March Program is at Hyundai in South Brunswick

We will be touring the Hyundai DC in South Brunswick, NJ on Wednesday, March 24th.

Hyundai (Mobis Parts America) launched on January 1, 2009, has begun the challenging two year task of combining the Hyundai and Kia operations into one customer service focused and efficient operating company. Systems strategies are being developed to integrate both companies into a single state of the art system. Parts Distribution Centers will become Hyundai/Kia facilities, allowing MPA to position facilities closer to their customers increasing current service levels at a significantly reduced cost.

Increasing service and reducing costs are the primary goals in combing Inventory Control, Parts Training and the Parts Technical Call Centers. A key business opportunity is in Parts Marketing. By leveraging the strength of both companies and utilizing common market intelligence, design and execution resources, MPA will add real Market Value for the manufacturer and dealer for both retail customers and wholesale business. As a result of the dramatic increases in sales for both Hyundai and Kia products, the Hyundai/Kia parts market has become extremely competitive and MPA is now positioned to win Customer loyalty.

Mobis Parts America (MPA), launched on January 1, 2009, has begun the challenging 2-year task of combining the Hyundai and Kia operations into one customer service focused and efficient operating company. Systems strategies are being developed to integrate both companies into a single state of the art system. Parts Distribution Centers will become Hyundai/Kia facilities, allowing MPA to position facilities closer to their customers increasing current service levels at a significantly reduced cost.

Increasing service and reducing costs are the primary goals in combing Inventory Control, Parts Training and the Parts Technical Call Centers. A key business opportunity is in Parts Marketing. By leveraging the strength of both companies and utilizing common market intelligence, design and execution resources, MPA will add real Market Value for the manufacturer and dealer for both retail customers and wholesale business. As a result of the dramatic increases in sales for both Hyundai and Kia products, the Hyundai/Kia parts market has become extremely competitive and MPA is now positioned to win Customer loyalty.

Having concluded the move into their new facility in August ‘08, MPA has realized a dramatic increase in storage capacity of fixed location capacity from 42K slots to 74K slots (+76%) ensuring our commitment to growth and operating efficiency. Although the new facility footprint is only marginally larger the increased operational height allows MPA to maximize the cube and achieve a 47% storage advantage. Additionally, energy efficient lighting and natural lighting provided by perimeter windows improve processing accuracy and provides a brighter and more open environment.

This facility provides service to 204 Hyundai Dealerships located in 13 states in the Northeast. Processing in excess of 1.7 million order lines annually, while maintaining a world class accuracy rate 99.92% (1 error for 1250 lines processed). Hyundai has been recognized by Industry analysts as a leader in Fill Rates, measuring over 98%, PDC Productivity and overall Supply Chain Efficiency.

Tour Highlights:

• A 320K square foot of warehouse and distribution operations
• A state of the art Technical Training Center for Dealership Technicians
• Utilization of in house slotting tools, providing optimal storage of over 33K unique part numbers
• A transportation system that provides delivery service to 203 dealerships by noon the following day with 60% of dealerships ordering parts prior to 3PM receiving deliveries prior to their opening the following morning
  

People are truly their most valuable asset that sets MPA apart from the rest. Processors are routinely flown to other facilities in the network to work, learn and share best practices, resulting in a unique camaraderie within the collective group. In addition to experiences at the other facilities, many of their Processors have visited their US Headquarters and Korean Operations both in Seoul and Ulsan to learn about the company and the Korean culture which is their foundation.

Unlike most PDC’s in the Service Parts Aftermarket, Hyundai takes a somewhat different approach in compensation, paying for performance opposed to contractually negotiated or predetermined increases, reinforced by incentives that provide monetary reward for meeting and exceeding performance goals.

PROGRAM SPONSORS

MHSNJ would like to thank our program sponsor for their support
of this month's program, as well as supporting our society.

