Food distributors basically have two transportation challenges: getting products delivered from their suppliers to their distribution centers (inbound deliveries); and getting products delivered from those DCs to their stores (outbound deliveries). Both of these challenges have spawned sophisticated technologies that are proving increasingly important to getting the job done.
On the inbound side, the Internet is playing a growing role in creating a communications network that can enable distributors and their suppliers to automate and track the delivery process and obtain unprecedented efficiencies.
For example, Bozzuto's, a wholesaler based in Cheshire, Conn., that serves stores throughout New England and the mid-Atlantic, will be leveraging a Web-based, collaborative, logistics network hosted by Elogex, Charlotte, N.C., to take greater control of the 38,000 loads per year going into its one-million-square-foot distribution center.
Currently, between 11% and 12% of that in-bound and backhauled freight is managed by Bozzuto's itself, with the rest delivered by manufacturers, said Joe Callahan, Bozzuto's vice president of transportation. Using the Elogex system, Bozzuto's, which signed on last month, should be able to boost that figure to 35% after one year and to 50% after two years, Callahan estimated.
By managing more of its own deliveries, the wholesaler expects to improve customer service and reduce its overall freight costs. "We want to unbundle our freight costs [from vendor bills] by picking it up ourselves and through other carriers," he said.
Other carriers can range from third-party freight carriers to other Elogex clients in New England, such as CPG manufacturers and "potentially" other grocery distributors like C&S Wholesale, Shaw's and Hannaford, according to Elogex. "We are looking forward to working with other Elogex clients in our area to expand our network of backhaul potential," said Jay McDowell, Bozzuto's vice president of distribution services, in a prepared statement.
Under the Elogex system, Bozzuto's will electronically tender loads to potential carriers in the Elogex network and if one can't accept, it automatically defaults to the next carrier. Carriers, in turn, can obtain an appointment via the Web, determining the specific warehouse bay a shipment should be delivered to. This automation, happening in real time, should "minimize our time on the phone," said Callahan.
In addition, the system monitors carriers' performance, enabling Bozzuto's to determine the optimal time to allot for each shipment, said Callahan. It also electronically feeds freight bills to the wholesaler's accounts payable department, automates payments and verifies that payments reflect freight contract terms.
Another Web-based system is being implemented by Giant Eagle, Pittsburgh, to bring greater automation and efficiencies to its inbound deliveries. Hosted at Giant Eagle headquarters, the GC3 system, from G-Log, Shelton, Conn., will also do everything from tender shipments to carriers, select equipment, schedule appointments, reconcile deliveries with purchase orders, rate vendor performance and handle payments. Information is transmitted via the Web, although other methods are possible, such as EDI or phone/fax.
Giant Eagle plans to have the system running by the end of October for grocery, dairy and frozens; by January for perishables; and by next summer for general merchandise and health and beauty care, said Bill Parry, vice president of logistics, Giant Eagle. "We expect an 18-month ROI," he added.
"Over the last couple of years, we began to recognize that we wanted to find a system to enable us to have visibility and seamless integration of execution across the transportation part of the supply chain," which led to G-Log, said Parry. The system will provide up-to-the-minute information to everyone from Giant Eagle's logistics executives and buyers to vendors and carriers. If, for example, a vendor is not ready for a carrier to pick up goods, the system will set off an alert notifying Giant Eagle, he said.
Parry also looks forward to the automatic tendering and re-tendering of deliveries that will "enable our analysts to deal with exceptions rather than routine dispatching of trucks." This, in turn, should "dramatically increase" the number of purchase orders the current staff is able to process on a daily basis, he added.
Some retailers are making use of a Web-based, just-in-time inbound shipment system for small-to-medium manufacturers orchestrated by year-old Enable Technologies, Jacksonville, Fla. Using a national network of five outsourced warehouses, Enable is stocking products from about 27 manufacturers in order to create consolidated shipments of their products to retail DCs that subscribe to its service (which is free to retailers following setup). Manufacturers who have recently selected Enable include Eagle Family Foods, American Rice and Tyson Foods.
Retailers can lower inventories, damage rates and receiving costs through the system, which enables deliveries to be tracked on the Internet, said Mike Diaz, Enable's chief operating officer. Enable delivers 98% to requested arrival date with lead times of three to five days, he added. About a dozen retailers are receiving full-truckload deliveries through Enable at present.
Organizing the Yard
For outbound deliveries to stores, it turns out that one of the greatest challenges is just keeping track of trucking equipment, especially trailers, in the warehouse yard. A confused, inefficiently organized yard can generate substantial costs and delays in the delivery process.
To address that challenge, companies such as OMI International and EXE technologies, both based in Dallas, as well as WhereNet, Santa Clara, Calif., have designed yard management and location systems.
Unified Western Grocers, Commerce, Calif., is improving its outbound shipping operation by employing the Mobile Distribution System (MDS) yard management tool from OMI. MDS, installed in October 2001, has given Unified greater control over its diverse trailer inventory, about 40% of which is owned by its larger, independent store operators, resulting in significant cost reductions, said Greg Vick, Unified's director of distribution and Web systems.
