SARA LEE PLANS TO CROSS-DOCK FROZEN PIES

JOHN KAROLEFSKI

SCOTTSDALE, Ariz. -- Sara Lee Bakery is planning to cross-dock its frozen pies with 15 to 20 retailers for the fourth-quarter holiday season. "It's a tremendous peak period. We felt that, given the volume of business, [cross-docking] offered a great opportunity," said Vic Stajduhar, director of ECR initiatives at Sara Lee Bakery, Chicago. "Also, we're looking for other opportunities to use cross-docking to deliver value-added programs to our customers," he said, "in addition to our pie-season business." He spoke here at an information systems and logistics-distribution conference sponsored by the Grocery Manufacturers of America. He announced these plans as part of a presentation on his company's experience with cross-docking in a test with five customers. "These types of programs just don't happen," he said. "We've already written and begun to execute a 21-step program for this pie season. We've begun planning earlier."

A "customer request" led to Sara Lee embarking on cross-docking in the first place, according to Stajduhar, who explained that the practice seemed suited to help the company through its busy time of the year. He said Sara Lee defines cross-docking as "a custom-designed pallet configuration of seasonal pies that eliminates storage and handling costs at our customer's warehouses and can move product directly to the store shelves."

In its test of cross-docking, Sara Lee offered its program to 12 high-volume customers. Some supported the pie program in the past, and others didn't. The customers varied geographically and strategically, he said, and included self-distributing retailers and wholesalers. Ultimately, five companies agreed to the test.

The goals for Sara Lee, he added, were to grow the frozen baked goods business, gain increased distribution, differentiate the company from the competition and take costs out of the total system. In the program, customers selected up to four stockkeeping units per pallet in full- or half-full pallet configurations, according to Stajduhar. Manual billing by the case was offered, and bar coding was not used. The costs for Sara Lee included storage, handling in the warehouse and transportation, repalletize-stretchwrap operations and freight to the customer. As a result of the test, he said, Sara Lee learned that understanding customers' needs is essential. Also, effective communication is "key" among customer, sales, MIS and operations. "All the players had to be brought into the loop and be kept there," he said. Understanding costs is also "a must," he said. "We learned that we had to embrace a total delivered cost mentality. The objective is to drive costs out."

According to Stajduhar, the test affected Sara Lee management in several ways. For example, logistics is now viewed more subjectively than it ever has. "We are now looking at ways to use logistics to differentiate ourselves based on our service offerings, in addition to our products," he said. Stajduhar said technology needs to be a more important part of cross-docking in the future.

"This was a low-tech study," he said. "But to gain more efficiencies for Sara Lee and its customers, we realize that technology will play a more significant role in future programs. "For example, from Sara Lee's perspective, we manually invoiced the module orders we received in the past. We're now looking at automating that process," he said.