Supply Scan

AIPC Alters SYSCO Supplier Deal

American Italian Pasta Co., a producer and marketer of dry pasta, will end its mutually exclusive contract with Houston-based SYSCO Corp. for the supply of private-label pasta at the end of the year.

AIPC, Kansas City, MO, expects to continue to supply pasta to SYSCO as a non-exclusive qualified supplier, while pursuing the approximately 75 percent of the foodervice market not serviced by SYSCO.

Under the terms of the current SYSCO contract, AIPC has been precluded from pursuing other foodservice providers, who present a market opportunity of approximately 375 million pounds of pasta annually.

AIPC also will be free to service major restaurant and hotel chains not serviced by SYSCO, and to supply private-label and branded pasta into the foodservice channel.

"AIPC has had a strong, long-standing relationship with SYSCO and its operating companies and we are looking forward to continuing to be a key supplier to SYSCO," says Jim Fogarty, CEO of AIPC. "Going forward, we also will be able to provide all other major food distributors and multi-unit accounts with our high quality pasta products marketed under both private-label and AIPC's own brands.

Unsaleables Reduction Leaders Honored At Annual Conference

The Grocery Manufacturers Association (GMA) and the Food Marketing Institute (FMI) named H-E-B, Carolina Supply Chain Services (CSCS), Heinz U.S. Consumer Products and GENCO Damage Research as its 2006 Unsaleables Innovation Award winners at its Joint Industry Unsaleables Management Confer-ence held in Charleston, SC, last month.

"We congratulate all four companies on their achievement, and hope their experience and learnings will continue to benefit them and the entire CPG industry," said Patrick Walsh, FMI's senior director of industry relations. "The award winners recognized that the most successful unsaleables management practices analyze performance across divisions and take accountability for inefficiencies. Minimizing unsaleables in the supply chain remains a shared process, which is why we value the outcomes celebrated through this award."

H-E-B and CSCS implemented programs that changed the processes, procedures, private-label packaging and policy that were detrimental to the supply chain, ultimately reducing unsaleables by 50 percent as a percentage of sales. H-E-B tracked the reductions in unsaleables across multiple divisions and found some performed better than others.

Similarly, Heinz worked with GENCO to identify root causes of unsaleables, instituting an aggressive goal to reduce them by 40 percent. In the first year, Heinz trimmed unsaleables by 23 percent and projected an additional 25 percent reduction to meet its goal in just two years. "Project MUDA," or "waste" in Japanese, is a multi-dimensional operation that impacts all Heinz projects.

"GMA and FMI have consistently supported and promoted industry work that recognizes effective supply chain processes," says Karin Croft, senior director of industry affairs at GMA. "H-E-B and Heinz saw initial cost benefits, but the most significant impact was adopting missions to eliminate unsaleables in their corporate strategies."

Pepsi To Distribute Ocean Spray

Ocean Spray and PepsiCo announced a long-term strategic alliance in which Pepsi-Cola North America will market, bottle and distribute single-serve cranberry juice products in the United States and Canada under the Ocean Spray name.

The agreement also includes opportunities to develop new product innovations across multiple trade channels.

"This is a chance for both PepsiCo and Ocean Spray to turn up the dialogue on the health benefits of cranberries," says Dawn Hudson, president and CEO, Pepsi-Cola North America. "Over the past several years, we've built successful, mutually beneficial partnerships with strong brands like Lipton and Starbucks, and now we plan to work side by side with Ocean Spray to create a major healthy refreshment business focused on cranberries. When people think of cranberries, they think of Ocean Spray."

"As the Ocean Spray cooperative moves to build its brand, we are seeking out alliances to reach consumers more broadly and powerfully than ever before," says Randy Papadellis, president and CEO of Ocean Spray.

"We're thrilled to re-establish our partnership with Pepsi and begin a fruitful, long-lived relationship with the world's premier beverage and snack company."

