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Multi-vendor consolidation, building mixed SKU truckloads to optimize transportation and order fulfillment, is an increasingly important service in the temperature-controlled supply chain.
The efficiencies possible through this collaborative effort are particularly attractive to mid-market frozen and refrigerated food manufacturers who must compete with larger, higher velocity multi-brand corporations, but whose order volumes for any given retail DC cannot (by themselves) fill a truckload.
Certainly, the mounting pressure to optimize (or eliminate) every step in the cold supply chain is due in large part to industry-wide operational issues. The volatile cost of energy, strained transportation capacity and long-term driver shortage usurps any notion that finished goods can simply be parceled out into the market as they roll off a distant production line.
The main reason for freight consolidation, however, lies in the fact that a growing number of retailers require it. For the large, multi-line CPG company, filling a multi-SKU PO means building a dedicated truckload of its own products. Not so with the mid-market producer. Even if these vendors could magically find a way to make LTL shipments of a single pallet inexpensive, there'll come a day when the retail DC receiver will not allot the appointment. LTL will become a form of non-compliance.
A Collaborative Effort
By its very nature, multi-vendor consolidation requires outsourcing the final mile, if not the entire logistics process. To be successful, a consolidation program needs the critical mass of collaborative trading partners, typically brought together by a 3PL or sophisticated PRW. Much more than pool distribution, a cooperative LTL program for sharing costs and consolidation is based on building truckloads to fill specific purchase orders for specific delivery points. Consolidation orders are picked from forward inventory or cross-docked from inbound truckloads. Pool distribution is push; consolidation is pull.