Managing Growth While Managing Spend Can Be a Challenge
Growth is something every business strives for, but can there be “too much of a good thing?”
Business success can be judged, not only by how much an enterprise grows, but also how that growth is managed. From headcount to operations to capital expenses, an increase in growth often leads to an increase in costs. In today’s competitive global economy, controlling costs and managing spend and working capital have become necessary components for success.
One of Corcentric’s customers has recently faced this issue, head-on. URM Stores, a co-op grocery distribution company, based in Spokane, WA added thirty-five new accounts over a six-month period last year. That is twenty times the average number of customers acquired on an annual basis! When a growth spurt like that happens so quickly, it can be a real challenge to keep up with the sudden demand.
The expansion for URM was in the west side of Washington State. Already serving customers in Washington, Idaho, Montana, and Oregon, this new demand meant having enough drivers and equipment to handle a 300-mile, one-way drive. Another issue that makes URM such a valued supplier but can create issues for the company is the fact that it operates without signed agreements from its customers. That means when new orders come in, the equipment needs to be ready to make deliveries.
Since commercial trucks are a major capital expenditure, managing that cost while maintaining customer satisfaction and 96% on-time delivery rate was essential for URM’s successful expansion. The answer was to lease the equipment needed, rather than purchase it. Corcentric was able to provide leasing schedules and flexibility that would meet URM’s needs. By using our proprietary tools and URM’s data, we were able to help them determine the right time to replace every unit in the fleet. And we continue to analyze which units should have their leases extended and which should be replaced.
According to Steve Wolfe, URM’s Director of Transportation, “There were a lot of moving parts, and that’s where Corcentric came in – they helped source equipment that allowed us to handle rapid growth.” Not having those huge expenditures meant that URM was in a much better position to optimize its working capital and continue on its path of growth.
Download the URM Case Study to read the full story.