Kane notes that a critical factor to success relies on convincing retailers that they won’t experience stock-outs. “In reality, weekly deliveries consolidated intelligently could fill the vast majority of the replenishing requirements for a typical retailer. Urgent deliveries, say in response to a sudden uptick in demand for a particular product, could be made via LTL. Visibility through the use of cargo tracking tools could offer retailers a comfort level that they have the right goods in the delivery pipeline at the right time.” The additional benefit of consolidated deliveries is that they make life on the receiving dock a lot less hectic. “The guys on the dock would much rather get one intelligently packed delivery a week than several scattered ones.”
EasyPass: Point A to point B: At Dallas-based Shippers Warehouse Inc., its multi-vendor consolidation subsidiary—Grocery Direct Consolidated Transportation (GDCT)—is a large and popular option for its CPG customers, says Ken Johnson, president and CEO. Of its 300 grocery retail CPG customers, over half of them use GDCT.
“We ship anywhere from 50 to 75 full truckloads a day of consolidated LTL shipments. GDCT handles about a half-billion pounds of refrigerated and ambient-temperature CPG shipments annually, serving primarily the Southeast, Southwest, and Midwest regions,” says Johnson. “Not only do our customers get the drastically reduced freight rates, but they get fewer damaged products as well because the freight is touched only one time. Shipments are loaded onto our trucks and are not handled again until they are unloaded at the consignee’s dock. Products simply go from point A to point B without ever crossing another freight dock in between—so shipments get to their destinations a lot quicker and with virtually no damages.”
Using GDCT, Shippers Warehouse consolidates loads utilizing the volumes from among all of its facilities. “The building that has the largest portion of freight to ship on one trailer is the building from which the full truckload will ship,” explains Johnson. Company trucks pick up orders from the company’s other facilities that need to deliver to that building for consolidation and final shipment.
Johnson cautions that some competitors, while touting consolidation and collaborative services, simply go to the LTL market with their huge volumes of freight and negotiate volume discounts with large LTL carriers. “These carriers pick up the freight and the warehouse bills their customers accordingly,” he says. “But in this model, shipments don’t end up on a truck going to the final destination. Instead, the truck heads back to a freight terminal, where shipments are cross-docked and consolidated further before they continue to the final destination. In some cases, they are cross-docked more than once.”
Single-retailer consolidated deliveries: Atlanta-based AmeriCold Logistics offers two consolidation programs, each of which delivers on a fixed schedule once or twice a week, depending on the destination. The traditional program consolidates products from multiple manufacturers and delivers to multiple retailers. Consolidation programs in the temperature-controlled niche are especially beneficial to food manufacturers who ship less-than-truckload shipments to customers.
“If you are delivering to large retailers like Publix or Wal-Mart, you will need some assistance to achieve density, and LTL programs can help you ride with other manufacturers in a multi-manufacturer to multi-retailer environment,” says Greg Bryan, executive vice president of transportation.
A second retailer-driven program consolidates products from multiple manufacturers going to one major food retailer, continues Bryan. “The trend in the industry shows that retailers are becoming much more engaged in this consolidation process,” he says. “They now want to work with us to be able to customize their deliveries so they can order from manufacturers at the layer level rather than at the pallet level. This helps them minimize inventory deliveries while receiving exactly the products they need on a week-in and week-out basis.” In either program, transportation savings can be 8 percent to 10 percent and inventory levels can be reduced by 10 percent to 30 percent, depending on the manufacturer.
This single-retailer model reduces inventory in the system and cuts cycle times from order to delivery, Bryan explains. “It also minimizes congestion on the receiver’s dock so instead of five different trucks arriving, they just get one in which there might be product from 20 different food manufacturers. So by building trucks to their specific delivery and inventory requirements, by maximizing cube, and by reducing the transportation cost, the unit costs are a lot less. Although the focus is on the unique needs of the retailer, we still have strong relationships with the manufacturers involved.”