Jelly Belly Candy Co.’s decision to shift distribution from its Pleasant Prairie, Wis. warehouse (pictured above) to Memphis involves dollar-and-cents geography.

When Milwaukee’s WTMJ television station broke the news that the Jelly Belly Candy Co. was closing its Pleasant Prairie warehouse, retail shop and tours on March 10, the broadcasters got a portion of the story correct: The Fairfield, Calif.-based manufacturer of Jelly Belly jelly beans will shut down the warehouse and internet fulfillment operation in Pleasant Prairie.

The plan is to shift the distribution operation to a third-party logistics partner, Barrett Distribution in Memphis, by Sept. 1. As for the retail shop and tours, a popular and successful addendum to the warehouse, no decision has been made.

“As a family-owned company, and one who values our loyal employees, we wanted to give those working in distribution [25] a six-month advance notice of our business decision to shut down the warehousing part of this operation,” says Jeff Brown, v.p. of global operations/distribution at Jelly Belly.

And although he wasn’t surprised when news of WTMJ’s sound byte reached him, Brown wanted the opportunity to tell the whole story. Hence, the company reached out to Candy Industry Magazine.

“The reason behind the move involves serving our East Coast customers better, at the lowest cost possible, providing them with more timely deliveries,” he says.  After conducting a business analysis of their customer data base, the company discovered that Memphis could provide a better distribution point for the company.

“By shipping from Memphis instead of Pleasant Prairie, we would be able to shave a day off our deliveries, that is, reducing the delivery time from three to two days,” Brown says. “The key was geographic location.”

After undergoing a thorough evaluation of third-party logistics partners in the area, the company decided on Barrett Distribution.

“They’re a family-owned business, which we can relate to,” he adds. “They also gave us candy industry references, people we respect.”

Another key aspect concerning the choice of a third-party logistics partner involved understanding the company’s business. In Jelly Belly’s case, the company ships product to a broad range of customers, “…everyone from big-box stores to mom-and-pop operators. All of them have different requirements,” Brown says.

The company expects substantial savings from the move while simultaneously improving performance.

“Another issue we faced involved seasonal shipping,” explains Brown. “Products shipped to places like Florida required cold packs. The challenge for us was to ship it in two days.”

Moving from a 233,000-sq-ft. warehouse [Editor’s note: Jelly Belly does not use all of the 233,000 sq. ft.; it leases a good portion to individual clients as well as uses some of the space for its retail store and tour operation.]  to a 75,000-sq.-ft. leased space will take some time, about six months to be exact, he adds.

“There’s quite a lot of logistics involved, including software and hardware systems,” Brown explains. “We’ll gradually draw down stock in Pleasant Prairie as we build up inventory in Memphis. In fact, we’ll start shipping our Eastern Canadian customers on April 1.”

And what about the retail shop and tours?

“Well, we are offering the building for sale or long-term lease,” he says. “But that could take some time. The retail shop and the tours have been tremendous for us. So for now, the 20 employees in retail will continue to work there until plans are put into place.”

Separately, the company’s gone ahead with its decision to make its North Chicago, Ill. facility a certified organic plant. It’s already invested a million dollars in expanding and upgrading the kitchen and is in the process of spending another six-figure amount on organic ingredients, such as starch.

As part of a strategic realignment of its U.S. domestic business last, the Jelly Belly Candy Co. transferred all Jelly Belly bean manufacturing from its North Chicago operation to its main production facility in Fairfield, Calif.

The move resulted in the loss of 66 jobs, as the company shifted production to private-label and contracted confections, although some production of its other confectionery lines remained.

Brown is optimistic that the shift will benefit the North Chicago facility.

“We’ve maintained communications with former employees,” he says. “If business picks up, they’ll be the first we call.”

In addition, Trevor Parkinson, grandson of Herm Rowland Sr., chairman of the company, has taken over as plant manager at North Chicago. Excluding the sharp temperature change — Parkinson came on board in early January — word has it that the sixth-generation candy maker is settling in.