Speed Demon

A look at how a courier company turned to technology to gain a competitive edge.

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There are two kinds of couriers: the quick and the defunct. Baron Messenger was determined to be very, very fast

Standing in a red suit and black boots on a 70-degree December morning, Larry Schwartz gears up to deliver the next package. This is a new gig for Schwartz; as president and co-owner of Miami-based courier Baron Messenger Service Inc., he has offered to personally deliver gifts in full St. Nick garb. As it turns out, Schwartz is a reasonably convincing, if unlikely, Santa, thanks to a round face, a gray-flecked beard, and a protruding midsection. He's reasonably jovial, too, despite the fact that this whole thing is, by his own admission, a pretty cheesy gimmick. "If it fails, so what?" he shrugs. "I've wasted $150 on a Santa suit. But if it succeeds, I'm buying more Santa suits for the drivers."

It's just the sort of friendly eccentric service you might expect from a small company like Baron Messenger, and it's something that giant couriers like FEDEX and United Parcel Service could never match. On the other hand, tiny Baron Messenger is probably no match for the giants' speed and reliability, right? Wrong.

Though its annual revenues of $1.5 million are appreciably less than FEDEX's annual revenues ($8.5 billion in 1994), Baron Messenger employs an array of computer systems that provide it with most of the same high-speed dispatching, tracking, customer response, and billing capabilities its much larger competitors enjoy. But where companies like FEDEX and UPS spend hundreds of millions of dollars on the information systems that make them fast, Baron Messenger has spent less than $100,000 over the past 12 years. And the system currently running the company's critical operations cost just $15,000. In fact, the company is still using obsolete 286-based PCs in critical roles. "I work close to the bone," says Schwartz.

Despite its limited resources -- the company has just nine full-time employees -- and a lack of in-house technical know-how, Baron Messenger is using automation to move more packages faster for more customers. The company boasts a 98% on-time rate and has grown sales by 30% over the past two years, with projected sales gains of 15% for 1996. And even with the growth, it's managed to maintain a healthy 17% profit margin. Along the way, Baron Messenger has proved that small companies can turn to inexpensive technology and shrewd decision making to wipe out the seemingly huge advantage large companies have by virtue of deep pockets and armies of technicians.

When Laurie Baron launched Baron Messenger Service from her father's transmission shop in North Miami in 1981, she didn't worry too much about tracking packages or monitoring drivers because there weren't enough of either to bother. Baron and Schwartz, long-time denizens of New York City, had packed their bags and followed the sun to Miami, where they married a short time later. Fresh out of college, Schwartz took a job peddling copiers for Minolta Corp. Baron, on the other hand, wanted to start something of her own. Miami was just entering its boom years, and more and more companies were heading south. But the city didn't have major messenger services for the growing population of corporations and law firms. So, with just a pad of paper, a 1972 Chevy Impala, and a handful of customers, Baron jumped headfirst into the local delivery business.

The start-up soon scratched out a modest foothold. During his sales calls for Minolta, Schwartz would pass out Baron's business cards, and within a year Laurie and Larry had signed up more than 100 customers. Schwartz even managed to snag Minolta itself, Baron Messenger's first big corporate account. It didn't take long for Schwartz to figure out his next career move: he joined his spouse full-time and took over sales. "I could walk into just about any building and walk out with a few customers," he says. By 1983 the company had close to 300 customers and more than 20 contract drivers. The good news was that money was starting to flow in. The bad news was that the processes of dispatching drivers and keeping track of customers' orders were becoming unwieldy.

The problem: Everything was put on paper. When a customer called for a delivery, the telephone operator would frantically spin through a Rolodex searching for the customer's name and address. The order was then taken down on a delivery slip and handed to one of the dispatchers, who kept lists of all of the jobs in progress. Drivers' locations were tracked through a system of cardboard boxes. Once a driver had been assigned a job, a copy of the delivery ticket would be deposited in his or her box. After the job had been completed, the dispatcher would remove the delivery slip. Theoretically, the dispatchers could glance at the boxes and tell which drivers were free; in practice, however, the crude system sometimes led to errors.

The biggest problem was responding to customers' complaints and inquiries. When a customer called with a problem from the previous week, it could take the company hours to sift through piles of pink delivery slips to find out what had gone wrong. "We were dealing with time-critical jobs, and things were falling between the cracks," says Schwartz. "We were just pushing paper." Billing was a crude affair as well: every Friday night a half-dozen employees would spend five hours or so, huddled around a couple of pizzas, poring over the slips and writing up bills for the company's customers.

Though few small businesses had computers at the time, Baron and Schwartz decided to take the plunge. They dropped $6,000 on a 286-based IBM PC so that they could automate the billing process -- only to find that the system actually created work for them.

But having glimpsed the promise of automation, Schwartz was hooked. Information technology became an obsession, and the dollars began to fly. Schwartz went on a spending spree, shelling out $60,000 for six 286 PCs, a Novell network built around a central file server, and a maintenance contract with a friend who had a knack for computers. Because buying the system outright would have eaten up 20% of the company's $300,000 in net sales in one pop, Schwartz bought the system on time, making payments of $1,000 a month over five years plus $375 a month for a maintenance contract. This time the company got not only an effective automated billing system but also speedier dispatching and complaint-handling capabilities (now that customers' records could be pulled up electronically). Nothing that would have blown away FEDEX, to be sure. On the other hand, no regional courier service could match Baron Messenger's speed and reliability.

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