The next time you stop at a take-out food chain or call for a late-night food delivery, you’ll be joining millions of Americans whose fast-paced schedules have made food “to go” one of the hottest segments of the industry. In fact, more restaurant meals are now served as take-outs rather than as sit-down meals, according to recent studies.
This demand consumes plenty of plastic to-go boxes, as well as tabletop paper products. Among the leading North American providers of these items is InnoWare Inc., (formerly Duni Americas) and it must have an efficient and responsive distribution network to be competitive.
The company provides solutions for any occasion when people consume food and drink, whether at home, in a restaurant, for take-away, at a hotel or within the food service industry. Distribution challenges have presented significant hurdles, some of which it has only recently cleared.
“Until last year our experience with outsourced providers of logistics services had not been very good,” explains Mikael Nordin, COO and President Americas. “At one point our overseas group had trouble with a primary logistics provider, and after we terminated that relationship, we went back to managing the process ourselves.”
He could see, however, that with all the competing demands for time and resources within the company, distribution management wasn’t getting the full attention it needed. For example, on-time delivery was in the low 80s, as was the company’s inventory accuracy rate.
“These rates were clearly not good enough for us to provide an acceptable level of customer satisfaction,” Nordin says. So the company searched again for a third-party logistics partner. “Initially we spoke with some of the larger players and they had the capability but not the flexibility we wanted.”
Finding The Right Partner
InnoWare serves a focused North American market, moving low-density shipments out of locations in Wisconsin and Georgia to locations across the U.S. The characteristics of its shipments were difficult to manage for consistent and efficient delivery. “We had customers buying off of two purchase orders and we wanted to get those down to one purchase order so we could combine shipments for savings,” Nordin says. “We found ourselves with high costs for LTL by weight.”
The trick was to find a third party that was large enough to cover North America and that could handle InnoWare’s volume and complex distribution patterns.
The company has plants in Menomonee Falls, WI, and Thomaston, GA, both of which ship product nationally. An independent consultant studied InnoWare distribution patterns and recommended that it locate primary distribution operations at Nashville, TN. Runners-up were Louisville, KY and Indianapolis, IN.
Subsequent changes in InnoWare’s customer mix have resulted in continuing direct distribution from Menomonee Falls, with Nashville serving as the distribution point for all products from Thomaston, as well as some from Menomonee Falls.
“Once we knew that Nashville was an optimum distribution point for us, we developed a finalist list of three providers that could potentially meet our needs,” Nordin says. “We then conducted an in-depth, objective analysis of each 3PL.” A scorecard system was employed to provide side-by-side comparisons of each company. Criteria included:
- Company interview;
- Executive management involvement;
- Cultural match;
- Financial value of budget presented;
- Bench strength (market presence in Nashville);
- Implementation time line;
- Overall service capability;
- Systems capability (TMS/WMS–Web);
- Transportation services value.
A perfect score was 27, and the contenders’ scores were 10, 18 and 23.
With the highest score, and based on the overall impression of Nordin and others at InnoWare, Ozburn-Hessey Logistics was chosen as the sole 3PL provider. “OH Logistics made a fantastic presentation,” says Nordin. “Plus, our one-on-one discussions were way above anything we’d had before.”
“We were thrilled to make the final cut,” says Fred Loeffel, senior vice president of business development, OH Logistics. “But we also knew that winning the business was just round one. We still had to prove ourselves in service.”
Customer Service Soars
To get the relationship started on the right path, InnoWare brought all of its sales people in for a kick-off meeting and meet the OH Logistics team. The meeting was actually held at the distribution center in Nashville so that the InnoWare group could see exactly where the products would be located.
This partnership transformed InnoWare’s operation from a manual distribution environment to a fully automated one in a very short time. InnoWare re-ports that OH Logistics provides the tools it needs to make informed decisions and to be more competitive.
OH Logistics is utilizing its WMS, Synapse, and Oracle Transportation Management System for the InnoWare operation. Both systems are web-enabled and provide visibility throughout the supply chain.
Shortly after the start of operations, InnoWare reported that the implementation was a success, that all shipments had been made and that its customers were happy.
Today, InnoWare is utilizing 135,000 square feet—with another 15,000 square feet of flex space available for its peak season—in the OH Logistics’ Nashville facility.
Critical performance indicators are way up and have reached levels that assure improved customer satisfaction for Inno-Ware. On-time delivery is now at 98 percent or better, and inventory accuracy is “very high” at 99.96 percent. Inventory availability has improved so that InnoWare’s fill rate is now 99.99 percent.
“Not only are we providing improved service to our customers,” says Nordin, “but internally our resources have been freed up. Previously our management was busy every day fighting fires and we had lots of expensive rush deliveries because we did not have good control of our inventory. That’s all changed and now we can focus on managing our supply chain and core business.”
Another benefit of better inventory control is that InnoWare has been able to reduce its overall DC space requirements while improving its inventory turn rate.
“I’d estimate our gains in customer service are at least 20 percent,” says Nordin. “We’ve always provided superior food service products, but now we are regarded as one of the best suppliers with on-time deliveries.
“In the final analysis,” says Nordin, “the performance provided by OH Logistics is way above what we were previously experiencing. There is no comparison between what our operations were before and the excellence we have achieved.”