstrom’s purview includes all of the company’s distribution, transportation, inventory, and engineering teams.

“Today we live in what I call a ‘convenience society,’ where we don't really know what we need until we need it, and then once we figure that out, we want it now,” he said. “One of the strengths of the Essendant network is the extension of our customer’s fulfillment process.  If one of our customer’s forecast for their products has a higher demand than they predicted, we’re their safety net. It helps with their fill rate, securing the sale, and keeping their customer from needing to look somewhere else for the products they need.”

Acting as an extension to our supplier base, when orders are below a supplier’s MOQ (minimum order quantity), Essendant’s Value of Wholesale program, built on their flexible fulfillment, kicks in. “When the supplier prefers to focus on filling orders as a full truckload or full pallet, we’re a great option to do mixed pallets or less than full truck load shipments. The customer still gets the branded product, but by having a partnership with Essendant were providing them purchase quantity options while doing it more efficiently for both partners.”

Helping customers service their customer while managing costs is a key play for the company. “Retailers, distributors and independent businesses are looking to have an endless aisle program where the product line is extensive in their offering,” Engstrom explained.

Essendant aims to be an extension of their fulfillment process, cutting out their expense of stocking scores of items that move at different cadences. The strategy allows customers to offer tens of thousands of SKU’s (Stock-keeping-units) while being flexible in their stocking strategies.

“It creates a great lifecycle management of the SKU, so if it’s a new item that the supplier wants to bring to the market and there’s no history of how it’s going to sell, the supplier can work with us. We’ll stock it, and the distributor, retailer, or independent business can go and sell it,” he said. “We’ll still do the fulfillment of their product offering, but now it makes their supply chain more efficient.”

Essendant is also a fulfillment partner for their retailers, distributors, and independent businesses. “When they are handling their own fulfillment and the demand exceeds the supply at their facilities, they can come to us and we’ll receive the order and pick, pack and ship it.  One of the great options Essendant offers is blind shipping, which we call ‘Wrap and Label’.  We print the customer’s information on the label, so it looks like they fulfilled the order. It’s automatic, so if an order comes in it is electronically diverted to the facility closest to the customer for fulfillment.  From their customer’s perspective it’s seamless,” he noted.

Some of Essendant’s customers, particularly e-tailers and some independent businesses, run stockless operations. “We provide marketing materials, and product content, but they have the website and the relationship with customers, and they don't stock any products. As the order comes in it electronically diverts to our facility that’s closest to their end customer. We’ll do the picking, packing and shipping.”

The Essendant network is positioned to cover 97% of the population with next day delivery from their 34 buildings across the country. “To achieve the highest fill rate, we continually analyze the velocity of the SKU’s and stock them in the appropriate hub networks across the U.S. driving towards a 98% fill rate for next day delivery.”  “We launched the ‘Journey to 98’ initiative, that identifies where items should be stocked, as well as strategic relationships with our suppliers to create a ‘frictionless flow’ of the products to achieve the desired service levels.”

Tim’s view: How the pandemic is changing the supply chain industry

“As the world comes out of the pandemic, I think businesses and consumers are looking for supply chain stability. The road back to this stability will take supply chain transformation, while looking at one’s resiliency and agility,” he said. “Pre-pandemic, supply chains were humming along, focusing on the traditional product availability and efficiencies. It was all about improvements and how to deliver the product faster and cheaper. Supply chains are always battling disruptions; however, we are seeing the bullwhip effect in many different channels and product lines: high demand, low supply, then as demand normalizes, supply is going to be high,” he said.

“There are going to be some adjustments from the bullwhip effect that will make companies relook at their focus. Instead of just focusing on faster and cheaper, are there other things we should be looking at from a resiliency perspective? Do we have the resiliency in labor and production lines not impacting product availability, and if labor has an impact on whether we can produce at a consistent rate, do we have redundancy? We’re finding that in part, in the extended supply chain, resiliency wasn’t as robust as we may have believed. The drive to stability will create or extend partnerships across all legs of the supply chain.”

“The agility comes into how you can become great partners and leverage each other. Do you have abilities that create some agility and resiliency that affects the overall supply chain but also helps your customers? I think there’s going to be more partnerships, and transparency is going to be more than just demand flow and product flow. It’s going to be the transparency of ‘here’s what we’re working on with the network. What are you working on? Can we work together? How can we both become better partners for a connected supply chain.’ That’s Tim’s view,” he said. “I can’t speak for everyone.”

A former adjunct professor and current lecturer at Elmhurst University’s Department of Business and Economics, Engstrom is passionate about developing the next generation of supply chain professionals.

The firm’s Ascending Leaders program is an important bench-building tool. In addition to nurturing internal candidates with the potential and motivation to move through the ranks, Essendant is cultivating relationships with universities across the nation.

“We’re building a feeder pool of either internships or a flexible force staffing model where we can bring in students, get them experiential learning opportunities and internships, then transform these opportunities into hiring. In addition to partnering with schools, we have embarked on a disability hiring initiative. Having experience in leading and implementing these programs, we have great entry level jobs that provide career progression.”

Assisting in the endeavor is staffing heavy hitter Skillset Group, experts in hiring for industry. Their expertise covers the entire scope of warehousing and distribution and
they bring a deep understanding of the changing processes and technologies in supply chain to the challenge.

The company is also implementing lean methodologies, which in turn will be an important developmental aspect of the program. “If you take your talent and put them on continuous improvement projects that broaden their skills, it opens the door to future promotion opportunities for them. If you’re working with schools, you have a feeder pool of talent coming in. And if you do all that, it drives product availability, inventory productivity and cost improvement while you’re taking care of your customers.”