Supply chain management is changing rapidly, and companies require ever-improving services and a more customer-centric approach. Arvato provides just that. The company is developing innovative strategies and models for its clients that focus on an entrepreneurial approach to thinking and acting, in order to future-proof their operations around the globe.
Arvato is a division of Germany-headquartered company Bertelsmann, that contains among others the trade book publisher Penguin Random House and the music company BMG. Arvato employs 17,000 people about 100 locations in 17 countries. In North America, Arvato’s warehouse network includes a total of 10 locations in Ontario, California, Las Vegas, Nevada, Pleasant Prairie, Wisconsin, Louisville, Kentucky and Memphis, Tennessee where comprehensive logistics services are provided to numerous clients in the consumer, tech, and healthcare industries.
The core of Arvato’s success lies in the combination of deep industry expertise and the right technologies that have enabled the company to develop innovative supply chain management and e-commerce solutions for its clients, supporting their growth objective.
Mitat Aydindag, President of Arvato North America, says: “We focus on B2B and B2C fulfilment, operating mainly in industries that are close to consumers, such as tech, fashion, lifestyle, and beauty, to which we have recently added the healthcare sector, i.e., ‘med tech’ products that we supply to hospitals, clinics, and physicians. While in the US the tech vertical is our strongest business, on a global level the ratio of tech and consumer products is more balanced, followed by healthcare as a third pillar.”
Comprehensive client support
Aydindag was appointed to his current role six years ago and under his management, the company has experienced exceptional growth, doubling its revenues as well as the fulfilment space in the American market. Himself an experience global business leader with extensive exposure in Asia and Europe in the supply chain, logistics and services industry, he seems to be the right person in the right place to manage teams and clients from around the globe at a time of major changes in the supply chain sector.
The secret behind such steep business growth? “I believe if you do the simple things right, you will succeed. Focus on the basics – quality, inventory accuracy, the right products at the right locations – coupled with excellent service levels will make everything fall in line. We were also lucky to attract the right talent from the US market and other parts of the globe. We have lots of expertise all over the world and my experience of more than 20 years in the organisation was very beneficial to find the right people within our network.”
He further explains that Arvato is not a typical service provider when it comes to fulfilment but covers the entire value chain. “We can support our clients with order management at the front end, with fulfilment, transport management solutions, customer care and after-sales solutions. The whole process is fully transparent.”
“Sustaining the level of service is something that we very much focus on. Given our recent fast growth, scalability is a topic, especially scaling with the best practices. We have created a lot of small pockets of excellence and now the task is to spread these best practices and excellence across the entire organization. This is one of my biggest focuses at the moment.”
In line with market evolution
He further points out that organic growth is expected to slow down in the coming years and to come mainly from new clients and new line of business from existing clients. “Our existing clients are facing significant pressure as a result of changed consumer behaviour in the aftermath of the pandemic. People are much more cautious about their spending and seem to prefer entertainment and travel to products. So, demand has fallen, and inventory levels are still pretty high which companies need to move.”
As a result of these market changes, companies are looking for a much more resilient supply chain; a supply chain that is more adaptable, flexible, more responsive, and even far-sighted, able to anticipate further challenges. And Arvato is well placed to meet these expectations, having recently implemented several major projects.
“Before the pandemic, we decided Arvato would be a cloud-first company. And that was not just a marketing phrase,” says Aydindag. “Unlike some others, we didn’t stop investments during the pandemic. One of the results was that we moved our entire ERP landscape to the cloud. We have also recently invested heavily in automation and robotics. Best example is our latest cooperation with Boston Dynamics. As part of this new partnership, we start to implement Stretch robots in our Louisville facility, which takes the degree of automation to the next level.”
“In this respect, we are lucky to be part of a strong organization. Bertelsmann Group has a strong appetite for investment in the highly promising US market. Arvato North America now accounts for 20% of the overall Arvato business and there is a willingness to further invest in expansion if the right opportunity arises.”
Green & diversified business
In January, the company cele-brated the opening of its new healthcare logistics centre in Memphis, Tennessee. With 320,000 square feet of space, it is the first Arvato AutoStore location in the U.S. The facility has created several hundred new jobs. The new customer at the location is one of the world’s leading medical technology companies, for which Arvato has taken over all fulfillment and distribution in the US.
Arvato is also increasing its focus on sustainability, committing to be carbon-neutral by 2030.
As of 2023, all ten warehouses now purchase renewable electricity for 100% of their annual consumption, and the Ontario, California location has more than 1,000 solar panels on the roof.
This will reduce annual greenhouse gas emissions by around 4,000 metric tons of CO2. An impressive achievement, given that the supply of power from renewable sources is still very limited in the US and making the switch is not easy as Aydindag points out.
“We keep pushing to make all of our sites greener, to further increase our focus on environmental improvements, and not only because our clients, most of which are blue-chip companies, require it, but because it is the right thing to do. We are also committed to further increasing the focus on our people, with various initiatives being introduced from the shop floor to the top floor. We want to be an employer that people are happy to work for.”
These plans, as described by Aydindag, fall fully in line with Arvato’s ambition to be the most client-oriented international supply-chain company with the strongest focus on people and technology.
