Here’s the formula: LTL + MCV with JIT = Food Logistics.
If a full truckload of stereo speakers runs late, that’s bad. Retailers and customers will be disappointed. If a load of fresh or packaged perishable food arrives late, it may get reclassified as garbage. The potential retail value just morphed into a tipping fee at the landfill. YOU failed to deliver, and the customer is not going to pay to get rid of it.
One solution transport companies provide is to simply pay the extra fees for Less Than Truckload (LTL) shipping to deliver perishables on time in the expected condition, but retain less profit. Time and handling are the enemies of all foodstuffs, but a better solution is quickly gaining popularity and it’s called a Multi-vendor consolidation (MVC) program!
The MVC evolved with the delivery requirements of club stores a few decades back, but applications in the food industry and the technology supporting the model, is still quite recent.
In Food Logistics, April Terreri writes “Years ago, a major national bus service attracted weary travelers using a catchy tagline that went something like “leave the driving to us.” That tagline could sum up what some food manufacturers are letting their MCV’s do for them today.” Food products often need to ship in quantities of just a few pallets to their retailer customers. In addition to LTL costs and lower service quality, their retailer customers face intensified labor requirements once they receive the small deliveries.
In Food Logistics, April Terreri writes “Years ago, a major national bus service attracted weary travelers using a catchy tagline that went something like “leave the driving to us.” That tagline could sum up what some food manufacturers are letting their MCV’s do for them today.” Food products often need to ship in quantities of just a few pallets to their retailer customers. In addition to LTL costs and lower service quality, their retailer customers face intensified labor requirements once they receive the small deliveries.
MVC programs group manufacturers with similar needs so each can enjoy full truckload economies, higher fill rates, and consistent on-time deliveries. This eliminates individual logistics headaches involved timely delivery to wide spread customers. Retailer customers then deal with fewer trucks with fuller loads. MVC program sources say shippers save up to 40% in transportation costs over LTL services. Still, only about 10 to 15 percent of eligible companies participate. The idea of sharing freight with competitors seems to concern some food shippers.
At Sun-Maid Growers, John Slinkard reports that he has no concerns about sharing freight. Sun-Maid’s competition is from manufacturers who don’t warehouse in the regions Sun-Maid does. “But that aside, why would I want to pay higher freight costs—especially if my competitors participate in consolidation programs,” says Slinkard, “I can understand some initial reservations but long-term, I don’t think it’s a valid concern at all.”
“Freight is a major component of our supply chain costs,” says John Sommavilla, president and CEO of Coles Quality Foods Inc. “As long as the quality of our products is not compromised in combining them with other vendors’ products, we don’t mind sharing freight costs in an MVC program, which has a track record for driving efficiencies.”
When evaluating an MCV, choose a major player in the region you wish to serve, thereby increasing likelihood for consolidation to occur, advises Slinkard. “It’s the last leg of the journey that has the least amount of weight and is the most expensive. So it helps to be close to the retailers you are serving so you can keep down the costs of that last leg.”
“Go for it,” encourages Slinkard. “If you don’t participate, your competitors will, and you will only hurt yourself by not taking advantage of the benefits.”
You can do this!
By K.B. Elliott
K. B. Elliott writes freelance for LogisticsJobSite.com. Working various logistical positions in the Detroit area for over 30 years gives him a unique perspective on the process. More of his blogs are at LogisticsJobSiteblog.com, and please check the postings for jobs in nearly any industry at Nexxt.
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