Warehouse and Transportation Optimization with Phil Schmidbauer

Podcast

Before you jump in and start your own business, do you conduct a network study first?

Justin sits down with Phil Schmidbauer of ODW Logistics to discuss the importance of warehouse and transportation optimization studies. Phil shares the importance of doing a network study or analysis to a business, especially if you’re in the production industry. Phil also shares how he handles consultation: It’s not about the network and charging sky high fees, but it’s more of the quality and how his clients can benefit more and get their money’s worth.

 

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Highlights

  • A little background: Who is Phil Schmidbauer and what’s his role in his company? – 0:20
  • What is ODW? – 2:10
  • Fundamentals of a network. – 4:03
  • Why is it important for a business to get a network study or analysis? – 6:28
  • Writing an article about network analysis. – 10:46
  • How does he decide on who he wants to work with? – 12:55
  • What he’s generally looking for from people? – 19:47
  • There is inefficiency in more complex networks: The more nodes you have, the more inefficient you are. – 24:23
  • Transportation costs will almost always cost higher than warehouse costs. Focus on how you can optimize your transportation costs first. – 30:30

Episode Resources

Connect with Phil Schmidbauer

Connect with Justin Smith

 

 

Justin Smith: Hey, Phil

Phil Schmidbauer: Justin, how are you?

Justin Smith: I’m doing alright. How about yourself?

Phil Schmidbauer: I’m doing well. Thanks.

Justin Smith: Yeah. Cool. I appreciate you joining me.

Phil Schmidbauer: Absolutely thanks for having me.

Justin Smith: I figured we’d just start with Phil and your role in the company and just a little background.

Phil Schmidbauer: Yeah. Perfect. I came to ODW almost six years ago now. I’m our senior director of solutions and analytics. So when I came on and there was a need at ODW for doing network analysis type work for customers or a specific customer network. And so I came on and took on that role and we’ve done for that specific customer. We’ve, I’ve done probably four studies now for them and they keep expanding their network. We’ve done, I don’t know how many, probably a a hundred or so different network studies for different customers, whether they be potential customers or looking to set up their network or current customers we have on trying to understand what, which areas should they be distributing from, et cetera.

But my background is largely in 3PL and the 3PL world started off cutting my teeth in automotive, working for a 3PL over the Toyota plant in Indiana and dabbled with a little bit of food at ALDI for a little bit. Did a lot of lean practitioner stuff, in between there and then I went to Conway Freight before the XPO purchase. Then shortly after that I came ODW I was calling an ODW and they’re like, Hey, we need, we have a need. And we think you can fill it. I did a lot of design type work and in the past with Toyota. It’s been a great fit. I love ODW. That’s a great place to be and the work we do is fun. I enjoy this type of stuff.

Justin Smith: It’s a never-ending puzzle pieces you’re putting together and figuring out it’s like taking multiple different puzzles and trying to piece some together.

Phil Schmidbauer: Yeah, absolutely. Absolutely. It is it’s and the puzzle pieces change and what they look like as well. So it’s a lot of fun.

Justin Smith: People I work for are who would be listening, would come from a variety of different industries.

So like automotive or manufacturing or apparel, or even, life science. ODW for those that don’t know, can you give a little background.

Phil Schmidbauer: Yeah. ODW Logistics, our warehousing unit was started in 1971. It’s been around for quite a while, originally formed in Ohio. And John Ness took over the company from his dad, Bob Ness and Bob still around, but John has taken over and he’s a CEO and it really expanded the footprint.

And we do warehousing now nationwide. And then in 2009, there was a partnership formed with the LTS group, which I worked for, which is our transportation division. So we started managing transportation and we’ve grown significantly and now manage over a couple of hundred million dollars, in transportation annually. So it’s really been a great marriage, with the two companies in a partnership. We, our customers, we act with one plus solution for our customers and build that solution form. But we’re across the process spectrum. We have customers that are in industrial and automotive. We have customers that we do warehousing for, that are in apparel that are, do a lot of retail are starting to get more and more into retail consolidation. For a lot of customers. So we like to pride ourselves on really handling the middle market, smaller companies, anywhere from five to 50 million transportation spend, we’ll call it and we can really knock it out of the park and focus on driving value for those companies and organizations.

