The question, of course, is “How can I cut days out of the supply chain?” he says. “The first step involves buying patterns. Typically, the product has been bought in bulk, like truckloads of bananas. However, there’s a trend towards buying less quantities, but more frequently, maybe 4 or 5 times a week.”
That requires changes in the transportation piece of the supply chain, which must not only handle more frequent deliveries, but make sure costs are kept in check along the way, he continues.
Next is the distribution part. “Ultimately, you’re going to have to get product through your DC in a day or two; not receive it, put it away, and accumulate a six- or seven-day turn at your DC. That means you need to think about whether you’re going to cross-dock it through a DC, or maybe use a regional DC to flow product through.”
Given the advantages, particularly for perishable goods, the flow model is one that Mader says has been steadily getting more attention in the food and grocery sector. “We’re definitely seeing a push this way. A lot more customers have been talking to us about this over the past 12 to 18 months,” says Mader.
“If you can take a day or more out of inventory, reduce labor costs at the DC, and have more product available that also happens to be fresher, then you can free up a lot more working capital,” he adds. The trick is to coordinate changes to the purchasing, transportation, and distribution functions so they happen simultaneously, which is why Manhattan Associates has remained focused on providing an integrated transportation/warehousing platform that makes the flow model possible, says Mader.
One solution that specifically addresses the needs of the food industry is Manhattan Associates’ Total Cost to Serve software, which allows users to see how costs are incurred and allocated by item for each supply chain location, resulting in better sourcing, routing, and fulfillment decisions. Additionally, the software offers a unique predictive ability to estimate costs before purchase orders are approved.
Intelleflex, a provider of on-demand visibility solutions, is also concentrating on food safety and helping to maintain the integrity of perishable products.
“The number of recalls and the growing volume of imported food, combined with the requirements of the Food Safety Modernization Act, are causing the entire cold chain to rethink its approach to food safety,” says Kevin Payne, senior director of marketing. “Intelleflex is finding that growers, distributors, and retailers alike are increasingly interested in using new technology to monitor and manage the condition of products throughout the cold chain and to improve track and trace capabilities. Pallet-level temperature monitoring can provide significant benefits by reducing spoilage and identifying at-risk products as they move from the grower to the retailer.”
Better cold chain monitoring and management also goes straight to the bottom line. By some estimates, up to one-third of cold chain shipments do not sell at full value because of transportation and logistics inefficiencies.
According to Payne, “Growers, packers, shippers, and retail grocers face increasing costs due to lack of proper temperature controls throughout the cold chain and the resulting increase in shrink. This risk manifests itself in decreased margins and profitability, as well as increased costs for insurance and financing. By using on-demand temperature monitoring to reduce shrink and proactively prevent losses, cold chain companies can not only increase margins, but also potentially further reduce costs by reducing insurance risks and interest rates on financing.”
In early April, Intelleflex introduced several new products to its portfolio. The CMR-6100 is described as “the first fully integrated cellular-enabled, GPS-equipped multi-protocol RFID reader with support for the ISO Class 3 battery assisted passive and EPCglobal C1G2 passive standards.” Intelleflex also launched its ZEST Data Services, “a cloud-based repository for aggregating, warehousing, and sharing information across the supply chain, which also facilitates on-demand access to actionable data for improved supply chain operations to provide a complete picture of data spanning the entire supply chain.”