Unified faced a particular challenge in dealing with the trailer fleet owned by the larger store operators, such as Super A Foods with 13 stores and Superior with 14 stores. In its "will call" drop-trailer system, these operators drop off their trailers to be filled with replenishment product and then pick them up at designated times. But in the past, Unified has had a hard time finding those individual trailers when they were needed to fill an order, Vick said. "We didn't know how many trailers were coming in, and at peak times we were exceeding 100% of capacity, causing gridlock."
MDS, on the other hand, tells the warehouse where to park trailers, which "gives us visibility into whose trailers are in the yard and where they're located," said Vick. That reduces the time spent finding a trailer and bringing it to a designated loading point.
The system also enables Unified to work with retailers on more precise scheduling of trailer drop-offs and pickups in order to minimize the time trailers spend in the yard. Keeping track of all yard movements and inventory, the system "prioritizes moves to support delivery," he said.
Unified uses a bar-coding system to identify trailers and enter them into the system. Another option is to employ an RTLS (real-time location system) on top of the OMI application to ensure pin-point tracking of trailers in the yard. But Vick finds that is not necessary for Unified "as long as we have the discipline to obey what the [MDS] system is telling us." Still, a Unified employee spends about one to two hours per day making sure trailers are where they're supposed to be and resolving discrepancies, said Vick.
Overall, Unified has achieved a six-month payback on its investment in the system, which Vick did not disclose. More specifically, the system has increased the efficiency of yard "switchers," (also called "hostlers" or "yard birds") responsible for trailers, by 20%, reduced Unified's inventory of rented trailers by 50, and made more frequent use of remaining trailers. MDS has also prevented putting loads on incorrect trailers, and saved time that would have been needed to correct those errors.
The biggest impact of the system may be inside the warehouse, where employees are able to ship out more products in a shorter time period due to the increased availability of trailers, said Vick. This is especially helpful during the peak shipping months of August through September that follow Unified's Expo show where its retailers buy large quantities for promotions.
In the past, to accommodate the peak shipping season, Unified has had to rent extra trailers to serve as "trailer slots" holding excess merchandise. Moving these trailers into position was a "logistical nightmare," said Vick. Those trailers are no longer required as the warehouse itself can accommodate the greater volume while the yard operates at under 100% of capacity. To further support the warehouse, Unified is also installing OMI's Triceps warehouse management system.
The biggest challenge facing Unified in implementing MDS was assessing its yard logistics and deciding what the optimal trailer movements would be, said Vick. And the optimization is an ongoing process, he added, as the system's database gathers information that allows Unified to fine-tune the process. "You get 20% of the benefits in the first three months, but it continues to bear fruit for a year or so," he said.
Unified is still developing the system, particularly in the area of product transfers from its satellite warehouse to its main DC during the peak season. The system is helping there by expediting emergency product transfers, thereby improving service levels.
As opposed to Unified's approach to yard management, Associated Food Stores, Salt Lake City, has employed an RTLS system, from WhereNet, Santa Clara, Calif., to precisely track and locate trailers in its DC yard. Associated uses the WhereNet system in concert with OMI's MDS yard management system, which is tied to OMI's Triceps warehouse management system. All three systems were installed following the opening of Associated's new one-square-mile DC in North Ogden, Utah, in April 2001, the WhereNet system coming in August 2001.
Once a load of goods is selected for delivery, the yard management system finds the right trailer and assigns it to the right loading dock at the right time, noted Tim Van de Merwe, internal logistics manager, Associated Food Stores. But before it does that, the RTLS systems provides "an X/Y location of every asset in the yard," including tractors and 33 types of trailers. "It gives us 100% accurate data on the yard." The check-in process, which formerly took 15 minutes to an hour, is reduced to minutes with RTLS, he added. There's no longer a "scramble for equipment."
The combination of systems has had a measurable impact on Associated's DC operations. According to Van de Merwe, deliveries have been consolidated, dropping to 950 from 1,445 at the old DC; routes have fallen to 320 per week from 506; drivers, to 83 from 123; and tractors to 62 from 92. Only 1.5 full-time employees are needed to run a system that required 127 last year. The RTLS and yard management system has reduced the amount spent on leased trailers for the busy July season to zero from $40,000 last year, said Van de Merwe, who noted that an ROI was achieved on the RTLS system in under nine months.
The WhereNet RTLS system places active lithium-battery-powered tags on equipment that blink at a specified rate -- anywhere from three seconds to six hours, transmitting radio frequency waves at the 2.4 gigahertz range. The waves are picked up by a "triangulated" set of antennas, connected by cable to a processor in the DC, that locate the tag within 10 feet, said Van de Merwe, who added that the batteries last from five to seven years.
The challenges faced by Associated in implementing RTLS were related to interfacing it to other systems and installing five miles of cable across the yard (though that can now be obviated by a new, totally wireless version of the system).