Integration of single-serve juices into the Pepsi system will begin in 2007.

Food Industry M&A Activity Continues To Decline

In 2005, 323 mergers and acquisitions were completed in the food industry—and an additional 75 were announced, but not completed, by the end of the year, according to Food Business Mergers & Acquisitions 2005, the annual listing from The Food Institute.

Activity was down 8 percent from 2004 and down a significant 49 percent from the 637 transactions recorded in 2000.

"Activity may have declined compared to previous years, but there were a number of significant transactions in several categories. Examination of certain deals in the confectioners, restaurants, retailers, food processors and foodservice distributors categories illustrates the use of acquisitions to not only strengthen a company's current operations, but also to mark their entrance into new areas of business," says Danielle Breuel, research and education director at the Elmwood Park, NJ-based trade association, which has been tracking food industry M&A activity for 25 years. "Meanwhile, divestitures enabled certain firms to exit underperforming areas."

Ryder Teams With Teletrac, Cingular To Create Smart Trucks

Ryder System Inc. has teamed up with Teletrac and Cingular Wireless to launch RydeSmart, an onboard telematics technology designed to improve vehicle uptime, driver efficiency, highway safety and cargo security, and real-time tracking of customer fleet operations.

Following an initial pilot underway in a limited geographic area, RydeSmart will be expanded to customers across North America through 2007. The pilot includes more than 5,000 vehicles assigned to customers in a range of industries, including food and beverage.

RydeSmart leverages Ryder's fleet of more than 160,000 vehicles with Teletrac's global positioning system (GPS), wireless data and micro-chip technologies, and Cingular's nationwide wireless coverage area of 13,000 cities and towns, and along 40,000 miles of major highways.

RydeSmart is a compact hardware and software unit that is installed into a truck and connected to the vehicle's computer and diagnostics systems. The unit continuously monitors the vehicle's location, mileage speed, performance and diagnostic data. That information is communicated every 15 minutes and on-demand, as necessary, via a secure connection with the Cingular network to fleet operators' desktops.

GPS also enables RydeSmart to help customers locate vehicles in case of emergency or to assign sudden pick-ups and deliveries.

LiftExchange Reduces Warehouse Equipment Costs

Food retailers, wholesalers, distributors and suppliers can reduce equipment costs and improve management efficiency through LiftExchange, a new program developed by the Food Marketing Institute (FMI), North American Perishable Agricultural Receivers (NAPAR) and LiftExchange Group Inc.

The program covers the full range of equipment and supplies used in warehouse distribution, including lift trucks, pallet jacks, forks, tires, seats, lights, batteries and chargers, battery-handling equipment, propane tanks, shrink wrap and racking systems.

LiftExchange offers members substantial discounts from the leading suppliers of these products. There are no startup costs or participation fees for FMI and NAPAR members.

The program also complements FMI's highly regarded FoodFleetXchange buying program for commercial trucking "Most important, LiftExchange enables companies to assess their equipment needs and use based on accurate, real-time data and management reports," says Tim Hammonds, president and CEO of the Washington-based FMI. "Members can perform cost/benefit analyses on equipment that will save them thousands and, in some cases, millions of dollars."

Joe Ciolino, president and CEO of LiftExchange Group, says, "FMI and NAPAR members have some of the largest materials-handling fleets in the country. Their participation in this robust purchasing program will enhance its aggregated buying power.

Our business model shows savings from 15 percent to 45 percent—primarily through more efficient equipment management."

For example, the program:

  • Alerts retailers when their systems surpass their useful life, which could potentially decrease productivity, generate excessive maintenance costs and contribute to high-priced emergency repairs;
  • Ensures that companies take full advantage of product warranties;
  • Calculates how much equipment companies need so they do not overspend;
  • Helps companies use the best and most cost-effective system for the job;
  • Benchmarks the cost of equipment per hour of operation;
  • Checks every invoice to ensure the amount charged is correct and companies are not double-billed;
  • Provides optimal pricing on quality-assured parts and material-handling equipment.