Justin Smith: The middle market. That’s where the fun is for us all I find.

Phil Schmidbauer: Yeah. We run into so many companies that are growing, and have a hard time scaling or companies that are trying to understand that footprint. A lot of those companies, aren’t going to go spend, $200,000 on a supply chain study or whatever. So we’ve found tools, technology and things that help us really deliver an equitable solution for those customers.

Justin Smith: If we are going to delve into networks studies. We can delve into that now, or think through the last year or two, just the lay of the land that would cause people to want to update them again. What have you experienced since, March 13th?

Phil Schmidbauer: Oh, it’s what I will say is the fundamental of a network. You don’t want to base the fundamentals of your network based on what’s happened in the past two years. Because networks, like when you change your network distribution, you’re usually getting into long-term lease agreements, unless you want to do short term, which is going to cost you more in general, if you’re trying to do short-term warehousing and stuff. So I’ve done some studies where all this and really try to take out the impact of COVID on people’s business. But really, I’ll do studies for people and they say, what happens if my demand changes by increase of 50%? If it increases evenly across the country, it’s not really going to change the strategy behind your network. All it’s going to do is change the size of a building you might need, but it’s not going to change where you’re going to put it, unless you tell me your demand is going to change in one specific area or another, that never changes the model. I shouldn’t say never, but really is going to change the model or have an impact if you’re just growing across it. It’s just going to increase the size of the buildings and the space you might need.

Justin Smith: That’s a great way to take the long-term approach on that, and just think through the fundamentals and making sure you really land those.

Phil Schmidbauer: Some people have had things that will change and some people have had supplier changes, supplier goes out of business or supplier can’t get me all the products that I need. So I’m starting to get more product from over here. And that’s just, when you have conversations around is that going to be the longterm? Is that what’s going to happen long-term or not? And so I have seen some businesses that have made changes in their network because of changes that have happened during COVID. Some of them be where they get their product from or where their demand is going to be serviced out of. So those things do happen. But in general, I wouldn’t say that everyone needs to revisit their network because of COVID or the supply chain interruptions.

Justin Smith: That’s where you say calm down. Let’s just to like cool our heads over here. Long-term we’re going to go back to maybe not go back to, but rely on a lot of the main business drivers that have you where you are in the first place. Network studies, for those who don’t know what they are, or if you could just say that help sum up, like, why are we doing these? And what do you get in one? When does one ask for one and when it’s appropriate? Just set the stage a little bit for that.

Phil Schmidbauer: Oh, it’s a lot, to unpack in that. So really a network, what I will call a network analysis or network study is understanding either, if you’re a shipper, you’re your outbound distribution network. What does it mean? How many distribution centers are you using? Where’s your product coming from and understanding what’s the best model for you? Do you need five distribution centers throughout the United States? Do you need one or two? And it all will be based on most of the costs is going to be driven on transportation costs. So distribution centers, I have a lot of customers who say, I don’t want to operate in California because it’s so expensive. I have news for them. It costs them a lot more in transportation, especially like they bring it into the port and then they want to distribute out to the middle of the country. I’m like, you’ve got to transport the stuff from the port all the way to the middle of the country and all of your outbound shipments are, it just makes no sense to do that.

Justin Smith: They’d be passing each other on the highway.

