OUTSOURCING YOUR OUTBOUND

MICHAEL GARRY

Some food distributors come to the conclusion that their core competency does not lie in transportation, so they outsource some or all of the process.

One large distributor, for example, decided to outsource part of its outbound deliveries to RUAN Transportation Management Systems, Des Moines, Iowa. RUAN, whose customers include Nash Finch, Fleming, Kroger and Marsh, manages the distributor's shipments, using mostly the distributor's trailers and some of its own. RUAN hires drivers, and maintains all equipment.

Among its technology resources, RUAN uses an onboard system from Xata, Burnsville, Minn., that manages an "activity-based payment" system for drivers, noted Alan Claghorn, RUAN's vice president, supply chain. Drivers' pay is based on the rate of pallet pickups and delivery, as reported by the drivers into the Xata system, with incentives built in. In addition, for distributors who don't have their own routing system, RUAN can offer one from Appian Logistics Software, Oklahoma City.

RUAN has also developed its own billing and reporting system called the Customer Information Management (CIM) system, hosted by RUAN on an AS/400. Using information downloaded from the Xata system, CIM pays drivers and does billing for the distributor. The system also generates reports such as costs per mile, costs per pallet, and stops per load.

After dropping off shipments to stores, RUAN also manages the backhaul pickup and delivery of products to the distributor's DC. "We strive to maximize backhaul revenue for our customers," said Claghorn. One way to do that is to consolidate salvage loads containing empty pallets, returns and paper bales. Another way is for this distributor's backhauls to be used to support other RUAN distributors' inbound shipping needs, he noted.