Third-party-warehousing firms fight world hunger

By Todd Cohen

[Note: This was written for Stop Hunger Now.]

Third-party-logistics (3PL) providers are piloting an innovative warehousing and corporate-social-responsibility partnership with an international relief agency to help address the global hunger epidemic.

3PL providers in Indianapolis and Pittsburgh have taken on warehouse functions that Stop Hunger Now previously handled, giving the Raleigh, N.C.-based relief agency’s local staff in those cities more time to develop partnerships with local organizations and volunteers that will get more food to hungry people throughout the world.

“It is our way of giving back,” says Tim Siddiq, president and CEO of Indianapolis-based Merchandise Warehouse. “We see logistics being key to ending hunger worldwide. And being in the logistics business, it made sense to us to put together a network of public warehouses that would donate space.”

Global epidemic

Throughout the world, 795 million people do not have enough to eat. Every night, one in nine people on the planet goes to bed hungry.

To help address that crisis, Stop Hunger Now has distributed over 200 million meals to feed hungry people in 51 countries since it launched its meal-packaging program in December 2005.

The meals were packaged by 650,000 volunteers from corporations, churches, schools and civic groups at 8,387 meal-packaging events in 19 U.S. cities in which Stop Hunger Now operates meal-packaging locations, and at locations in South Africa, Malaysia, the Philippines, Italy and India.

And warehousing is central to that effort.

How meal-packaging works

A meal-packaging event is a volunteer-based, assembly-line production process that typically is hosted by a local organization that provides volunteers and partners with Stop Hunger Now through a mobile operation that delivers ingredients and supplies.

In just under two hours, a group of 50 volunteers can package 10,000 nutrient-rich meals for the undernourished globally. The assembly process combines rice, soy, dehydrated vegetables and a flavoring mix that includes 23 essential vitamins and minerals into small meal packages.

During the event, volunteers work in teams. They set up the packaging stations and equipment. At the first station in the assembly line, volunteers mix four meal ingredients through a funnel into a specially designed bag. The bag then is carried to the next station, where it is weighed and heat-sealed shut. The sealed bag is brought to the next station, where bags are counted and packaged into boxes that are labeled to indicate the package date and “best-used-by” date of the meals. Then the volunteers take down the packaging stations and equipment.

At the end of the event, Stop Hunger Now transports the packaged meals back to its warehouse to await shipment abroad. It distributes meals through feeding programs operated by partner organizations in developing countries that promote education, encourage children to attend school, improve students’ health and nutrition, address gender inequalities, stimulate economic growth, and fight child labor, and are part of the movement to address global issues.

Warehousing to end hunger

In each community in which it operates, Stop Hunger Now leases warehouse space totaling 5,000 square feet to 12,000 square feet, depending on the size of the market.

Through those leases, which typically run for two years to five years, Stop Hunger Now maintains complete control of the operations.

At each warehouse space it leases, Stop Hunger Now receives the raw materials it needs for meal-packaging events, including the ingredients for each meal, plastic bags in which the meals are packaged, boxes in which packaged meals are stored, and packaging equipment that includes rubber bins, funnels, scoops and cups.

Stop Hunger Now either rents or owns a truck in each market. At its leased warehouse space, its staff loads the truck with materials needed for a meal-packaging event, and drives the truck to the site of the event.

Volunteers unload the truck and then, after the event, load the truck with the packaged meals. Staff drive the truck back to the warehouse, and unload the meals at the warehouse, where they remain until they are shipped overseas.

At each warehouse, Stop Hunger Now needs to accumulate 285,120 packaged meals – enough for the 20 pallets to fill a shipping container – before it makes a shipment overseas.

And its costs are fixed: It must pay the cost of each of its monthly leases whether it packages 1,000 meals or one million meals at a particular location.

Third-party-logistics model

Partnering with Merchandise Warehouse and Catch-Up Logistics in Pittsburgh, Stop Hunger Now is testing a new model for its warehouse operations.

In Indianapolis, where Merchandise Warehouse is based and operates both a 400,000-square-foot warehouse and a 175,000-squarefoot warehouse, the company has taken on responsibility for all of Stop Hunger Now’s warehousing needs.

It receives the raw materials and packaging materials Stop Hunger Now needs, stores them in one of its warehouses, maintains the inventory of raw materials and packaging materials in its computer system, pulls ingredients and packaging materials when a Stop Hunger Now partner is hosting a meal-packaging event, loads the Stop Hunger Now truck for the event, unloads the truck after the event, maintains the inventory of packaged meals, and loads containers for meals to be shipped overseas.