Phil Schmidbauer: But not only that, but a lot of them have a huge demand in Southern California because it’s such a big area. So now you’re going to bring all your products inland, let’s call it Colorado. And then you’re going to ship it back to California. Doesn’t make sense. So yeah, it might be a little bit more expensive to warehouse there, but a lot of times it makes sense because of where you’re bringing your product in from and then where you have to distribute it back to. So network studies, there’s so much to unpack in those things. And, and I think you and I have discussed it before a little bit about the complexities of it and I call it an artwork. There is no right or wrong answer. It’s about aligning your strategic direction of your company with what you want your network to do and how you want it to perform. Once you set up your network, 70 to 80% of your costs, are there, your warehousing costs are there, the majority of your transportation costs is figure it out for you. There are some refinements you can make to that, if you’ve got to travel 500 miles, you’ve gotta travel 500 miles to meet demand. We can’t change that once you’re set up. There’s a lot of strategic direction that needs to be understood when you’re going into a network study.

Justin Smith: I’ve found like a PE backed companies and that’s oftentimes a time when they’ll go through a network studies of just figuring out okay, if we’re going to spin off a company, or if we’re going to bolt on another one or acquire like that is a shift, that’s a moment to say okay, we’re bringing a whole new set of capabilities. How are we going to integrate those?

Phil Schmidbauer: Yeah, that’s a big trigger I’ve had. We’ve worked with a couple of PE firms that have acquired companies are acquiring companies and some of them are firms that, have bought and sold companies that we actually handle either in a warehouse or transportation capacity. So that definitely is something that they ask about. We’ve also had, I’ve had companies that run into issues with, Hey, my production facility, I’m running out of production space. I need to get this 200,000 square feet of warehouse out of my way. Where’s the best place to put it. Do I put it on the street or somewhere else? And so that’ll kick it off a lot of times when somebody hits a constraint and their supply chain that they need an answer for. And then I have other customers where it’s speed. I had a customer ask me, Hey, what if I had to compete with Amazon? And I told him, I’m not even going to do a study to tell you if you have-

Justin Smith: I’ll tell you the answer right now.

Phil Schmidbauer: If you just take the population of the United States and you want to be able to deliver to everybody in the US within a day, you want to stand up 12 VCs or not. So you know, maybe if you’re lucky, it’s nine or 10, but everybody’s driven by a different strategic objective. And so I see a lot of those different things driving a question about a network analysis.

Justin Smith: And so you wrote this piece, this article, The Network Analysis. Three pages that just gave like a couple of frameworks of how to think through them and then just distilled those even further. So I found that’s a super great framework. And to the extent we can, share that or put a link to it for other people to find it and then be able to read it, get back in touch with you. I would think to link that to the show or put it on the post or some way.

Phil Schmidbauer: Absolutely feel free. We’ve shared it on social media and LinkedIn. I’ve got the article PDF if you want that. Maybe you can share that as well, but it was a fun article to write because sometimes there’s so many things that pop up in these networks studies. I just got done doing another one.

And so when I’m writing that, I’m like man, I got to not boil the ocean. I have to try to simplify this and just give people some high level things to think about, where they’re going through it. And I’ve had customers too, where I give them recommendations and I’m like, look you’re in one distribution point right now, you are not big enough for a second distribution point. And they’ll say to me, but if I open up a distribution point out here, I can grow. I’m like, all right, look if that’s your ROI. I’ll tell you the study and tell you that you have to factor in like complexity. The more complex your distribution network, the more inventory you have. So it’s fun having those conversations with customers. And it’s not that I don’t like giving recommendations to people, but it has to be their strategy that’s driving. And I can’t tell them how much they’re going to grow. They have to tell me. If I tell them it’s going to cost them $2 million, are you going to get $2 million in profit from your growth or not? If the answer is, I don’t know. Then that’s your decision to make, I’m not going to tell you what to do. It’s your business, right? So it’s a lot of fun doing these. Everyone is different, every single one of them.

Justin Smith: That’s where you realize the advisor, you can provide them with insight but they still have to make that decision. They’re the only ones that are going to know all the pieces. When I hear people who are producing network studies, I hear like FedEx. I hear people and things that are like Llamasoft and Koopa, like a vendors. And I see one-off people, they do this as a consultancy and then you are part of a logistics company. So that’s a pretty wide variety of like, why would you choose who, when you think of, who you’re going to work with for awhile on one of those? Is it more just based on I trust you Phil or is it more the big guys charge twice as much, but it’s twice as detailed or it takes twice as long or how do you size that up?