DINNER SPEAKER

Ronald M. Palochko
MPA National Parts Distribution Center

MPA is truly excited to share their story and hope you can join us on March 24 for an exciting tour and presentation by Ronald M. Palochko, MPA National Manager Parts Distribution Center, as he tells us “The rest of the story…”

DINNER PROGRAM LOCATION

Crown Plaza Monroe
390 Forsgate Drive
Monroe Township, New Jersey

SCHEDULE

3:30....................Registration at the Tour Site
4:00..............................................Tour Begins
5:30..........................Reception at Restaurant
6:00...........................Dinner Program Begins

DIRECTIONS

Mobis Parts America (Hyundai)
1122 Cranbury-South River Road
Jamesburg, New Jersey 8831

From NJ Turnpike

• New Jersey Turnpike to Exit 8A.
  
• Stay to the right and follow signs for Cranbury, South Brunswick, Route
  535.
  
• At traffic light, make a right onto Cranbury South River Road (Rt. 535)>
  
• Hyundai is first right.

DIRECTIONS FROM TOURSITE TO DINNER PROGRAM

Crown Plaza Monroe
390 Forsgate Drive
Monroe Township, New Jersey 08831

From Toursite:

• Make a left out of the Hyundai parking lot onto Cranbury South River Road (Rt. 535).
  
• Continue straight through 2 traffic lights (the one directly next to Hyundai; and over Route 32).
• Make your first left onto Interchange Plaza and proceed to the end.
  
• Make a left onto Abeel Road.
  
• Follow straight into the back of the Crowne Plaza Parking lot.

REGISTRATION

Registration prior to tours is strongly recommended to guarantee admittance. Tours often fill to capacity prior to program date which prevents same-day on-site registrations. Please pre-register to allow us to adequately plan our programs and dinners. Please note: Walk-in day of tour registrations are subject to availability and are subject to an additional charge.

MEMBER PRE-REGISTRATION RATE - $50.00

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NON-MEMBER PRE-REGISTRATION RATE - $75.00

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FIRST MEETING SPECIAL: JOIN MHSNJ AND ATTEND THIS PROGRAM AT A REDUCED RATE - $95.00

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NJ Franchise Practices Act Expanded to Cover Wholesale Distribution Warehouses

The following article has been provided by MHSNJ member Jeremy Silberman.

MHSNJ Member Jeremy I. Silberman, Esq.

In the January 2009 MHSNJ Newsletter, I wrote about the wide range of businesses covered by New Jersey’s Franchise Practices Act (“NJFPA”) and its protections. Click here to download January 2009 Newsletter. On January 16, 2010, the NJFPA was amended to cover an even wider range of businesses, including specifically warehouse based wholesale distributors.


Enacted in 1971, the NJFPA prohibits a “franchisor” from terminating a “franchisee” without “good cause” or from imposing unreasonable standards of performance. First, let’s be clear that a “franchise,” for purposes of the NJFPA, is not just your neighborhood McDonalds, Burger King, and other types of traditional franchises. Many types of businesses in New Jersey, are franchises for purpose of the NJFPA, including companies in material handling industries. A contract between any two businesses is a “franchise” under the NJFPA so long as six requirements are met: (1) a written arrangement between the parties, (2) one party (called the “franchisor”) grants the other party (the “franchisee”) permission to use a trademark, trade name, service mark, or related characteristic, (3) there is a “community of Interest” in the marketing of goods or services, (4) the franchisee has “a place of business” in New Jersey, (5) more than 20% of the franchisee’s gross sales are derived (or intended to be derived) from this arrangement, and (6) gross sales of products or services between the franchisor and franchisee exceed $35,000 in the prior year.


