Scratch: Inside A Dayton Hub Of The U.S. Supply Chain Transformation
Ohio is located within one day’s drive of more than half the country’s population. This fact is often touted by development officials looking to boost the state’s economic profile.
It’s also a favorite talking point among many Miami Valley business leaders, who say the proximity to interstate highways gives Dayton an edge in attracting new investment.
In this installment of our Scratch innovation series, we get a behind-the-scenes look inside one company where Dayton’s location is key to the bottom line.
Gov. John Kasich talks a lot about Dayton’s place in the country’s supply chain. Here’s Kasich in his State of the State speech last year:
“Why is Ohio at the epicenter of all this? It's location. The same location, 600 miles within 60 percent of the country. Okay? That helps us get employment."
The location helps generate new businesses, Kasich told the crowd, economic growth, jobs.
Some of those jobs can be found at a nearly mile-long warehouse building near the Dayton International Airport. The facility belongs to Procter & Gamble, the Cincinnati-based global company behind dozens of familiar American brands.
Brands including, “Pampers, Tide, Pantene, Head and Shoulders, Gillette," says Communications Manager Jeff LeRoy.
He says P&G opened this facility a couple years ago to be closer to many of its United States customers.
Now, it's at the center of an invisible revolution that’s rapidly transforming the country’s retail supply chain – the byzantine nationwide distribution system that delivers the household products many Americans rely on every day.
“Dayton is a crossroads for America. With I-70 and I-75 crossing here, this is the crossroads of the supply chain,” says LeRoy.
P&G calls the facility a mixing center. The "mixing" in the name refers not to the products themselves, but to the way they’re handled and shipped across the country.
“What the mixing center enables us to do is to take a blend of products that are produced at more than 20 locations across the U.S., where our manufacturing plants are, and bring them to one centric location in Dayton," LeRoy says. "And they’re blended, they’re mixed, so the customer, the retailer is getting a representation of P&G's total brand portfolio and not just a truckload of one or two products.”
To see the Dayton mixing center in action, we head to the main floor, where workers in protective glasses and vests zoom by on motorized lift trucks and other machines in every direction for as far as the eye can see. A chorus of honking horns fills the air as workers maneuvering around 83,000 shelves stacked sky high with shipping boxes announce their presence at every intersection for safety.
In a golf cart, LeRoy says the complex is vast enough to hold more than three dozen football fields.
And Dayton’s mixing center is one of six around the country that P&G, with net sales of more than $65 billion in 2017, invested half a billion dollars to build.
“As we drive through, if you look straight ahead you can see a tunnel and it has door after door after door, and each one of these cases is filled with diapers or bottles of shampoo or dish soap," says LeRoy. "It really gives you a feeling for the P&G business and the volume we have right here in North America.”
That volume keeps the mixing center open day and night, with hundreds of 18-wheeler tractor-trailer trucks hauling loads in and out every day. The logistics are complicated.
The golf cart pulls up to a line of loading-dock doors.
“This is an example of two different trucks that I want to talk about," says mixing center Site Leader Mark Byrn.
He points to two trucks parked side by side. One truck is loaded with only one product. It’s heavy liquid detergent. To account for the weight, the truck is less than half packed. There’s a lot of empty space.
“This is how we shipped to all of our customers in the past, before two and a half years ago," he says.
The truck on the left is how P&G ships today, he says.
It's packed up to the ceiling, holding what Byrn calls a full mixed-unit load, a mix of products at different weights, shapes and sizes, allowing workers to use all available truck space more safely.
Minute-by-minute data generated by the company’s advanced computer system helps make this highly efficient process possible, he says.
“It actually tells us how to go build the truck. It understands the weight of the product, the dimensions of the brown box that it comes in, it understands the crushability index whether or not something is going to crush it or hurt it, and the U.S. Department of Transportation laws on how to ship product," he says.
"We then fulfill that order based on what the computer tell us, specifically based on what the customer said they want to put into their stores.”
Yellow patterns laid out on the floor in front of every loading dock door represent the interior cargo space of a typical tractor-trailer.
Following P&G's computer-generated instructions, Byrn says workers begin building each retailer order 12 hours before any truck arrives for a pickup. And when trucks arrive, they're packed according to the same pattern.
These and other complex calculations are triggered with every P&G item purchased by customers anywhere in the world.
Mixing centers aren’t exactly new.
The distribution model was first pioneered by consumer giants, including Walmart. But research shows they’re having an even greater impact today - boosted by the rise of big data, technology and the analytics to harness it.
The proliferation of data, says assistant professor Jacob Lee Hiler, director of the Consumer Research Center at the Ohio University College of Business, is providing a new level of insight into customer behavior for companies of all sizes, not just worldwide consumer companies the size of P&G and its market competitors.
"Even small companies can use data and leverage it to figure out patterns within their customers or things like that," he says, "to either influence your behavior or market something towards you or figure something out about their customers."
P&G officials say its half a dozen mixing centers are already dramatically reducing the time it takes for products to reach store shelves, and customers increasingly demanding faster and faster home delivery of stuff they buy with a click online.
"It takes less inventory now per dollar of sales than it did a generation ago. We're more efficient than we used to be as a whole in the country," says Wright State University Assistant Supply Chain Management Professor Jim Hamister.
As more and more companies look to leverage the country’s faster, increasingly digitally connected supply chain, Hamister says Dayton is well positioned to attract more economic growth.
Dayton Development Coalition numbers forecast the 14-county region’s logistics industry will employ nearly 31,000 workers by 2019.
This could present a challenge, Hamister says, because more specialized training will be needed to prepare potential employees to fill new data and analytics-heavy jobs in the future.
"We really need that skilled worker set to support this," Hamister says, "building the capability so we have the expertise in this area, which encourages firms to continue to build their facilities here and continue to do their their work in this area."
A recent report by consulting firm Deloitte and the Manufacturing Institute backs this up.
The report predicts the manufacturing industry skills gap will leave two million jobs unfilled over the next decade.
This story is part of WYSO's series Scratch, exploring some of the people and ideas that could impact life and the economy in the Miami Valley and beyond. The series was inspired by a simple question: where is Dayton’s famous spirit of invention still alive and well in the Miami Valley? And, who benefits?