Managing Complexity While Reducing Costs

Food manufacturers and distributors are coping with the proliferation of SKUs, lack of supply chain visibility and increasing customer demands with technology.


Nardone: The ability for trading partners to exchange data, through all the capabilities associated with standard EDI transaction sets, has certainly helped with accurate order management and tracking. Systems that have been developed to manage continuous replenishment and vendor-managed inventory have also been a success.

Although they sound like old news, because they were first developed in the ’70s, the way UPC codes have been used in the supply chain over the last 15 years has also significantly improved operations, specifically their use in warehouses and transportation to scan and track inventories and product movement has helped inventory accuracy and order accuracy.

More recently, in at least some organizations, improvements in the use of point-of-sale data beyond category management applications, for activities like dynamic forecasting, is gaining traction. This further extension of visibility into inventory, right to the store shelf, is allowing companies to do a better job adjusting their supply chain response.

Chossek: When we first started five years ago, all we had was a financial accounting system that was the equivalent of Quickbooks, and the rest of our inventory management was being done with paper and pencil. Now, with Smart Turn, our on-demand enterprise and warehouse solution, we have software that’s more robust in its ability to handle inventory and kit products.

We’re using it for all warehouse management functions, incoming and outgoing, which formerly were handled with about five different pieces of software. It’s eliminated a significant amount of data entry, and given us significantly more information we can use to manage our business.

Ten years ago, we wouldn’t have been able to do what we’re doing the way that we’re doing it—the capital costs to maintain these kinds of software capabilities would have required a whole different way of operating. Whereas now, any start-up with a few smart people and a couple of good application service providers can be part of the game.

Gavigan: The big difference for us was when we rolled out our integrated ERP and WMS system from Retalix. Before that, we had a tough time just finding inventory in the warehouse.

Since then, we’ve added a bunch of other systems, some of which integrate very well with the enterprise and warehouse systems, others that are just add-on packages. We now use voice picking, sales automation, advanced purchasing and forecasting, Roadnet routing and MobileCast real-time vehicle tracking for our delivery trucks.

On the demand planning side, we used to do all ad hoc reporting. If a school was closing, we’d get a list of what they bought, how much by week, take that report and go into the purchasing system to try to tweak P.O.s to get the desired result.

Now all the demand and forecasting data is available online at the touch of a button. You go into the demand screen and can see four weeks forward from any point, for this year or last, or remove or add in a customer, to see the impact on demand.

Some of these applications have been surprising with their ROI. We’ve gotten phenomenal feedback on the Mobilecast application, for example, which lets our customer service people tell customers exactly where their delivery truck is at any minute, and from voice pick in the warehouse, which particularly for handling catchweight items has probably saved us two bodies on the night shift, while also helping to decrease mispicks.

Sieberg: Looking back over a 10-year horizon, various kinds of optimization tools have made the biggest difference for us, for example transportation optimization tools, and our E3 buying system. Because our average order size, even inbound, is very small—typically in the 3,500– to 5,000-pound range—we were historically shipping a lot of LTLs. With freight optimization tools we can build multi-stop truckloads, which has saved about 15 percent in freight costs.

More recently, over the past three and a half years, we’ve been centralizing certain functions with the help of these tools, because you no longer have to be in the same office to be able to look at the same things. We’ve gone to a matrix organizational structure, where all inventory management reports go to the vice president of inventory management, all transportation reports to the vice president of transportation, the same with warehouse, because we have visibility across all our DCs with tools like JDA Transportation, and our warehouse management system, which is the backbone.

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