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  • Michael Dommenge

PHILIP MORRIS USA Outsources its Entire POS Logistics Department

Updated: Jul 16, 2020

How EES developed a nationwide seamless distribution & installation pipeline for all Philip Morris USA advertising signage and POS equipment.

Background:

philip morris ad display
Philip Morris Ad Display - photo cred: Kyeong Park

Philip Morris USA operated a nationwide,

eternal logistics department consisting of hundreds of distribution hubs, thousands of employees, a nationwide fleet of service vehicles, and an operating budget in excess of $50MM. In 1994, EES was contacted by a senior PM executive requesting they meet to discuss EES' ability to design and execute a logistics pilot program that would enable PM to eventually outsource their POS logistics department to 3rd party vendors.




Overview:

Launched in 1989, Vermont-based Electrical Equipment Solutions, LLC (formally Integrated Solutions, Inc.) provides global, manufacturer to end-user, customized installation logistics services for electrified products and equipment. Through an extensive network of licensed electrical contractors, construction service providers, warehousing and distribution facilities, and transportation partners, EES is positioned to meet the needs of our clients' most demanding installation logistics requirements.

Meeting End-User Needs:

The Philip Morris business model provided all advertising signage and product displays to their retail sales partners on a national basis. Local PM warehouses maintained large inventories that would be distributed out to the local retailers and installed by PM employees upon individual order requests. The system experienced severe order-to-placement delays, inventory shrinkage, hoarding of materials by low or high volume districts, product damage and loss, and an unacceptable increase in operating expenses and liabilities.


EES agreed to the strategic alliance partnership with Philip Morris in 1994 and set about establishing a single local pilot program in Wayne County, Ohio. EES partnered with the local resources required to receive, warehouse, stage, locally deliver, and install individual retail partner signage and POS orders. Simultaneously, EES was customizing our UNIX-based, proprietary logistics operating software to establish a comprehensive order placement through installation, tracking, and reporting customer interface.


Over the course of two years, the pilot program grew to a fully integrated, fully outsourced, national roll out and Philip Morris was able to eliminate their internal logistics department.



"Outsourcing our POS installation logistics to EES, substantially lowered operating expenses and took us out of a high liability and problematic aspect of our business."

Fixed Costs and Guaranteed Order Fulfillment Standards:

By entering into to this strategic alliance and allowing EES to develop and manage the nationwide POS installation business, Philip Morris was able to significantly reduce costs through the processing, distribution, delivery, and installation of a single piece of POS equipment or advertising sign as part of an actual retail partner order. All nationwide inventory and associated warehousing, distribution, damage costs, and liabilities were eliminated due to the newly established direct-from-manufacturer shipments into EES facilities.


Both tracking and reporting data was provided to Philip Morris on real-time basis per individual order. Nationwide fixed-cost pricing per unit, per service was established, allowing Philip Morris to accurately forecast annual budgets.


Philip Morris was able to establish a national, company-wide protocol for the distribution and placement of their advertising & POS displays that guaranteed adherence to corporate budgets, policies, and quality standards. The elimination of all fixed costs associated with the placement of advertising signs and POS displays provided Philip Morris with competitive advantages in their highly productive markets.

"The flexibility and commitment to our success during the piloting phase of our program, cemented our decision to work with EES."