It Pays To Collaborate

Getting damage-free products from points A to B on-time and cheaper is a shipper’s dream. Collaborative distribution is making this a reality in the food industry.


Operating with certainty: Shippers are a lot savvier today. “There are numerous things they are demanding today that 10 years ago they weren’t,” reports Quinn. “For instance, they want to know that their brand is being put on quality equipment and that their products are being handled with integrity and security throughout the supply chain. They want more owner-operators, contracted, or co-owned assets in place rather than the old brokerage concept. They want to know that their orders will move on a predictable schedule to meet certain timeline benchmarks.”

If 3PLs are not offering these services, they will find themselves sitting on the sidelines, adds Quinn. “It is a powerful achievement for us to be able to say that we can tell you the day and sometimes within the hours that we will be at a particular location. We have approximately 125 truckloads a week sailing into all 48 states on a scheduled basis, so retailers or foodservice distributors trying to manage inventory investment and increase inventory turnover have a high degree of certainty that they will receive the goods they need when they need them.”

Customers want to experience the perfect order concept, Quinn explains. “Anyone trying to sell goods to a foodservice distributor, a club store or a retail grocer will tell you that you absolutely must deliver flawless execution for delivery times, for correctness of the order and for the appearance and temperature of the goods. All the information on the documentation must be correct. They don’t want anything that obstructs the flow of their goods to their customers. So to grow your business, you must achieve perfect execution.”

Big gains for smaller companies: Let’s face it, as a smaller food manufacturer or retailer, you want to be able to compete with larger truckload competitors on the shelf and you want that playing-ground environment to be as level as possible.

“Some of our customers target retailers who cannot buy truckload quantities of merchandise,” notes Kane. “So they are forced to ship in LTL quantities, which puts them at a cost disadvantage if they are not in a collaborative program. If these companies collaborate with other companies of their size, then deliveries to retailers result in a truckload delivery rather than an LTL delivery and they are no longer at a cost disadvantage. This is very significant to small- and medium-sized companies because food margins are razor-thin, meaning that supply-chain advantage or disadvantage significantly affects your bottom line.”

Some consolidation programs consider a truck to be full when it has sufficient weight and cube on it for shipments rated LTL to exceed the comparable truckload charge for the same destination, notes Johnson.

“But within GDCT, a full truck is one that has pallets filled all the way to the door. So if we have an order equal in size to those remaining pallet positions, we will include those extra pallets, thereby reducing the cost to our customers by achieving more trailer efficiency. This is an example of where a customer’s smaller shipment could achieve large savings,” says Johnson. “The smaller shipment will be rated based on truckload pricing—and not on LTL pricing—and the company with the larger order will not have to pay the full truckload rate. So it’s a win-win situation for everyone.”

He adds that customers can save about 25 percent over the LTL model. “This is very significant. Some customers tell us they save more in a month than the amount they pay for their warehouse storage bill.”

Improvements in cost and service: Providers of 3PL services report significantly higher service levels using the collaborated distribution or multi-vendor consolidation model, with industry on-time rates reporting 98 percent and higher, while the rate for LTL ranges from 68 percent to 85 percent.

“It’s about delivering the right product, on time, with no damages, and with transportation savings ranging from 20 percent to 40 percent, depending on the nature of your network,” reports Sanker. The company handles a few hundred million pounds of food products a year from facilities in six regions throughout the country.

Midwest Refrigerated Services operates four facilities in southern Wisconsin, serving food manufacturing customers in the upper Midwest region who flow product into these facilities. “On the outbound lane, we service clients in all 48 states,” reports Quinn. On the warehousing side of the business, annually Midwest handles about 1 billion pounds of frozen and refrigerated food products. On the freight side, it handles about one-half billion pounds of product.

Already have an account? Click here to Log in.

Enhance Your Experience.

When you register for FoodLogistics.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

OR

Complete the registration form.

Required
Required
Required
Required
Required
Required
Required
Required
Required
Required
Required