Firms, including the Kellogg Co., Battle Creek, MI, and its Keebler subsidiary; ProPak Logistics, Fort Smith, AR; and Source Interlink Cos., Bonita Springs, FL, are already benefiting from LiftExchange as program participants.

LiftExchange offers services in a menu format. Participants select those features that fit their operations. The program, for example, can accommodate companies that outsource their maintenance to a third party.

For more information, contact Joe Ciolino (joeciolino@comcast.net).

Walgreens Recruits Disabled Employees For New DC

Drugstore chain Walgreens has launched an initiative to hire people with disabilities at its new distribution center in Anderson, SC, and is recruiting through a specially designed Web site.

Walgreensoutreach.com describes jobs available at the Walgreens distribution center and is accessible by people with sensory, physical and cognitive disabilities.

The center has begun pre-hire training and will open in 2007. Initially, Walgreens will hire more than 200 employees, with plans to ramp up to more than 600 employees.

The company's goal is to have at least one-third of the workforce consist of employees with disabilities. This "real work for real pay" environment will be competitive employment in which performance standards must be maintained, according to Walgreens. Job openings include a number of management positions.

Walgreensoutreach.com provides information to help potential employees understand what work will be like at the distribution center and incorporates audio messages, photos, video and a large-print text option to depict jobs and worklife at Anderson. It is designed to be accessible to blind and low-vision individuals who use screen reader technology.

Under the jobs section, videos show employees performing jobs, and text describes what the workers are doing. Prospective employees unsure if they can perform the essential job functions can take a self-quiz to get an idea of the tasks involved. From the same page, photos show an employee arriving at work and going through the daily routine—going to a locker, storing lunch, walking to a work station, taking a break and ending the day.

For potential employees considering relocating to the Anderson area, the site also has information about Walgreens' partnership with 13 local disability agencies. It also addresses concerns such as transportation, housing and the impact of gainful employment on Medicaid, SSI or SSDI benefits.

"We know this requires more than a ‘build it and they will come' attitude to be successful," says Randy Lewis, Walgreens' senior vice president of distribution and logistics, who has a son with autism. "Our local partners and statewide officials have worked tirelessly in setting up a support network to make this outreach with the disability community a success."

Walgreens worked with The Paciello Group of Nashua, NH, to make Walgreensoutreach.com accessible for people with disabilities and to meet the international Web Content Accessibility Guidelines of the World Wide Web Consortium.

Intermodal: A Solution To Nation's Transportation Woes?

Intermodalism can help solve the nation's transportation problems, according to testimony delivered to the U.S. House of Representatives' Committee on Transportation and Infrastructure last month.

Patrick Sherry, co-director of the National Center for Intermodal Transportation and a professor at the Intermodal Transportation Institute at the University of Denver, addressed the committee and identified five major challenges facing transportation.

Sherry told the panel that congestion, competition, capacity, conservation and connectivity are the primary challenges facing the transportation infrastructure and identified intermodal connectivity as the solution to the nation's transportation problems.

"Without a national transportation policy with incentives to establish a seamless intermodal transportation system, which would maximize interconnectedness while optimizing the cost efficiencies of the various modes of transportation, these problems will only further stress the U.S. infrastructure in the years ahead," he testified. Sherry cited the following problems facing the nation:

Congestion: "Population concentration and increasing consumption of goods from Asia will continue to create pressure on the nation's transportation system," he said. "This situation will only get worse as projections for the next 20 years suggest a 40 percent increase in population and a 103 percent increase in transportation activity. Data provided by the USDOT also predicts the numbers of containers utilized in the already overburdened area of southern California alone to increase by 350 percent in the near future."

