Prominent supply chain consulting firm Tompkins International plans to become a fourth-party logistics provider (4PL), managing a group of prominent companies that will pool their services in an unconventional approach to capturing a share of the fast-growing e-commerce fulfillment market.
The venture, the MonarchFx Alliance, will be headed by James Tompkins, founder of the consultancy that bears his name. MonarchFx will team with third-party logistics (3PL) providers Kenco Logistics and NFI Interactive Logistics Inc. and software developer JDA Software Group Inc. to offer same-day, next-day, and two-day deliveries across the U.S., Tompkins said.
The venture breaks through the traditional firewall separating consulting firms and logistics providers by putting a consultant in charge of a nationwide fulfillment network. The alliance, in all, will be composed of a material handling systems design firm (Tompkins International), three 3PLs (Kenco, NFI, and an unnamed third company), a technology provider (JDA), and an unnamed delivery firm. The partnership also includes an unnamed financial backer that owns the group's six distribution centers, Tompkins said.
MonarchFx will start by enlisting footwear and apparel vendors. It plans to begin stocking in its DCs by July and start shipping its first orders by August, Tompkins said. By building a network of local fulfillment facilities, Monarch hopes to disrupt the traditional hub-and-spoke strategy of DCs performing last-mile delivery from massive, centralized sites.
Tompkins acknowledged that many 3PLs and contract logistics firms offer similar services. However, he said MonarchFx would be able to do it for a lower price because of efficiencies gained by combining multiple tenants in the firm's warehouses. The group will leverage the large-scale operation to build highly automated material handling systems, he said.
Additional cost savings will come from shrinking the delivery distance to each consumer by distributing inventory among the group's fulfillment centers, which are located in northern California, southern California, Dallas, Chicago, Atlanta, and eastern Pennsylvania.
"Certainly multi-tenant is not a new concept," Tompkins said in a phone interview. "The challenge is that 3PLs have limited clients—just two, three, or four—and they don't want to sign long-term contracts. But our financial partner will put the automation in, then lease the space and equipment back to us."Partners cite need to compete with Amazon
From the partners' point of view, joining MonarchFx is an opportunity to compete with Seattle-based Amazon.com Inc.'s speed of delivery in retail eCommerce. Amazon has built massive economies of scale and route density in final-mile delivery. Joining forces under the banner of MonarchFx could allow the new partners to perform fulfillment at a similar speed, Sean Coakley, senior vice president of Chattanooga-based Kenco, said in an email.
"No individual retailer has the capital to build a competing network of forward-deployed fulfillment centers, and no individual retailer would have the volumes to operate it efficiently even if they could," Coakley said. "The only way to capture the same kind of scale and efficiency is through collaboration."
Kenco will continue to serve its existing 3PL clients under its core model of providing outsourced logistics services, experience, and expertise, Coakley said. "Where our customers require dedicated, outsourced logistics, Kenco will continue to be best of breed. But where the competitive pressures of modern online fulfillment mean that our retail e-commerce customers need the scale and efficiency that can only come from collaboration ... the MonarchFx Alliance gives us a tool that we can use to supply those needs too," Coakley said.
NFI, based in Cherry Hill, N.J., said the partnership offers an opportunity to expand its existing businesses, and to leverage partners' strengths to create a specialized distribution model for rapid fulfillment, NFI Senior Vice President of Sales William Mahoney said in an email. "As all global 3PLs work to find their place in a growing e-commerce world, where same-day and next-day delivery directly to the consumer is the requirement, MonarchFx offers NFI an opportunity to partner with world-class organizations in development of an innovative e-commerce platform that shares best-in-class warehouse management systems, MHE automation, and ... facilities to do so," Mahoney said.
Scottsdale, Ariz.-based JDA cited MonarchFx's potential to combine the partners' assets, resources, and expertise "to provide a new and fundamentally improved fulfillment service for U.S. retailers, marketplaces, and consumer branded goods companies," JDA Chief Revenue Officer Razat Gaurav said in an email.
JDA will contribute by providing warehouse and labor management solutions, a cloud-based control tower, and a distributed order management system, using that package of software tools to help power MonarchFX's high-velocity fulfillment centers to reduce shipping distance, time, and costs, he said.
Tompkins has plans to extend the model to fit other specialized fulfillment chains, including: Monarch FS (for stores), FG (for white glove), FH (for garment on hanger), FI (for industrial B2B), BB (for big and bulky), FZ (for cold chain), and FC (for cross-border). The common thread is that each channel would build sufficient volume to justify investment in material handling automation equipment, and to build sufficient density of delivery to justify low-cost transportation, he said.
"What we're betting on is the future of e-commerce, and the need for high throughput, high automation, local-delivery fulfillment centers. There's no 3PL in the world that can combine those," said Tompkins.
Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing