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AMS Fulfillment bets on its success – and wins

Posted: May 28, 2014 2:38 p.m.
Updated: May 28, 2014 2:38 p.m.

Jay Catlin, president and managing partner of AMS Fulfillment, left, and Ken Wiseman, CEO, check merchandise for a SpaceX order in one of their warehouses. Photo by Katharine Lotze.

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When AMS Fulfillment of Santa Clarita learned it was going to lose its largest customer in 2013, the company planned for, and weathered, the storm. The company has just reported that within the space of months, it is already back in positive territory and operating in the black.

How AMS planned for a successful recovery could be a classic textbook case of what to do when a business suffers losses.

The Valencia-based company’s meteoric growth over the past 12 years led the company to lease 13 different buildings and up to one million square feet, scattered throughout the Santa Clarita Valley by 2012. The company received a Business of the Year award by the California Enterprise Zone.

The growth came at a price however, when the company couldn’t find an available commercial property large enough to fit its largest client at the time – TOMS Shoes.

While AMS was willing to build a 500,000 square-foot building to accommodate the retailer, timing was a factor for TOMS, which planned to install a new automation system it needed to move faster than construction would allow. The shoe retailer began leaving the Santa Clarita Valley for another order fulfillment company in September 2013.

As if the loss of one client wasn’t enough, a few other clients changed business models at the same time leaving AMS in a near perfect storm, losing four of its biggest six or seven accounts. Sports clothing retailer Umbro changed to a licensed brand only after Nike sold the division. And two other accounts ran into financial difficulty, said Ken Wiseman, CEO and managing partner, leaving the company with 25 smaller accounts.

“The downfall for a lot of companies is to be dependent on one large account,” he said. “But one of the positives coming out of this situation is that the portfolio of clients now is very well balanced, putting the company at much less risk for the loss of any other accounts.”

AMS regrouped, and strategically planned for a rough three to four month period. While that plan included laying off some 200 workers, many of whom were temporary, Wiseman said the company immediately identified potential customers and poured its energy into the sales process – a process that had been restrained when working with its former customer base because of their size, and a lack of industrial space into which they could consolidate all of their operations.

The company, headquartered in the Valencia Commerce Center, also worked to gear up for the long term success of the company by planning financially to retain all key assets – equipment and employees.

Though it created a financial strain, AMS retained all of its core team of staff and employees. Some of the assets were kept idle for a period of time because if the company had let them go, it would have lost them, said Jay Catlin, president and managing partner. The company wanted to keep the quality team it had built in place to be ready to respond quickly to a rebound.

AMS also inventoried equipment, like all of its forklifts, and planned for the disposal of older machines, keeping only 75 of the newest forklifts. And it let go of some of the leases for buildings that were smaller in size, retaining leases on buildings that that offered 100,000 square feet of space or more. AMS was able to consolidate the core business into 480,000 square feet of space, down from more than 1 million square feet. And it is now pursuing the potential construction of a new facility using EB-5 investment funds from China. The company, represented by Wiseman, just recently returned from the trip to China, led by Los Angeles County Supervisors Michael Antonovich, with other business and economic leaders.

“We knew we’d to need to come out of that period and be poised to take on new business,” Catlin said. “What set AMS apart from other businesses that go through downsizing is that we were able to look out for the long-term interest of AMS and our employees.”

Positioning itself to weather a tough period, AMS set money aside to ride out this period knowing that it was going to invest in the long-term basis and interest of the company. It absorbed expenses for the people and equipment, even knowing that not all the resources were needed during the rough period.

But with stealth planning, the gamble paid off. Just months after Toms moved the last of its shoe inventory, AMS Fulfillment now has 42 clients – nearly double what it had in the fall of 2013.

It has landed some top-name clients, as well as up-and-coming accounts, including Strava, Chubbies Shorts, Soludos, Blue Ridge Product Solutions, Carrini, Filmtools, Footed Pajamas dot com, Punchase by Leslie Hsu, Rey Swimwear and SeaVees. The company handles merchandise order fulfillment for other noted clients as well, who declined to be named.

One company, however, who is not shy is the True Innovation division of China-based Li & Fung. AMS recently began working with the $18 billion international supply chain management company, a world leader in consumer goods design, development, sourcing and distribution. It manages the supply chain for retailers and brands worldwide with more than 300 offices and distribution centers in more than 40 economies spanning across the Americas, Europe, Africa and Asia, Wiseman said.

“Entrusting your distribution over to a third party requires both an appreciation of your business acumen and alignment of the culture of your organizations,” Wiseman said. “This one win will have more than justified our participation in the China trip.”

By focusing on a longer term growth plan as opposed to immediate profitability, the company has come out stronger, according to the executives. They now refer to themselves as the newly “tricked out” fulfillment company.

“We’re coming back stronger and better than ever to face our new growth opportunities,” Catlin said.

Companies who are forced to show immediate profits or downsize to meet stockholder needs are so often forced to sacrifice planning for the future. But if the leadership has confidence in their team, at some point it has to bet on its success, Wiseman said. Today, the company projects that it will grow by another 50 to 60 positions during the balance of 2014.

“It’s been an investment that has already proven to be well worth the risk in a tough financial period,” he said.

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