Case Study

How Covenant Ensured Profitability & Doubled Output for Manufacturer’s New Distribution Center Despite Challenges

In the midst of a global pandemic, a large pet-food manufacturer turned to Covenant to help manufacture a new distribution center for a quick solution in a world where change was happening at an accelerated pace.

The Overview

In the peak of the COVID-19 pandemic, a national leading pet-food manufacturer partnered with Covenant to develop a new distribution center that could store and manage products, as well as fulfill shipments to veterinary offices, pet stores and e-commerce recipients. The collaboration was significant, as the manufacturer had not worked with a new 3PL partner in ten years. 

“Carefully selecting us as a partner was a major step for the brand,” said Covenant’s Nathan Cowart, contract sales. “From the start, the initiative presented considerable challenges. Not in the least was being commissioned during the COVID-19 pandemic, when transportation and warehousing were facing unprecedented difficulties.”

The Challenge

Aside from the timing of the ramp up, other challenges included:

  • The center required a particular design to accommodate food-grade cargo, as pet food must be handled in special ways to ensure integrity.
  • The bags of food are stacked on slip sheets, not pallets. While this brings more efficiency for the manufacturer, it prevents the use of standard forklifts and requires a seasoned materials handler.
  • The location is in a small town in Pennsylvania, where competition and demand for warehouse workers are high.
  • The requirements at the start of the project involved a set number of loads in/out, but within the first month of operations the number of required loads quadrupled.
  • The manufacturer required working with its legacy technology (SAP system), which is highly custom and several generations behind the latest systems.

The Partnership

Understanding the unique needs of the manufacturer, Covenant successfully designed the facility’s 380k sqft. space based on cargo velocity, volumes, product types and other factors. After much planning and preparation, it opened in February 2022 to immediate profitability.  

After a month of operations, the manufacturer’s number of required loads quadrupled. The company is proud to report that it has doubled the number of loads in and out to date and is actively ramping up capacity and the labor force required to support additional loads to meet the clients’ needs. 

Additionally, Covenant met or exceeded expectations for each of the other challenges:

  • Achieved quality control to ensure the food’s integrity
  • Invested in very highly trained, experienced material handlers to manage the slip sheet loads
  • Stabilized the workforce amidst the challenge of hiring area warehouse workers
    - Annualized turnover rate reduced from high of 214.5% to 2022 final 145.2%
      - Moved away from temporary to permanent staffing and hired an on-site recruiter to achieve 100% staffing to plan
  • Invested significant resources to specially train personnel to work within the brand’s legacy technology system
Regarding the technology systems, Cowart added, “As the client looks to update and automate its warehouse solutions, we are well-positioned to help as we already offer a customizable Warehouse Management System (WMS) designed to grow with clients over time.”

Further successes include:

  • The facility boasts high safety performance
    - Corporate Life Safety audits - Life Safety audits improved from 72% to 86%
  • On time shipping is excellent
  • Inventory is 90+ percent

We are proud that what’s resulted from this partnership is a distribution center that is highly functional, profitable and on track to continue to perform.

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