Phil Schmidbauer: Yeah, that’s a good question. That the one I just did was probably one of the more complex, network studies I’ve done, where we were looking at product level detail for warehousing or for manufacturing locations. And then they were trying to figure out how many DCS, where they should be placed. So we use, a technology starboard navigator. And when I came on almost six years ago, where Steve Johannsen is the founder and he used to work for Llamasoft. And, he can tell the story of why he developed what he developed and I love his tool and it’s technology. We are his longest running customer and I’m pretty proud of that because we use it all the time. And there’s some times where I haven’t used as much where like, Steve, just keep it there. I’m not going to turn it off and turn on when I need it because that’s just annoying to everybody. And when I need you, you’re going to help me out. And so this last one, he helped me out on a lot of the modeling. He’s has bugged me for more enhancements to this tool then I could ever imagine. He used to say, I want to know what you do with my tool when you’re done. So I would take the data out of the tool and I’d put it into a presentation to show the customer. So six months later, Steve calls me and says, Hey, watch this now you can click a button and it spits out a presentation with basically what I used to do and spits it out for me.

Justin Smith: It helps you focus on what it means to the customer.

Phil Schmidbauer: That’s right and so it’s been great. So I can turn these a lot quicker. I don’t have to charge a fortune for them. One of Steve’s things was like, I want to get to a similar answer, a similar strategic direction. I don’t want it to take six months in a dedicated team to get these answers to people. By the time you take data and you run it through and you do a network study in a traditional sense, you’ve got all kinds of data requests. You’ve got all kinds of people and you really don’t know what’s happening in the background. There’s a lot of calculations being made and it’s hard to really unpack and get that on a more complex tool. And I feel like almost every network study are done and then actually gone and executed it for a customer as an operations group, we have probably exceeded expectations on what the operation did over. Which has always been good. So I haven’t done a study in an executed it ever, to where the results were totally different because I always go back and check. A lot of times when people hire a really expensive consultants and a consultant gives them information. That consultant is not the one that’s responsible for executing it now. To me, it’s always been a very dangerous place of you pay for something. They tell you what you should do and then what happens when you have to go do it with somebody else and you don’t get the results you want it. It’s just a little scary to me. I’ve also had people ask me and say, but if you’re doing the consultancy work, aren’t you going to make it advantageous to fit in your network or whatever. And my answer is no.

Justin Smith: A natural question.

Phil Schmidbauer: It’s a fair question. But I will literally show people look if it tells me that Indianapolis, in a lot of my studies that does, we have warehousing and Columbus and Redlands are the two main locations and Indianapolis always comes up a little bit cheaper and a lot of these studies for transportation.

When I moved that note over to Columbus, it’s literally less than a percent difference. It’s just pushing it over there and when I go to Columbus, I’m actually closer to a larger city. I’m closer to New York City and the east coast. And I’m actually closer to a larger population in Columbus than I am Indianapolis. So I like to show people, look, here’s what it looks like. If you’re in somebody else’s DC and I’ve done models for people where we can’t help them from an operational standpoint. So we’ll refer them to somebody else or whatnot, but modeling tool has been great. And again, not everybody, especially in the middle market wants to pay 150 or $200,000 for a study like this. And we can give them really good, fairly accurate results, in a much shorter timeframe just depending on the data in four to six weeks. If I have really clean data, I can share them one of these things out in a week. It just depends on how complex the study is.

Justin Smith: Yeah, I think in talking with Steve and going through the speed part is huge. That was a big driver. I feel like also how you were talking about your ability to own it and execute it. I feel like that’s a great part of the middle market where you can say, if you want to run this then by all means you can, and if you want us to execute it we can and this is what this would look like. And then you’ve served up two solutions basically instead of one. And that’s just a more context and more ways that you can then think through what to do next or to compare it to.

