The client is a major grower, packager and seller of produce. The company grows a variety of tomatoes in greenhouses in Arizona and has five production factories in three states of Central Mexico, with distribution throughout North America.
Goals and Objectives:
The client’s goal was to gain control over an inefficient supply chain. The client wanted a forward distribution model that better aligned itself geographically with its current customer base and positioned it for growth into adjoining regional markets. The client was also looking for a comprehensive inventory management and quality control program that would eliminate growing shrink rates and allow for less production lead-time and held volumes.
Major challenges included:
- Consistently late inbound and outbound shipments.
- Dock scheduling.
- Inefficient routing / Geographic challenges.
- Rising freight costs.
- Poor data integrity as related to carrier service metrics.
- Lack of an inventory management and quality control program.
The client chose to collaborate with SpartanNash Logistics (formerly BRT) because of its ability to provide strategic assistance and unique solutions that meet ongoing growth as it happens, at an affordable price.
SpartanNash Logistics has stepped in and adapted to all business imperatives with a variety of warehousing options and inventory control services. Now the client has plenty of flexible storage and keeps its perishable inventory in check to avoid overstocking and waste. SpartanNash Logistics remains responsible for the flex and ride-share transportation of finished products to customers in a geographically efficient manner.
With SpartanNash Logistics’ exceptional services, the client continues to expand its product lines into father reaching areas while still maintaining its high quality, low price motto.
The client’s current transportation model involved sending full truckloads with multiple deliveries from the point of product origin in Laredo, TX to destinations in the Upper Midwest and East. With the introduction of ELDs in 2018, this model was exceptionally cost and time inefficient. On-time deliveries to the end customer had dropped to unacceptable levels while the product cost per case had risen significantly due to the excessive miles driven and the drop / layover added costs.
SpartanNash Logistics proposed using Pool Point, also known as hub and spoke, and MSTL (Multi-Stop Truck Load) distribution models. The product would arrive into SpartanNash Logistics’ Indianapolis facility in TL / bulk quantities and be piece picked and shipped to the end customer in two ways.
- The product is transported via SpartanNash Logistics’ refrigerated carrier partners on existing routes via a “ride-share” program.
- New “dedicated” routes are created to pool smaller quantities of product with similar landing geographies.
Both options allow multiple customers to be delivered on the same day during optimal business hours while ensuring that the truck and driver can return to the pool point warehouse to be ready for more work the following day. These options eliminated wasted, empty miles and extra-added accessorial costs.
SpartanNash Logistics would also direct and organize all inbound and outbound dock scheduling duties for the client, both client delivered raw product into the Indianapolis warehouse, and end customer delivery appointments based on current inventory levels and customer requests.
Poor Customer Service Data Integrity:
The client was having difficulty gathering accurate data relating to transportation costs, product quality, inventory levels and important customer service metrics. This data is used to help make key business decisions through predictive analytics.
SpartanNash Logistics, through a discovery process, determined that most of the data integrity issues were caused by human error, lack of accountability, and no viable standard operating procedures.
SpartanNash Logistics composed a comprehensive system of processes and key performance indicators, reviewed weekly, that stress the completeness, consistency and timeliness of data gathering including:
- Cost per case.
- Cost per mile.
- On-time delivery to end customer.
- Average transit days.
- Pallets in / out.
- Quality assurance statistics.
- Labor costs.
- Dumped product.
- Re-packed product.
- Miscellaneous warehouse fees (wrapping, admin, piece pick, etc.).
This data integrity program allows the client’s sales staff to accurately forecast costs per region for potential customers and removed any “guess work” that was present under the previous model.
Inventory Management / Warehousing:
The client was battling both overstock and stockout issues in their current “factory to end customer” model resulting in product shrink and lost sales. Additionally, the inefficiency of the transportation model caused consistently late deliveries and higher costs.
SpartanNash Logistics proposed a comprehensive inventory control and warehousing model that utilized key components, which eliminated the pain points experienced including:
- A state of the art Warehouse Management System (WMS) that allowed real time data on Lot Traceability, Reporting and allowed for E-Commerce capabilities.
- Full QA inspection and testing at the time of receiving.
- Daily physical inventories / cycle counts.
- Pick, Pack, & Ship.
- Case Picking.
- Private Labelling opportunities.
- Kitting – Repack – Sub Assembly.
- Access to ripening rooms.
Developed processes and KPI metrics that are reviewed weekly. These are accurate measurements showing how the supply chain process is functioning and provides a base for both parties to help identify where any discrepancies have taken root, and allow for suggested improvements.
- Productivity / Cost.
- Shipment Accuracy.
- On Time Service.
- Quality Assurance.
- Innovation and Responsiveness.
- FSMA / USDA Compliance.
- Inventory Levels / Cycle
Step 1: Collaboration Qualification
- SpartanNash Logistics evaluated the client to determine if there were any hard or soft constraints that would have prevented the companies from collaboration, none were found. Both companies ship palletized produce via refrigerated road transportation (LTL and TL). The shipment size, frequency and competitive considerations were also agreeable.
Step 2: Savings Analysis
- SpartanNash Logistics quantified the potential savings for the client through collaboration. The savings will occur through multi-stop truckload and pool point distribution, inventory management and quality assurance programs.
Step 3: Implementation
- SpartanNash Logistics conducted a thorough route optimization exercise including its current outbound business and executed a geographic based “ride-share” program that combined current shipment quantities and proposed weekly demand to guarantee shorter delivery windows from the time of harvest, higher on-time delivery standards to the end customer, less need for on hand inventory and the reduction in product shrink. This model also allowed the potential for future growth into adjacent markets.