HOUSTON -- Retail and wholesale food distributors need to become more efficient at logistics or they will continue to lose sales and volume to bigger players, like Wal-Mart and cross-channel sellers.
That was one of the key points of the annual benchmark report on retail and wholesale distribution center activity released last week at the 2001 Productivity Convention & Exposition here.
"For the first time logistics has to become top-of-mind for executives," said Richard Kochersperger, president of the Food Marketing Group, Wallingford, Pa., and author of the report.
"Now, you have to look at logistics as part of your long-term strategy for growth," he added. "There is no doubt that in today's competitive atmosphere you need to be good at logistics in order to survive."
One of the key statistics Kochersperger highlighted in the report reveals that retail and wholesale food distributors surveyed are losing sales "at an alarming rate."
The report stated that 22% of the responding food distribution centers report less volume than the previous year.
The report attributed the lost sales and volume to increased competition from Wal-Mart and other mass merchandisers, along with drug stores and category killers, which are now selling food items.
Kochersperger noted that since Wal-Mart and other cross-channel food sellers are extremely efficient at logistics, retail and wholesale food distributors can no longer afford to be lax in this arena.
"If you don't compete in [logistics], Wal-Mart will beat your brains out," Kochersperger told SN. "Wal-Mart has a logistics infrastructure as good or better than anyone."
Kochersperger noted in his report that Wal-Mart has made a major commitment to building new distribution centers that will handle dry and perishable food items in an effort to meet the demands of its continued growth in food retailing.
The increased competition wasn't the only compelling factor cited in the report.
Kochersperger's report also revealed that the consolidation of wholesale and retail distribution facilities as well as a labor shortage make the significance of top-notch performance in logistics all that more important. "Almost all food distribution centers are experiencing difficulty finding qualified associates, with 31% indicating the problem is critical or severe," the report said.
Distribution center turnover is a major challenge, as 37% of the companies reported they are changing 20% of their work force each year, the report said.
On the plus side, the report found that new technological advances in the warehouse have led to increased productivity.