Phil Schmidbauer: Some customers have gotten pretty slick in their approach to what they’ll call an RFP. And they’ll say, this is what we look like today, but we don’t really know where we want our warehouse to be. So we’re just going to send out an RFP and we’re going to ask all these providers to give us rates and warehouse pricing for whatever different locations they choose. So people are trying to get warehouse studies out of RFPs these days. It’s interesting how they do it, and it causes a ton of work on the 3PLS that are trying to price it. And I really have no clue how they’re comparing things, and I’ve seen people do it before. And then I’m like, look, instead of going through that, let’s do the network study first and determine where you should be from a strategic standpoint and then go out to RFP and find out who your warehouse providers should be in transportation provider and all of that. Again, a $250,000 price tag and somebody is maybe I can get this done through an RFP. And just RFP out my freight and warehousing and I’ll get my answer that way. I’ve seen it a million times. Sometimes you just gotta do what you gotta do as a provider, but you can tell when people are doing that. And a lot of times they end up sticking with their incumbent anyways.

Justin Smith: Yeah. It’s a scrappy way of doing it. And then, you probably don’t do it justice. And then when they’re different, how do you then make sense of that?

Phil Schmidbauer: Yeah, try to compare a provider that has a warehouse in Chicago versus one that has one in Columbus, per se and they both have different types of transportation rates. And really the transportation rates are going to drive where you should warehouse. Now, if I have one in Columbus versus Indianapolis, it’s not much of a difference. So generally when I use the tool, I tell my costumers, just because it says you need to be in Valdosta, Georgia doesn’t mean you can’t move it to Jacksonville, Florida, or you just in that region is really what the tool is telling you. Like it’s giving you directional guidance, but the tool that I use and the methodology that we have for these things, it’s been a godsend for so many different customers that we’ve had. It’s really helped with bill build really good relationships with our customers from a strategic standpoint.

Justin Smith: On the data front, good data from bad data. What are you generally looking for from people? And what’s like a best case scenario look like?

Phil Schmidbauer: Yeah. It’s just understanding your demand. And it all depends on if you want it product levels study. Meaning I have seven products and I want to know they’re all manufactured at seven different manufacturers and I want to know the distribution of all those seven products, where should I distribute them from? So you have to be able to get product level data at the demand. So I have to know your customer in New York City ordered X amount of pounds and here’s how it was shipped from this distribution center and here’s where it’s manufactured. Sometimes people can’t get at that data so we just have to do a whole list. Okay. I’m shipping a million pounds in New York City. I’m shipping a million pounds to Los Angeles wherever, and here’s my two distribution points today. What does it look like if I have four or five?

So it’s not terribly complex data that you need. It just depends on how granular you want your study to be.

Justin Smith: Yeah, and it is interesting. What I found was when I was looking through a starboard and I was thinking through different network analysis was I’m a real estate guy, so I knew, the granular about all these warehouses and not only in Southern California, but in a ton of different markets and the dynamic and it was interesting to then think of like how does that show up in other people’s reports that don’t have that. And how much of that is not anecdotal, but it’s like a, generally this is the availability and generally these are the rates and then think through I think you said it best with giving you directional showing you where. You should be pointing and then you can start to look a granular layer, look with experts. Or then you can start to like really fine tune it, but that can at least tell you where you need to be searching for the answer rather than rely on it to tell you that Phoenix is definitely better than Vegas because of the 2 cent difference on the warehouse price or something.

