Revitalization Series: Carol Keup, Valley Distributing And Storage

This Article originally appeared in Happenings Magazine on May 23, 2013.

Carol K. Keup is the Chief Operating Officer of Valley Distributing and Storage. She holds a BS from Wilkes University in Materials Engineering and Engineering Management. Following career experience with General Dynamics, General Electric and Palmer International, her uncle, John Passan, provided an opportunity for her to return to the area. Passan, an entrepreneur, founded the company in 1953 with one truck that delivered shoppers’ packages from downtown Wilkes-Barre straight to their doorsteps. Today, the company owns and manages over two million square feet of third-party warehousing and a truckload fleet providing regional and brokerage transportation services across the U.S. and Canada.

As a 3PL (Third Party Logistics Company) they source products both locally and globally (including Italy and China). Customers such as Cosco, Walmart and Dollar General can have single-day truck delivery to more than 60 percent of the U.S. consumer population through their services. They currently employ 85, with additional temporary labor up to 40 at times.

As a leader in a primarily male-dominated industry. Keup sees gender as both a challenge and an opportunity. Her perspective on the subject was formed in a very positive manner, growing up in a family of six siblings (five girls and one boy). “Gender was never an issue with my parents,” Keup states. “We all had equal opportunity in terms of education, sports and work.” We recently spoke with Carol Keup about Valley Distributing and her thoughts on the region.

Which innovation has made the greatest impact on your business?

Technological advances in information sharing have had the greatest impact in the third party logistics industry. Electronic data interchange (EDI) provides customers real-time information and visibility of inventory and receiving and shipping activities. The evolution of the warehouse management system (WMS) provides the warehouse with a platform to drive efficiencies and control costs.

How crucial has online access to the warehouse and other technological advances been to your business?

IT initiatives can be very expensive and require ongoing support. We provide customers with an online alternative where they can access account information and activity via a secured portal into our website. This allows smaller, independent customers to take advantage of the same real-time information as companies with investment into more proprietary, customized systems.

What advantages and disadvantages does the region present to your business?

Advantages include our proximity to New York and New Jersey markets, the highway and rail infrastructure and lower costs compared to major metropolitan areas. Disadvantages could include the lack of incentives for existing businesses as opposed to new businesses considering locating in NEPA.

How does the region need to continue to improve?

We need to maintain and attract new talent through job opportunities and quality of life for young professionals.

How can we improve the region’s unemployment rate?

When I joined Valley Distributing 15 years ago, our key customers were local manufacturing companies employing hundreds of people: Techneglas, Thompson Electronics, Leslie Fay. (These companies have since closed.) Legacy companies need assistance with technology and research and development. New companies that have located in NEPA need skilled workers with proper education and training. Math and analytical skills are areas of opportunity.

Talk about your prior experience.

I worked either directly or indirectly in manufacturing environments.

  • General Dynamics Land Systems Division, Eynon, PA: Manufactured M1A1 tanks.
    • General Dynamic was my first job out of college. The facility was former Chrysler plant and machined parts for the M1A1 tank. This experience was extremely valuable as it provided me the opportunity to work directly on a shop floor. We machined parts and completed some interesting processes from heat treat to specialized paint. The paint was a United Auto Workers (UAW) shop.
  • General Electric Machinery Apparatus Operation,Schenectady, NY: Project Management Naval Nuclear Plants.
    • I was at GE during the Jack Welch tenure. It was a great place to work. They had high expectations for employees – technical master’s degrees, a required three-year training program – and they provided the time and investment. When GE sold business units where they were not #1, the Naval Nuclear Division was sold to Westinghouse Corporation.
  • Palmer International, Skippack, PA: Family-owned manufacturing company supplying the automotive Industry.
    • This was a second generation family-owned business with niche chemical and metal processing for brake wear and sound dampening materials. Palmer provided the opportunity to brainstorm and apply what I learned at the larger corporations without the twenty signatures for concurrence. The ownership was very progressive in taking their company from “start up” to the next level.

How have the operations of your company changed?

The operations are much more technology dependent. The warehouse floor is run with the warehouse management system (WMS); communication with customers is heavily dependent on exchanging data electronically and there is real-time visibility of inventory status and activity. The fundamentals of receiving, shipping and accurate inventory are the baseline. There is a much higher customer service expectation that the 3PL is an extension of the customer’s business and will provide exceptional management and problem-solving services.

How have the companies services grown?

Mass reailers moving large volumes of inventory have had a tremendous impact on our inventory. Retailers such as Walmart and Target have automated their Warehouses with flow-through systems. This requires every box of product shipped to the distribution center (DC) to have a unique bar code label that can be automatically scanned. Each week at the Scranton facility, we work with our staffing service to increase temporary labor, sometimes up to 40 employees, to label, palletize and ship 12,000 – 18,000 cases of consumer goods within 48-hour period. These retailers have also increased the demand for value added services such as shrink-wrapping products, creating floor-ready displays and creating multipacks of beverages. We build and shrinkwrap multi-flavors organic drinks that ship to Cosco; at Christmas, we shipped 1,000 displays to Walmart with 1,240 books; and Dollar General continues to expand shrink-wrapping opportunities.

Why do you encourage direct rail?

Transportation cost is the largest cost in logistics. Rail freight is one of the most economical methods for shipping goods. A boxcar can hold the equivalent to 3-4 trailer loads. It is also the most energy efficient and environmentally friendly transportation solution. Valley’s first customers shipped by rail to a multi-story warehouse located in downtown Wilkes-Barre. Forty-six years ago, we moved to Laflin next to the Delaware and Hudson rail line. Today our Laflin Logistics and Trade Park has eight warehouses totaling 1.2 million SF with access to rail. Our Scranton facility, the former Murray Plant, has a unique rail niche in northeast PA as our rail products ranging from fire logs and food lumber.

How have growing energy concerns affected your industry?

As we work to continually control and reduce supply chain costs, increasing energy costs have impacted our industry in both the warehouse and in transportation. Working with PP&L’s rebate program, we have been replacing warehouse lighting with efficient T5 and T8 fluorescent lighting with motion sensors. Our customers have been reengineering the case sizes of products to take the air out, thus fitting more on a truck and reducing transportation costs. With diesel fuel costs averaging $4 per gallon, trucks powered by compressed natural gas or CNG are cautiously being implemented and are something we will have to evaluate in the future.

Where do you see your company going?

Our focus is growth within the 3PL industry and remaining current with its innovations. As companies are challenged to remain competitive in an economy with uncertain conditions, the flexibility of outsourcing to a 3PL provider remains attractive as it provides both financial and service advantages. While the barriers to entry in the industry have somewhat decreased, our industry is still in its infancy with tremendous growth opportunity.