Years ago, a major national bus service attracted weary travelers using a catchy tagline that went something like “leave the driving to us.”
That tagline could sum up what some food manufacturers are letting their transportation providers do for them today. Manufacturers of quality food products often need to ship just a few pallets of product to their retailer customers. If they ship LTL loads, they face expensive and sometimes poor service. And their retailer customers face intensified labor requirements once they receive the LTL deliveries.
Multi-vendor consolidation (MVC) programs group manufacturers such as these so that each of the participants can enjoy full truckload economies, higher fill rates, and consistent on-time delivery performance. These programs eliminate for manufacturers the logistics headaches involved in getting their products delivered punctually to their customers, who could be scattered throughout the country. And manufacturers’ retailer customers appreciate having to deal with fewer trucks with fuller loads. It’s been reported that MVC programs can save shippers up to 40 percent of their transportation costs over using traditional LTL services.
We checked in with three food manufacturers whose relationships with their respective MVC providers continue to be as successful as possible containing costs and guaranteeing on-time deliveries that maintain their high customer service levels. Two manufacturers are relatively new to their programs, and one has been involved with an MVC program for over 15 years.
Why Share Transportation With Competitors?
MVC programs have been around for some time, evolving from the delivery requirements of club stores a few decades back. Even so, the model in the food industry is still quite new and has been developing, along with advances in the technology supporting the model, over the past 10 years or so.
Because the concept in the industry is still somewhat new, with only about 10 percent to 15 percent of eligible companies participating, the idea of sharing freight with competitors might initially concern some food shippers.
At Sun-Maid Growers of California, John Slinkard reports that he has no concerns about sharing freight because most of Sun-Maid’s competition is from manufacturers who don’t warehouse in the regions Sun-Maid does. “But that aside, why would I want to pay higher freight costs—especially if my competitors participate in consolidation programs,” says Slinkard, vice president of supply chain and customer service for the Kingsburg, CA-based company. “I can understand some initial reservations but long-term, I don’t think it’s a valid concern at all.”
“Freight is a major component of our supply chain costs,” says John Sommavilla, president and CEO of Coles Quality Foods Inc. in Grand Rapids, MI. “As long as the quality of our products is not compromised in combining them with other vendors’ products, we don’t mind sharing freight costs in an MVC program, which has a track record for driving efficiencies.”
John Slawny reports that he has no concerns about sharing freight with competitors. “Anything we can do to improve our shipping efficiencies only improves our competitive position,” says Slawny, vice president of sales and marketing for Gehl Foods in Germantown, WI.
Staff Of Life
Coles Quality Foods, manufacturing frozen bread products, has been in an MVC program with Hanson Logistics in Hobart, IN, for about three years. This program caters to the needs of one of Coles’ large customers—a major international retailer—with specific and strict demands. For instance, the retailer requires 100-percent fill rates on weekly deliveries to its extensive national network of DCs. Coles delivers several hundred thousand cases to this customer annually through its MVC program.