Phil Schmidbauer: Right, and you being in real estate will understand that some of that, what I call site selection has to happen after the fact. But, there’s a distinct difference between that’s funny, you mentioned Phoenix and Las Vegas because I just came up for a customer of mine. And they were thinking they needed to be in Las Vegas. When I did the study, Phoenix actually showed a little bit cheaper and the lead time it was able to capture, El Paso in a one day. Whereas if you go up to Las Vegas, you can’t get back to a large demand point. They have in El Paso, very similarly, the same customer. When we did their first network study, we told them the first place you should go is down in the Southeast. And it picked Valdosta, Georgia. They ended up in Jacksonville because Jacksonville, you can get to Miami in one day from Valdosta you could not. So for them, Valdosta was not as much. It was more about meeting the one day demand from some of their own customers. The next point we said, Dallas, Texas was another one to look at. One thing they realized once they went to Texas is that Texas has an inventory tax that they tax you based on the inventory you have in the warehouse. So that’s a location specific thing they found out and they said nope, we’re not going to Texas. So we just moved it up to Norman, Oklahoma, and that one’s opening today. And then we’re talking about what the next ones looked like. So there’s little things that you’ll find in site selection, that forget about real estate labor and all that, that has an impact but sometimes you find tax abatements and you find taxes that are gonna make your costs explode even more. I always start with transportation. And then when you look at site selection, there’s some of those things, labor, labor availability, real estate availability. What’s your strategy? Are you going to build, are you going to buy? All those different things when it comes into site selection. I generally leave those out of my navigator information and I just coach people what to look for as they move forward on that.

Justin Smith: That was the part that started to get me to short circuit on some of the complexity when I was thinking about how can I get better at understanding these studies. And it’s not like I ever wouldn’t expect to be someone that produces them. because I’m not the king of transportation. I don’t know that world that’s next door neighbors to it, but, that’s not where I’m going to shine and really give people the most value. But it was interesting to think through how do you lead with transportation and lead with the demand and lead with all the nodes and how many and in what locations, and then you can, that’s, there’s huge value in that. Yeah, and then you can start, you can be freed from that and then go forth and prosper trying to get into the nitty gritty of some of that.

Phil Schmidbauer: Yeah, and Steve and I have talked a little bit about there is inefficiency in more complex networks. So, the more nodes you have, the more inefficient you are. I had a customer that was in five different nodes throughout the United States. Their business wasn’t that big. It was growing, but it wasn’t that big. And they had two and a half million dollars in transfers. And I’m like that’s a huge amount of transferring product all over. When you look at the map, they were just moving product all over the place and I’m like, why are you in five nodes? I said the provider we’re with, that we needed to be within five nodes so they could deliver on time. We do retail and we deliver on time from two nodes throughout the U.S. I can deliver on time from one node throughout the U.S. With retail lead tax. It’s a little more complex when you’re going all the way to California from Ohio, but we do it all the time. I said, look that’s the number where you need to simplify into two nodes at the most. If you simply into two nodes, you are going to get rid of a lot of that noise. And a year after the implementation of that one sure enough, we saved over a million dollars in wasted transfers. They turned a profit. There’s just a lot of things that people don’t realize when, I want to be closer to my customers. That’s fine but now your inventory explodes and the complexity of what you’re trying to manage explodes and neither one of those is cheap.

Justin Smith: And transportation expenses are not going down anytime soon.

Phil Schmidbauer: No, sir. I was hoping as we went into this year that maybe like the market would change a little bit and things would come down. I don’t get into like lane specific rates a whole lot. My team pulls out a lot for me and stuff, but I actually pulled up a rate yesterday and I was looking back over like the past thirty, sixty, ninety, a hundred twenty days and I clicked on seven days and it was actually cheaper. And that’s the first time I’ve seen that. And I don’t know how long. That’s one lane I don’t know what that really means. But we’re getting ready to go into the busy season. So we’ll worry that going into retail season things are going to get worse. So I don’t know if it’s going to loosen up at all the next couple of weeks, but we have a feeling it’s going to continue to get tighter. So I don’t think 2021 is the year where we’re going to see rates loosen up. We’ll be hopeful of next year.

Justin Smith: Yeah, someone told me yesterday do your Christmas shopping now. That’s what they tell me. \

Phil Schmidbauer: That’s a good reminder for myself because I was talking about that a couple of weeks ago. I’m like, it’s too early. You know what, it’s not.

Justin Smith: Yeah, I live in SoCal where on my way to work, I can see the ports and so I can see the ships and them stacking up. And it is interesting to think through, how does that change people’s decisions? How do they think about what they’re stocking up knowing we’re going into the holidays? It seems like there will be a lot of time it will take to smooth things out and have it be more predictable for people and give it back to less shock in the system.