While many third-party-warehouse providers include transportation in their services, Stop Hunger Now wants to control its own transportation to and from packaging events. Its business model depends on volunteers to load and unload its trucks at meal packaging events, and the window of opportunity for doing that is about 20 minutes.

In contrast, the estimated period of time during which many transportation providers say they will deliver a truck to a meal-packaging site is much longer, making it impractical for Stop Hunger Now to depend on transportation providers for transporting materials to the packaging sites. Merchandise Warehouse does not include transportation in its services.

Cost savings

The third-party model is expected to reduce the warehousing duties for Stop Hunger Now’s local staff, giving them more time to develop new partnerships that will package more meals for people in need throughout the world.

“This new model enables our staff to focus on what we do best – facilitating great meal-packaging events for volunteers and distributing meals effectively to end hunger, while letting experts handle the logistics, which are not our core competency,” says Rod Brooks, president and CEO of Stop Hunger Now.

Mickey Horner, director of expansion and program innovation for Stop Hunger Now, says that moving to the new 3PL model could save the organization as much as half its operating costs, allowing the organization to provide more aid, increase monitoring and evaluation, and invest in sustainable community-development projects in developing countries.

One key to those savings will be the shift from a fixed-cost warehouse model to a variable-cost model. So Stop Hunger Now will pay for warehouse space and labor only when it actually is storing inventory in the warehouse.

The third-party model also is expected to reduce by 25 percent to 35 percent the time that local Stop Hunger Now staff spend on warehousing functions.

“By partnering with warehousing and logistics experts, we can spend more time developing more partnerships to package more meals for people in need,” Horner says.

Benefits of third-party model

For Siddiq at Merchandise Warehouse, partnering with Stop Hunger Now was an easy decision.

“Everybody has the food we need,” says Siddiq, whose father was Afghan and who was born and lived in the country until he was seven years old. “It’s something we take for granted. I grew up in Afghanistan. I saw hunger first-hand as a kid.”

The partnership with Stop Hunger Now also represents a way for Merchandise Warehouse to be a responsible corporate citizen, says Siddiq, whose maternal grandfather founded the privately held company in 1951.

Because it is an accredited food-handling warehouse with third-party inspection and accreditation, Merchandise Warehouse also provides food-grade services that meet or exceed regulation and compliance requirements of governing bodies to operate a food warehouse, says Scott Whiting, vice president and general manager for Merchandise Warehouse.

“Those services are not always easily achievable under a lease,” he says. “That’s another level of service Stop Hunger Now does not have to worry about.”

Merchandise Warehouse also has agreed to contribute up to $50,000 in in-kind services to Stop Hunger Now, including office space in its warehouse for Stop Hunger Now’s local employee, and has allowed Stop Hunger Now to install a sanitation system in its warehouse. The system includes a three-bay sink and a dishwasher Stop Hunger Now can use to clean meal-packaging equipment after it is returned to the warehouse from meal-packaging events.

Future of third-party model

Based on a logistical network analysis of its third-party warehouse model that Stop Hunger Now is developing with consultants, it will decide whether to shift to that model in other U.S. communities in which it operates when its warehouse leases in those communities expire.

It also will consider the third-party model when it expands to new communities. The Stop Hunger Now board of directors, for example, has approved expansion to the New York metro area.

“Our long-term goal is to have greater efficiency in logistics, and we’ll need additional 3PL partners to make that happen,” Horner says.

Whiting says Merchandise Warehouse aims to work with its peers in other cities to build a network of third-party operators “to be able to ship food to all over the world where it’s needed.”

Millennials value employers that give back

Millennials, or people born after 1979, believe a company’s involvement with a cause is one of the most important factors in deciding whether to apply for a job, a new report says.

Forty-seven percent of more than 1,500 Millennials who were employees at over 300 U.S. companies and participated in a survey by Achieve and the Case Foundation had volunteered for a cause or nonprofit through their workplace in the past month.

Eighty-seven percent of Millennial employees feel encouraged to participate in their company’s cause work, an equal share donated to a nonprofit in 2013, and 92 percent believed they were actively contributing to their company having a positive effect on the world, the Millennial Impact Report says.

“With approximately 80 million Millennials in the world who will soon make up 50 percent of the workforce, thus  generating is already redefining our culture and the workplace,” Derrick Feldmann, CEO at Achieve, says in a statement.

