It's been said that historically, the shipper community gets creative when its collective back is to the wall. Gough Grubbs of Stage Stores is a prime example of that. During the most recent economic slump, Grubbs collaborated with his company's dedicated outbound carrier to work out a new delivery regimen that saved everybody time and money. His takeaway from that experience? "Economic downturns can actually be positive," he says, "in that they force the kind of communication with business partners that we should have had all along."
Grubbs is senior vice president of distribution and logistics at Stage Stores, a retail chain that operates more than 800 stores under the Goody's, Bealls, Palais Royal, Peebles, and Stage brands. He joined the retailer in 1996, following 23 years in the distribution positions with Foley's (May Co.) and Sanger Harris (Federated Department Stores).
Grubbs holds a B.A. in business management from the University of Texas at Arlington and is a frequent speaker on the logistics and supply chain conference circuit. He recently spoke with DC Velocity Group Editorial Director Mitch Mac Donald about the operation he oversees, his management philosophy, and how he was converted from skeptic to hard-core fan of transportation management systems.
Q: Could you tell us a little about Stage Stores and how it has grown since you joined the company?
A: When I arrived back in 1996, Stage was operating 235 stores in 13 states. Today, we have over 800 stores in 39 states and continue to expand. This fall, we're opening a store in Wyoming, which will be our 40th state. Our aim is to have over 1,000 stores by 2014.
We sell name brand apparel, footwear, cosmetics, and jewelry to rural America. Our focus niche is to be in towns of less than 50,000, although over the years, some of those towns have grown well beyond that.
Q: Could you briefly describe the distribution network that serves those stores?
A: We have three DCs—in Jacksonville, Texas; South Hill, Va.; and Jeffersonville, Ohio. Those DCs have a combined capacity of 1,150 stores, so you can see we have quite a bit of growth potential as long as we stay within our traditional geographic footprint. If we expanded heavily into the West, with the cost of transportation, we might need to consider adding a fourth DC, but we don't see that in the near future.
Q: Sounds like you're well positioned to provide next-day service from the DCs to stores?
A: Well, we could if we wanted to, but we're not doing that right now because of volume and distance. After the 2008 economic slump, we began talking with our dedicated outbound carrier, Velocity Express, about reducing delivery frequencies. What we decided was that some of the stores were small enough that they didn't really need three cartons delivered every day, and we could both save some money by moving them to a designated-delivery-day system. So, we took a segment of the stores and put them on a Tuesday-Thursday or a Monday-Wednesday-Friday delivery schedule, all based on volume and business.
It was a win-win for both the carrier and for us. The stores had no objection—they didn't necessarily enjoy going to the back door every day to receive two or three cartons.
That's not to say this will be a permanent arrangement, however. The grand plan, since we have a dedicated delivery partner, is that as it adds other clients in these areas and finds itself going to a location anyway for some other client, we will probably go back to more frequent deliveries.
Q: Tell us a little bit about the logistics operation's role in supporting Stage's broader corporate success.
A: Well, as I mentioned, we are a growth company, so our primary role is to make sure that we are never the reason they can't continue down that path—that I have sufficient capacity and have the mechanisms in place to support whatever strategy they decide to pursue.
Another of our main responsibilities has to do with balancing stock levels and transportation costs. We operate literally hundreds of stores in rural areas and the average store size is around 18,000 square feet, so we are pretty shallow in terms of depth of our SKUs. As a result, we have to be very sensitive to how quickly we can replenish to avoid out-of-stocks. Trying to marry up the need to keep inventory in the store but do it cost effectively in so many widely scattered locations is a major challenge.
Q: Could you talk a bit about your specific role? For instance, what do you do when you come to work each day?
A: Most of my time is spent communicating with our own merchants, communicating with vendors, communicating with carriers, and trying to develop an environment that is conducive to the maximizing of productivity and efficiency within the organization.
What makes that possible is that I have a very good team. They are solid. They are experienced. They are great leaders. That has allowed me to focus my efforts on things outside the four walls. They are running what goes on the inside.
Q: So you're a proponent of hiring good people and getting out of their way?
A: Absolutely. Often when I speak, I open with, "I love my job." The reason I love my job so much is I get to do my job. So many of my peers appear overworked and over-tasked. When you talk to them for just a little while, you find out that the reason is that they're not only doing their own jobs, they're also attempting to do their people's jobs.
Q: Assume for a moment that you've stepped into a new job and discovered some pretty substantial personnel problems within the logistics operation. How would you go about orchestrating change?
A: I think you do it one step at a time. You have to spend time with each of the individuals to try to get to the root of the problem and then go attack those issues.
That can lead to difficult decisions, like having to cut loose a star player—someone who's well thought of in the industry—for the sake of the team. Sometimes that has to be done and a lot of things happen as a result of that. For one thing, it sends a message about what is acceptable and what is not acceptable no matter who you are. For another, people see that you're serious about your philosophies and they start to get into line.
Q: You've spent 40 years in the logistics profession. What are some of the biggest changes you've seen in that time?
A: The biggest one is the increased availability of data. Take advance ship notices, for example. We're now at about 93 percent advance ship notice utilization. An advance ship notice is basically like an electronic packing slip for every carton that comes across. With that information, you can do a better job of staffing, and the receiving process is more efficient because instead of having to do the old count and sort and stack, you just scan a carton. On top of that, it allows us to make store allocation decisions based on up-to-the-minute information, rather than having to decide as much as six weeks out where merchandise is going to go. When you do that, of course, by the time it gets there, that's not where you need it.
It's the same thing for transportation. We have a transportation management system that helps us optimize our loads. When we first installed the system back in 2002, we compared the routes it developed with those created by our people and questioned some of the decisions. We said, "Why are we sending that truck there?" But when we went back and did the math on the miles and the costs, it was right.
Q: What do you see coming down the road in terms of logistics technology?
A: I'd say RFID has a great deal of potential. We are not a part of that right now—mainly because the price has not come down enough that it has been totally embraced by the vendor community—but I think it is coming.
I remember a day when just scanning a bar code seemed like a huge win. But now I'm hearing complaints from store personnel about the amount of time they have to spend at the back door to receive freight because they have to scan a bar code. With RFID, they could just wave a wand over a pallet load of cartons and get back to their primary job of selling. I think we will get there.
RFID holds similar promise for tracking inventory. The ability to validate your inventory with the stroke of a wand is something we will eventually have, and probably sooner rather than later.