Phil Schmidbauer: Yeah. They’re having the same issue, everybody else’s, they can’t hire enough people. There’s I think I saw today that there’s 76 ocean ships out there waiting to be unloaded, which is a record high. What we’re seeing a lot in some of our operations, actually, we were just talking about it yesterday with a customer. So it’s two things happening. One people are trying to pre-order and get stuff in before retail season. So a lot of customers are stopped stocking up on inventory now because they know it’s going to be a problem. The other thing that we’ve seen with some retailers is retailers are going into more point of sale or reordering so that if they sell one item, they’re just placing an order for one item, with our customers instead of ordering X number of cases or a layer of cases or whatever. So some of those minimum order quantities and we’re seeing that with a couple of retailers because the retailers don’t want to hold all this inventory. So they’re going to try to just do point of sale ordering and then bring in smaller shipment sizes and that’s not good for anyone. Warehouses just inflating other costs. So now they’re going to use it. There’s a lot of things that people are trying to do to be creative and solve this problem. We have retailers that I don’t understand exactly how this is happening or what’s happening at the retailers. But we have some that we can’t even deliver to because it’s three weeks to get an appointment. They continue to order stuff, but they can’t handle it. They don’t have volume. They don’t have people. I’ve never seen a marketplace like this before it’s unprecedented.

Justin Smith: But they know they can sell it if they have it. So they order it anyway.

Phil Schmidbauer: That’s the thing like, I look at my own personal shelf. I haven’t gone to the store and found a bunch of things missing that I wanted from the store. Now, maybe other people experiences are different than mine. But I don’t know if they’re just bringing in this volume so early. I know the supply chain is disrupted everywhere and it’s manpower people can’t find drivers. Everything’s so expensive. They’re trying to keep the cost down. You and I are seeing it when we go buy stuff at the store, everything expensive. Inflation is hitting hard. So I don’t know. I don’t see an end in sight, Justin, I wish I did.

Justin Smith: But your network studies haven’t been hitting inflation yet.

Phil Schmidbauer: No, we’re doing a lot of them. Hopefully it’s helping people and helping them to understand strategically where they’re headed so they can align their costs properly.

Justin Smith: Yeah. I love it. I think that’s a good spot. That’s all the fun stuff. That’s the meat and potatoes. I think, if that’s a good spot we’ll call it a wrap. Then the only thing I see so much of is people like hate on locating their buildings in California, thinking it costs too much and I think you hit on that a little bit too, of there’s a time and a place for everything, knowing that you have your customer base. If you need to serve your customer base there then you got to figure out how you play in that space.

Phil Schmidbauer: Yeah and transportation costs is almost always going to be higher than your warehousing costs. So don’t worry about that. Let’s focus on how to optimize your transportation cost first, because if you don’t want to operate in Southern California, that’s fine. You’re going to spend more money transporting your goods and services back to Southern California if that’s where your demand is. People that say that to me before I do a study, I’m like, if you’ve pre-determined where you want to be, you don’t need my network study. But if you want me to tell you where you really should be based on what should drive your agenda, then I’ll do it. Sometimes people will say, we want to avoid this area for good reasons. So I’ll tell them what the impact is going to be and educate them on that. But as far as bright spots, I guess the only bright spot I see is that supply chain jobs are out there. It’s good for kids graduating college because of their should be plenty of jobs.

Justin Smith: I feel like it’s also exciting time with warehouse automation to see new things that people are putting out there that are making it better for everybody, but are also like exciting to see different ways that you can make it happen.

Phil Schmidbauer: It’s really cool. Yeah. It’s a lot of fun.

Justin Smith: Thank you. I appreciate you taking the time and I’ll link, whatever contact information is good for you for people that have questions or want to reach out or talk about studies or transportation or any type of work. Glad we were able to connect.

Phil Schmidbauer: That’s perfect. Thanks Justin, for having me. I appreciate it.