The survey results challenge the “stereotype of this generation as self-centered,” he says.

While what a company makes and sells is the top motivation for Millennials when applying for a job, 53 percent of survey respondents said that, beyond compensation and benefits, having their passions and talents used and fulfilled was the top reason for staying with a company.

Another 20 percent stayed because of a belief in their company’s mission and purpose, and 20 percent stayed because of bonds with co-workers.

Todd Cohen

Company combines giving, volunteering

By Todd Cohen

WINSTON-SALEM, N.C. — As marketing manager for Tar Heel Basement Systems, Jackie Hoffman regularly received calls from organizations looking for monetary donations and sponsorships.

“It was hard to turn down any of them,” Hoffman says, “but being a small business, our pockets were only so deep.”

Over the last three years, for example, the company has donated over 30 crawl space encapsulation systems valued at over $100,000 in products and labor to Habitat for Humanity affiliates in Caldwell, Avery and Watauga counties.

The steady flow of requests led to Hoffman’s idea to create “Pay It Forward,” a company program that combines financial support with employee volunteerism.

With 47 full-time employees, headquarters in Winston-Salem and an office in Boone, the company now gives each employee five paid hours a year to use to volunteer at any organization it supports through the program.

Launched a year ago, the effort has generated contributions of money, products and services totaling over $30,000, plus roughly 250 hours of employee involvement, Hoffman says.

About 25 percent of employees have volunteered through the program, and about half have made a donation.

Every month, for example, company employees volunteer to prepare a meal for families at Ronald McDonald House of Winston-Salem.

The company held a school supply drive that filled two three-foot boxes with supplies for teachers in Forsyth County to use in their classrooms.

In February, it held a food drive among employees and in the community that collected over 200 food items and $101 in cash to donate to Second Harvest Food Bank of North Carolina.

And it provide a $2,000 sponsorship for the annual golf tournament for the Watauga Humane Society.

“I wanted this initiative to be more than simply writing a check,” Hoffman says. “The goal is to improve the wellness of our employees through helping local nonprofits in our community.”

Companies tie giving abroad to bottom line, local needs

Local needs and corporate financial performance in countries in which they do business are the main factors that drive U.S. companies to make social invests abroad, a new study says.

Eighty-six percent of companies that gave internationally say they plan to increase or maintain the size of their foreign giving budget, says the study, commissioned by Global Impact and prepared by the Lilly Family School of Philanthropy at Indiana University.

In creating their giving programs, the study says, companies typically align their business goals and the “charitable priorities of their stakeholders.”

They also look for nonprofit partners that match their own philanthropic goals in the areas of mission, geographic service area, and focus area.

A “demonstrated record of producing effective and efficient results” is the top attribute companies look for when selecting a nonprofit partner, the study says.

Companies also consider a nonprofit’s accountability, reputation, as well as its size and capacity, the study says.

Resources that companies said they need to expand or strengthen their international philanthropic commitments include assistance with screening potential nonprofit partners, and with developing strategies to engage employees in global partnerships.

The study also found that 20 percent of 27 companies that donated internationally gave only in developing countries; Asia and the Pacific Rim drew the most attention from companies that donated internationally, with a majority giving in the region; and companies with a larger share of their sales revenue coming from overseas made even more international gifts and gave more money internationally at the level of $1 million or more between 2000 and 2010, compared to companies with over 90 percent of sales revenue from the U.S.

The research was based on secondary research on Fortune 100 companies; an online survey of 59 Fortune 500 companies; and in-depth interviewed with four major U.S.-based companies.

Todd Cohen

Easter Seals UCP mulls strategy to offset Food Lion loss

By Todd Cohen

RALEIGH, N.C. — Since 1991, Easter Seals UCP has raised over $36 million through Shop & Care, a cause marketing program it created and operated in partnership with Food Lion.

This year, the effort generated $3.8 million for Easter Seals affiliates in 10 states, including over $2 million for Easter Seals UCP.

That total represents 40 percent of the $5 million the nonprofit generates each year through private contributions to support its $86 million annual budget.

But after this year’s campaign, which was held in February in Food Lion stores in 10 Southeastern and Mid-Atlantic states, Easter Seals UCP learned Food Lion was dropping out of the partnership as part of a new corporate giving strategy.

“Easter Seals is a wonderful organization with many contributions to the community,” says Christy Phillips-Brown, director of external communications and community relations for Salisbury-based Food Lion.