I highlighted the “place of business” element in the above paragraph because that requirement was just amended to include warehouses and offices of wholesale distributors. Prior to the recent amendment, the NJFPA defined a place of business as “a fixed geographical location at which the franchisee displays for sale and sells the franchisor’s goods or offers for sale and sells the franchisor’s services... [but] shall not mean an office, a warehouse, a place of storage, a residence or a vehicle.” Thus, the law required some level of sales activity to take place on the premises and excluded certain types of facilities. Manufacturers used this “place of business” definition to deprive distribution businesses of the NJFPA’s protections. Distributors frequently do not conduct sales activity on their own premises; the distributors’ personnel make sales calls, obtain orders, and make deliveries at their customers’ facilities. This led to the following anomaly: if a distributor required its customers to buy goods at the distributor’s place of business, it could be protected from termination by the statute, yet if the distributor instead delivered products to its customers and consummated its sales at the customer’s location, it did not meet the place of business requirement, and was not protected by the NJFPA.


Following this logic, in 2007, the federal district court in New Jersey allowed the termination of a New Jersey wholesale distributor of Vitaminwater™ beverages, holding that it was not protected by the NJFPA. This company had been distributing Vitaminwater™ beverages since the product was first introduced, and invested considerable time and money to create a market for the product where none previously existed. Its personnel made sales calls at customers’ corporate offices and supermarkets, obtained orders at the customers’ facilities, and delivered the product to the customers’ stores. After the distributor built a multi-million dollar market, the Coca-Cola Company purchased Glaceau, maker of Vitaminwater™ , terminated the Vitaminwater™ distributors, and replaced them with Coca-Cola’s existing distributors. The New Jersey distributor sued for unlawful termination, in violation of the NJFPA. However the federal district court found it was not protected by the statute because it did not have sufficient retail sales activity at its own warehouse to meet the “place of business” requirement.


The legislature passed the new amendment to the NJFPA in response to this Vitaminwater™ distributor case and other instances where wholesale distributors were denied NJFPA protection. In passing the amendment, the legislature expressly found that protections against unreasonable termination “are necessary to protect not only retail businesses, but also wholesale distribution franchisees that, through their efforts, enhance the reputation and good will of franchisors in this State.” (P.L. 1971, c.356, Sec. 2.)


Under the amended law, effective January 16, 2010, the place of business definition is expanded:


Place of business means a fixed geographic location at which the franchisee displays for sale and sells the franchisor’s goods or offers for sale and sells the franchisor’s services. Place of business shall not mean an office, a warehouse, a place of storage, a residence or a vehicle, except that with respect to persons who do not make a majority of their sales directly to consumers, “place of business” means a fixed geographic location at which the franchisee displays for sale and sells the franchisor’s goods . . . or an office or a warehouse from which franchisee personnel visit or call upon customers or from which the franchisor’s goods are delivered for customers. (P.L. 1971, c.356, s.3)


This expansion of the place of business requirement is limited to companies “who do not make a majority of their sales directly to consumers.” For these businesses, at least, the place of business requirement can be met by an office or warehouse from which sales personnel make sales calls or from which product is delivered, even if no sales activity takes place at the facility. The amended NJFPA is a significant improvement in protecting New Jersey’s wholesale distributors from unreasonable terminations, and expands the opportunity to structure your business operations to fall within its protections.

Jeremy I. Silberman (MHSNJ Member) and Haekyoung Suh, who contributed to this article, are members of Norris, McLaughlin & Marcus, P.A. and specialize in franchise and distribution law. Norris, McLaughlin & Marcus is a full service law firm based in Bridgewater, New Jersey, with offices in Allentown, Pennsylvania, and New York City. For more information visit www.nmmlaw.com.

Coming in June: The 2010 MHSNJ Classic

On Wednesday June 9th, the Material Handling Society will host our annual MHSNJ Golf Classic at Minebrook Golf Club in Hackettstown, NJ. This event raises thousand of dollars that we award to students from both Rutgers University and New Jersey Institute of Technology (NJIT).

At our March meeting, professors and student attended our program and were awarded $6,000 in scholarship money. Many of our past scholarship winners have gone on to jobs in the material handling industry, and are current members of the society.

We invite you to join us as a golfer, a sponsor, or at our dinner program after a day of fun, friendship, and networking.

Click here to view the companies and individuals who support our scholarship.

Download an application to be a golfer or sponsor here.