Fidelitone Logistics delivers in new niche

Fidelitone Logistics presents itself as the epitome of an American success story: Able to adapt and reinvent itself to continue thriving.

For more than four decades Fidelitone, founded during the economically dreadful year of 1929, made and distributed phonograph and jukebox needles and accessories.

When the advent of new audio technologies made it obvious that business was obsolete, the company used its retail contacts with companies like Sears to morph into distributing electronic parts.

Now the Wauconda-based Fidelitone handles parts and products for any type of industry, and company officials say it can help other companies cut capital and personnel costs by outsourcing supply and delivery issues.

Fidelitone Logistics, with more than 400 employees and 22 sites around the country, is taking advantage of its financial strength to acquire other companies. It recently expanded both services and its geographic territory, especially in the Southwest, by purchasing The WinWell Companies Inc. of Dallas, another logistics provider.

Future acquisitions could include complementary businesses like trucking and freight brokerage, said Josh Johnson, president, and a member of the Hudson family, which owns the company.

The private ownership allows Fidelitone to react quickly and customize services, said Michael Schoenfeld, executive vice president.

A big part of Fidelitone's business is managing parts for repairs. And for retailers like Best Buy, Fidelitone can purchase and warehouse the most frequently needed parts and ship them quickly to a store, service center or consumer's home.

"Parts is a tricky world," Johnson said. "You are reacting to a negative situation always, versus somebody buying a new product. Generally something had to break."

An estimated 20,000 or more parts leave the Wauconda warehouse every day - shipped the day they are ordered or the next morning.

Other parts can be ordered and shipped from a manufacturer or distributor without anyone from Fidelitone's touching them.

"Many times we do it all electronically - a virtual supply chain," said Schoenfeld. "It's a huge deal, not shipping or handling something twice. It saves a lot of money."

In fact Fidelitone pioneered drop shipping in the 1980s.

From little parts of dishwashers to front panels of television sets, Fidelitone stocks them or can get them quickly. In fact, the company knows how to put its virtual fingers on 9 million parts, Johnson said.

Another side of the business deals with products like office equipment. The manufacturer ships these machines to a Fidelitone facility such as the one in Bensenville, where they are unpacked, assembled and delivered to the user. The old machine then makes the return trip in what is called last-mile service.

Another important service is helping huge retailers figure which products and how many of them it makes financial sense to warehouse and when it's better waiting for arrival, even if it's all the way from China.

"I have five widgets in stock, which will keep my customers happy 97 percent of the time," Schoenfeld said. "I could keep them all happy if I stock six. But that would be an increased investment of how many dollars? We help do the math for millions of products - an analysis of what we stock and what we try to ship from vendors."

Obviously, Schoenfeld credits Fidelitone's millions of dollars worth of technological information systems for much of its success.

According to entrepreneur.com, the U. S. third-party logistics industry reached $10 billion a year in 1993 and in 2004 approached $80 billion. And a magazine called Inbound Logistics named Fidelitone to the Top 100 in the industry last year.

"A company that remains in business since 1929 has to be willing to change and reinvent itself every day," said Johnson.

"The leadership has been very entrepreneurial over the years - people who saw opportunities at the right time and knew when to get out of certain businesses. It was lucky, but always listening to your customer made the difference."

But Johnson would never call his business recession proof.

"Some of our customers are down, but overall we're in good shape from a volume perspective."

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