Conservation: "Rising fuel costs have once again gotten the nation's attention. Clearly, it is most advantageous to move cars and trucks off the roads to conserve fuel, and doing so will require policies and incentives to connect buses and light rail to airports for the movement of people and to move freight off the trucks and onto the more fuel-efficient railroads."

Capacity: "Intermodal freight traffic is expected to increase by about 6 percent a year, which means that productivity at our container terminals needs to improve drastically. Major ports like Singapore, Hong Kong and Rotterdam are able to move well over 30 containers an hour while our best systems are only capable of handling two-thirds that number. Increasing investments in new technologies will help increase productivity and operations within U.S. intermodal and port facilities and free up more capacity."

Competition: "Our transportation infrastructure contributes greatly to our national economic competitiveness. However, developing economies from Asia and around the world are building intermodal systems and increasing the rate of their economic growth. If the U.S. is to maintain its competitive edge in the global economy, it will have to enhance the economic advantages of its transportation infrastructure."

Connectivity: "The intermodal solution utilizes modal connectivity to decrease congestion, while increasing fuel conservation, infrastructure capacity and competition. However, our nation's transportation department plans and funding are lagging behind our 21st Century transportation requirements."

A recent study by NCIT on state departments of transportation (DOTs) indicated that since the early 1990s, intermodalism and intermodal planning has improved, but may now be leveling off. The study showed that while many state DOTs are more attuned to intermodal issues, as many as 20 states still did not have an office devoted to intermodal freight planning, and, among those that did, the staff was largely filled with highway engineers, and a majority of the funding still went to highway projects.

RFIP Update:RPCC Embarks on An RFID Study

What do you do with an RFID tag once it's reached its final destination? That's a dilemma facing retailers like Wal-Mart, which are requiring their suppliers to slap RFID tags onto their pallets. While RFID may offer many supply chain benefits, the millions of RFID tags that will eventually wind up in landfills could lead to environmental problems.

The Reusable Pallet and Container Coalition (RPCC) is working on a potentially ground-breaking solution that will not only address environmental concerns but will also allow companies to get a better ROI on their RFID investment—by using multiple-use tags on reusable shipping containers.

"We want to establish the business case for RFID and multi-use tags as it applies to reusable transport packaging," says Jeanie Johnson, executive director of the RPCC, a Washington-based trade association of companies that manufacture reusable pallets and containers and manage pooling services to users and distributors of these products.

"The problem is that companies have been using single-use RFID tags on one-way packaging, such as cardboard, and the tags are just thrown away," says Johnson. "Our project assumption is that reusable transport packaging will be the real enabler for the success of RFID technology—especially in the food industry, where perishables are often shipped in reusable plastic containers (RPCs)."

Although only about 3 percent of product in the food industry is shipped via reusable transport packaging, the savings garnered by reusing shipping materials as well as reusable RFID tags could be enormous, Johnson points out. "Most of the field tests in the U.S. have been done on one-way transport, but it's certainly much more economical and better for the environment to get reuse tags and containers. We're way behind Europe in this area."

The RPCC will begin a three-phase project to test its theory, starting with lab tests at a university this month to examine the durability of multi-use tags when used with reusable containers.

Johnson says the organization will test five to seven different tags, which are all Electronic Product Code (EPC) compliant. "The tags will be tested under simulated conditions, including placement, vibrations, wet, cooling—the harshest kinds of environment that a multi-use tag would have to go through."

Once the lab tests are completed, which should take about a month, the RPCC will develop an economic model for integrating the RFID tags with reusable transport packaging.

"We're going to compare the cost of one-way RFID tags on expendable packaging vs. multi-use tags on reusable transport packaging," according to Johnson.

"If these two phases give us the outcome we anticipate, we'll do a field test this fall using RFID to track RPCs with a major shipper/grower and a major retailer. We'll use produce because it is subject to the harshest conditions." she says, adding "asset visibility will be greatly enhanced throughout the supply chain if we can enable these multi-use tags throughout the supply chain."

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