WEGMANS TESTS POSITIVE RECEIVING INITIATIVE TO BRAKE COSTS

DEENA AMATO-McCOY

NEW ORLEANS -- To enhance its carrier alliances, Wegmans Food Markets, Rochester, N.Y., is testing a positive receiving initiative to improve delivery, including dock time and communication with carriers.

Wegmans joined forces with Procter & Gamble Co., Cincinnati, two months ago to launch a test program to improve the receiving process using the Uniform Code Council's 128 bar code, said Tim Murphy, inbound logistics manager for Wegmans.

"Positive receiving will let us utilize advance shipping notices along with the pallet license plate -- the UCC-128 bar code technology," he said.

Murphy spoke at a seminar at the Distribution Conference here this month sponsored by the Food Marketing Institute, Washington.

"We are currently using advance ship notices and the UCC-128 code for inbound freight from P&G," said Murphy. "By using the technology, our carriers will reduce their dock time, which enhances our supply chain, and our accounting and merchandising groups will benefit from the ASNs because they will eliminate discrepancies and other issues related to inbound orders."

Wegmans is also planning to explore the use of the Internet for communication with carriers and to set up invoice payment programs with vendors, Murphy said at the conference.

The retailer began building its carrier alliances three years ago in order to control its freight expenses.

"We identified our inbound freight expenses to be $40 million annually, so we thought if we could reduce our freight expenses then we could reduce costs in our supply chain," said Murphy. "Since building our carrier alliances we have not had any increases in our inbound freight expenses."

Within the last three years, Murphy reported, the retailer took steps to reduce its carrier base. "In 1996 four [regionally based] carriers did 68% of Wegmans controlled inbound freight," Murphy said at the conference.

He added, "Since Wegmans is a major portion of our regionally based carriers' business, we see a greater commitment and dedication from them, rather than what we might have from a major carrier, because our business means a lot to them."

Through its carrier alliances, Wegmans has implemented programs that reduces freight costs to the retailer and its carriers.

The retailer's drop-trailer program allows carriers to leave their trailers in Wegmans' truck yard to be unloaded by Wegmans' employees. "The value to us is it reduces our freight costs," Murphy explained. "We arrange for the trailers to be dropped and in return we get reduced costs on our freight rates from the carrier."

Wegmans also established a carrier appointment performance program to decrease dock time and cut its unloading costs. "We operate 100% by appointment time so if we cannot get our carriers into our dock within an hour of their appointment time, we credit the carrier $75," he said.

Through this program the retailer is eliminating delay time and dock time the carriers add into their freight costs. "This program lets us dissect those factors out and let our carriers know that we will get them to the dock on time -- and if not, we take care of their delay time with $75," said Murphy.

Wegmans also charges carriers a penalty of $50 if they are not at the retailer's distribution center within an hour of their appointment time. "The program is a true sharing agreement -- it is a concept that shows our commitment to our carriers," he said.