The race is on for wholesalers to make their transportation departments a center of efficiency, not costs.
"We have our own private fleet and we think that's the way to go," said Pete Lima, transportation manager at Spartan Stores, Grand Rapids, Mich. "But we still have to prove our worth because there are a lot of third-party options out there."
The high costs of maintaining a private delivery fleet are enticing a number of wholesalers to consider outsourcing operations to third-party companies. For transportation departments seeking to justify their existence, delivering a heightened level of efficiency is becoming more important than ever.
"Transportation departments have a real vested interest in [improving operations], because we are one of the key cost centers," said Darwin Dewsnup, traffic and transportation manager at Associated Food Stores, Salt Lake City. "If we want to continue, we have to change what we are."
To meet that challenge, many wholesalers are investing in new technologies, from routing and scheduling software to enhanced onboard computers in their trucks.
Others are streamlining transportation operations by consolidating corporate departments and divisions and stepping up employee involvement in making key decisions.
Three wholesalers told SN how re-engineering efforts can bring them closer to a common goal: a streamlined transportation department capable of supporting today's key initiatives like continuous replenishment and cross-docking.
Certified Carries the Load
LOS ANGELES -- For Certified Grocers of California here, computerized routing software is both a tool to fill its trucks to capacity and the glue to help unify transportation operations.
"Our goal is to keep that trailer full," said Corwin Karaffa, vice president of distribution. "If we've got a route coming out of our Stockton facility and going to one of our member stores in San Jose, and there's a vendor in the area, we want to coincide that pickup to match our delivery schedule."
Certified has been testing routing software at one distribution center for about six months and plans eventually to go companywide with a routing system.
"Computerized routing systems will help us improve the number of cubes that go out on a truck and minimize the miles," he said.
"We have orders that come in on a daily basis and we batch them by time of delivery," Karaffa said. "We then figure out what would be an optimum route based on trying to cube out a trailer and the number of stops we have."
The wholesaler also sees automated routing as a way to electronically link all seven of its divisions, which include five distribution centers. For example, by using a common data base accessible by all divisions, a truck leaving one warehouse could be routed to do pickups for other divisions.
"We're looking at the opportunity to have an integrated routing network," Karaffa said. "By having this computerized system we feel we can eventually link all our facilities and maximize our backhaul opportunities."
Certified now coordinates vendor pickups and store deliveries between divisions through a manual process. Using an integrated computerized routing program, however, would vastly enhance the effectiveness of its program, he said.
A Heavy Merge At Associated
SALT LAKE CITY -- Associated Food Stores here is bolstering the strength of its transportation department through a group of organizational and technology changes.
The wholesaler will merge the transportation and warehouse departments of its largest division here this year to create a single, streamlined distribution department with complete control of all warehouse-to-store deliveries.
The new department will involve transportation and warehousing dispatchers working in the same room, thus enhancing the coordination of warehouse orders and truck deliveries. In addition, the unified structure will allow the wholesaler to make a long-desired move into using routing software.
The merger will also enhance the effectiveness of Associated's employee teams that have helped make crucial operational decisions in the past.
"We found out fairly quickly that making transportation [system upgrades] alone could not effect the big changes; it had to involve the total company," said Darwin Dewsnup, Associated's traffic and transportation manager. "We're going to see if we can effect changes with the walls torn down between departments."
Associated had considered investing in a routing package, but because its warehouse and transportation departments were separate entities with little communication, the full potential of a system could not be exploited.
But with warehouse and transportation dispatchers now working together, a routing system will determine "the quickest, most efficient way to get [products] to a store within the parameters of what the store needs," Dewsnup said.
A routing package is "something we really need. There's no way you can avoid it, especially anyone with any size," he said, adding Associated anticipates reducing transportation costs by 10% through the use of routing software.
"There's no way you can have it all in your head and dynamically route based on what the cube and tonnage is on any given day."
The departmental merger should also enhance the responsibilities of the wholesaler's employee teams.
"Our warehouses have their own teams and we haven't really intermingled yet," he said. "We're working on getting these cross-functional teams and that's when we'll really see some efficiencies."
By giving drivers and mechanics more responsibility in regard to the vehicle inspection and purchasing process, Associated has reduced the workload of corporate employees without having to contract with a third-party company.
"We're empowering the drivers and mechanics to make decisions at their work level," Dewsnup said. "They're working on some pretty significant problem-solving.
"The theory behind that is [the team] knows what they need to get the job done and even if they make a mistake it's theirs and they'll make it work," he said.
Associated employees are also inspired to work efficiently because they receive a portion of whatever savings are accrued. "Now you hear an employee say, 'That's our money: let's be careful how we spend it.' "
Spartan Gets Onboard
GRAND RAPIDS, Mich. -- Spartan Stores here maintains that the key to transportation efficiencies lies in improved communication with its drivers.
By early next year, the wholesaler plans to install new computers in its trucks that will allow dispatchers to track and maintain continuous electronic communication with drivers at all times.
"We're looking at onboard communications with our drivers on a real-time basis," said Pete Lima, Spartan's transportation manager.
Drivers also will be able to access Spartan's mainframe for information on special orders or backhauls that they now receive on paper, he added.
The wholesaler's current onboard computers only allow transportation officials to examine trip data after a truck returns from its route. "They don't give us the capacity to communicate the way we'd like to with our drivers," Lima said.
Because the system will provide Spartan with immediate access to information keyed in by drivers during the course of their routes, including verification of load returns and fuel consumption rates, transportation officials will be able to monitor more accurately whether a truck will make its deliveries on time.
"If we go outside of our [delivery schedule] plan, we would have the ability to call our retailers and tell them we're going to be 15 minutes late," he added.
The new system will also enable the corporate office to electronically alert the driver to last-minute changes. Spartan sees upgrades like the new onboard computers, along with an increased use of cross-docking and direct-to-store shipments, as ultimately reducing the number of stops made on each truck route.
"We're hoping we'll see better utilization of our trucks than we are right now," he said. The wholesaler eventually expects to reduce the number of stops per route from its current average of five to a maximum of two or three stops.