CoLinx: An Efficiency Model to Celebrate

A somewhat unusual event took place a few weeks ago. A group of competing power transmission/bearing manufacturers and their authorized distributors – from very small to very large - gathered to celebrate the 10-year anniversary of their joint venture. It’s a unique supply chain efficiency model in the form of a non-profit shared services company called CoLinx LLC, which passes its costs back to members. It’s an extremely high-value ROI for its owners, members, the distributors who use it, and ultimately their customers.

We profiled CoLinx in MDM in 2004 (MDM Nov. 10, 2004). In 2000, four of the biggest names in bearings and power transmission products – Rockwell Power Systems, SKF USA, The Timken Co., and Schaeffler Group USA Inc. – were aggressively developing e-commerce capabilities and trying to manage the large financial investments that required. The open-minded executives from these companies took the idea a step further to fully address the cost-saving potential by combining logistics and warehousing into the mix. The company was formed in early 2001; in 2006 Gates Corp. acquired an equal ownership stake, and Baldor Electric acquired Rockwell Power Systems. Since then, the group has grown to eight manufacturer members, including the five owners, plus Cooper Split Roller Bearing Corp.; Drives, LLC; and Master PT.

Members have access to warehousing, packaging, labeling, kitting, export packaging, light assembly, foreign trade zone use, freight bill payment and audit, web stores, system-to-system connections with customers, transactions with freight carriers, transportation management, delivery, cross-docking, shipment consolidation, and returned goods processing. Members are assessed fees based on a proprietary cost-sharing methodology.

Distributors visit an online “Web strip mall,” www.PTplace.com, to access each individual manufacturer store, where they can check availability, see customized pricing, order and check status. Those orders are passed through to member systems, with many routed through CoLinx’s main 700,000-square-foot warehouse in Crossville, TN, or one of its five other warehouses, including two in Canada. In August, CoLinx shipped nearly 25,000 lines per day from its six warehouses combined, with 80 percent of the lines for same-day shipment. Their on-time shipment rate was 99.7 percent; shipping accuracy was 99.99 percent with inventory accuracy at 99.98 percent.

“The key to the success of CoLinx has been that all these manufacturers have been keen to help their distributors; they are 100-percent dedicated to the distribution channel,” says Don Louis, president of CoLinx since its founding. “This is truly helping distributors at the balance-sheet level. This type of shared service provides a higher level of customer service with lower investment in inventory.”

Louis notes that the number of SKUs have exploded as manufacturers have increasingly created new niche products. Without having to stock and support larger levels of inventory, distributors can support a much broader product offering. For its manufacturer members, Louis says that PTplace.com has dramatically reduced call center costs along with all the other logistics cost savings produced by this model.

Mistakes down, transaction and logistics costs down, service levels and ease of ordering up, lower cash in inventory – these are all part of distribution 101. There are great examples across many distribution sectors in the form of coops, buying and marketing groups. The model that CoLinx developed is an example of what a group of creative and innovative industry partners can do – even competitors – to improve the industry as a whole.

Read the two-part buying and marketing groups report, published in MDM in August 2010.