Today's regional cold storage providers are thinking outside of the box-that is, beyond the four walls of their facilities.
These companies are not only using their extensive knowledge and expertise in their perspective regions to better service food manufacturers, but they are developing strategies to help their customers reduce costs and increase efficiencies throughout the supply chain. These tactics include network optimization, multi-vendor consolidation and rail access-services you might not expect from regional players.
Hanson Logistics is one such company. The St. Joseph, MI-based firm operates eight facilities in Michigan and Indiana, providing warehousing, transportation and consolidation services. Hanson recently began offering its customers network optimization through an agreement with Supply Chain Optimizers (SCO), Buffalo, NY and Toronto, Canada.
"Transportation costs account for 60 percent of every logistics dollar and fuel costs are driving that figure even higher," says Andrew Janson, the company's executive vice president of business development. "We are doing our best to react to our customers' needs and with the monumental increases in transportation costs, our customers are looking hard at rationalizing what facilities they should be in. Network optimization allows us to do an analysis of our locations relative to their plants and customers."
SCO is led by two highly experienced network modeling strategists, Jack Ampuja and Chris Ritz. Ampuja is 25-year industry veteran, having worked at American Can Co., Tambrands, Rich Products and Fisher Scientific. Ritz has 30 years of modeling experience working with large consumer packaged goods companies. SCO uses licensed modeling software, as well as other modeling platforms, to help its customers design optimal supply chain networks.
"The real issue for these manufacturers is what's my total freight if I move from one facility to another," says Jack Ampuja, president of SCO. "No one is going to make a change until they know the cost. When we work with companies such as Hanson, we load their freight costs into the system and generate a network analysis for their customers."
Hanson recently conducted network analyses for three frozen food manufacturers that are currently self distributing. "In addition to the cost of fuel, they're dealing with a number challenges, including increasing volume, rising insurance and driver costs and congestion within the U.S. highway infrastructure," says Janson. "They're not sure if they want to do it themselves any longer. It's no longer a sustainable business model for them. Once the analysis is complete, they will be able to decide what will be the most cost effective."
Another service that Hanson is offering is multi-vendor consolidation. Earlier this year, the company opened its Chicago Consolidation Center that operates a scheduled distribution system, picking orders from cross-docked and forward inventory and then consolidating LTL (less-than-truckload) shipments into a multi-vendor truckload. Food manufacturers benefit from a shared truckload rate and a scheduled delivery and retailer and foodservice receivers reduce dock congestion and stock outs.
"There is tremendous added-value in consolidating at Chicago-especially for companies that are currently shipping LTL," says Janson. For an average manufacturer, multi-vendor truckloads can save 30 percent in transportation costs compared to LTL. That can often make the difference between profit and loss in servicing all DCs in a retail or foodservice network," he adds.
"It's collaboration between manufacturers, retailers, wholesalers and carriers. We're trying to bring those parties together to lower overall supply chain costs. We see ourselves as the conduit between these parties," says Janson.