Food Lion in recent months has begun to focus on a new community strategy “that is consistent with our business,” she says, and that also will “enable us to build a solution for our primary area of focus, which is food insecurity and hunger relief.”

While Food Lion will permit individual stores to participate in the Shop & Care campaign in 2014, Easter Seals UCP is working to relaunch its cause marketing strategy to try to offset the loss of its single biggest source of philanthropic support.

Easter Seals UCP, which has headquarters in Raleigh, employs 3,000 people and delivers over 3.3 million hours of support to over 20,000 individuals and their families managing disabilities and mental health challenges throughout North Carolina and most of Virginia.

The nonprofit generates most of its funds through contracts and services, largely through Medicaid and Medicare reimbursements.

Before Food Lion moved to end the partnership, Easter Seals UCP already had been working for over a year to reengineer its business model to develop strategic partnerships that focus on better connecting the clients and communities it serves to the most helpful solutions to their needs, says Jeff Smith, chief communications officer at Easter Seals UCP.

People living with disabilities and mental health challenges represent a big part the population and face a broad range of needs such as access to affordable housing, health care and jobs.

One in every four people has a mental illness that can be diagnosed, for example, and nearly 70 percent of youth in trouble suffer from a mental health disorder.

And nearly 80 percent of adults with disabilities are unemployed, with one in every four individuals with disabilities living in poverty.

To help address those needs, Easter Seals UCP is looking for possible partnerships with nonprofits and corporations that focus on those issues, says Smith, who has overseen the Shop & Care program.

“Collaboration and innovative thinking are the only way we can move the ball forward, particularly for people with disabilities,” he says.

Easter Seals, which created the Shop & Care program, is considering partnerships that would franchise or lease it to other businesses or community partners, tying the Shop & Care brand to causes such as poverty or affordable housing, rather than to individual organizations, Smith says.

Food Lion has “made a tremendous impact on what we’ve done over the years,” he says.

And he says he hopes shoppers at individual Food Lion stories that opt to run Shop & Care campaigns in 2014 will continue to support the effort.

Meanwhile, he says, Easter Seals UCP is looking for new strategies to build on its Shop & Care cause marketing program that will allow retailers, their customers and vendors, and possibly other nonprofits, to work together to address critical community issues.

“We want to continue to connect with other retailers and community partners,” he says, “in creative ways that would provide solutions to people with disabilities.”

Social business, Part 9: Nonprofits work with companies to help find business solutions

By Todd Cohen

[Note: Last in a series.]

In looking for a corporate partner, nonprofits should identify business challenges that they can help a company address and that a company can help them address, experts said.

“Corporations are not these monolithic entities,” explained Katherine Smith, director of the Center for Corporate Citizenship at Boston College. “They’re made up of people who have pressures they’re experiencing and jobs to do, and those pressures are more extreme than 25 years ago.”

If a nonprofit can figure out how to “help the company accomplish a job, or help that person in that company accomplish a job they have to do, it will be that much easier to secure support,” she said.

Including employee matching gifts, the average medium-sized company makes 1,200 to 2,000 gifts a year through its corporate giving program based on a review process managed by about six people who review two times to three times that many funding proposals, Smith said.

“As worthy as  you know your cause is, the person on the corporate side is looking at thousands of worthy causes,” she explained. “Think about how you’re different, and make sure the person in the company understands how your cause and organization are different.”

Talya Bosch, Boston-based vice president for social ventures for Western Union, which is based in Englewood, Colo., said nonprofits should move beyond the “usual suspects” in a company’s community relations department and connect with officials in other departments, such as marketing, human resources, and product development.

“If you understand what the business is trying to achieve and what the challenges are,” she explained, “you might find common ground where you can help the company achieve business goals while also achieving community goals.”

And just as companies can benefit from being linked to a nonprofit with a strong brand, nonprofits can benefit from being associated with a “credible company,” she said.

“Good will and community trust,” she explained, “can very much cut both ways.”

The series:

Part 1: Companies team with causes to add value

Part 2: Companies build giving into business strategy

Part 3: Philanthropy adds value for companies

Part 4: Nonprofit builds corporate partnerships from ground up

Part 5: Company works with nonprofits to build markets

Part 6: Companies turn to nonprofits to help develop leaders

Part 7: Nonprofits tap corporate expertise

Part 8: Company teams with nonprofit to solve social problems

Part 9: Nonprofits work with companies to help find business solutions