Transformation from less than carload distribution to integrated distribution
through the transformation from less than carload distribution to integrated distribution, the solution sales of perishable food provider chef solutions reduced costs and improved customer satisfaction
no matter what your company's name is, you'd better make sure that your customers are really satisfied with your products and logistics services. This is why Timothy Egan, the director of integrated logistics of chef solutions, has gone through hardships to redesign the logistics solutions of the whole company. Next, I will introduce the distribution network of the company
"our goal is to turn a process that has not been carefully designed into a process that has been carefully designed in order to better serve customers." He said
it is no exaggeration to say that the products of chef solutions are very perishable. That's because the company is a leading supplier of fresh food and specially baked food to retailers and the food service industry
it relies on Orval Kent food store, pennant food store and i&k distributors to survive. The company produces and distributes fresh sliced fruits, frozen mashed potatoes, salads and side dishes sold in delis. It also specializes in fluffy pies, frozen dough, biscuits, crescent shaped bread, cinnamon rings, muffins, and baked goods with private labels and many company trademarks
the company has 12 facilities in North America and has about 2500 employees. The annual revenue is about 600million US dollars, and the total logistics cost is about 30million US dollars
for chef solutions, improving distribution is actually a matter of survival, not just improving efficiency. The company has recently experienced a serious performance decline, and needs to find ways to reduce costs and better serve customers, including sam's club, red locker, Boston markets and dunkin'donuts. In addition, there are thousands of restaurants, delis and grocery storesLike many other companies that rely on transportation, chef solutions was also seriously affected by the terrorist attacks on September 11, 2001. At that time, Lufthansa in Germany owned this company, and Airbus also invested in chef solutions in order to obtain practical benefits
Lufthansa's investment has been partially in place, but on September 11, everything changed. "This has dealt a serious blow to many companies, and those companies engaged in aviation business who welcome you to come to consult have also been dealt a great blow." Egan said. "So in the last period of 2003, Lufthansa put our company on the status of sale."
questor partner fund is a subsidiary of estor management company, which will have more factories in the future. It obtained chef solutions in June, 2004. The company, located in Southfield, Michigan, is an expert in revitalizing companies with poor business performance. Questor management has invested in many companies with operating difficulties or low performance. New owners of chef solutions need new attitudes and ideas
original intention of using integrated distribution
an idea that can improve performance is to overhaul the distribution system of food suppliers, because this system has become increasingly fragile with the expansion of scale in the past 50 years. By analyzing the operation of distribution and suggestions for improvement, chef solutions turned to lanter, a subsidiary of ozburn hessey, a third-party logistics provider in Nashville, Tennessee, responsible for transportation and distribution services. Egan said, "we held a joint meeting, and I stated the problems that need their help to solve, and they also stated their solutions to this problem." After carefully discussing the best solutions of other major food distributors, lanter's recommendation is to transform the scattered logistics distribution mode of chef solutions into centralized distribution
in this era of rising logistics costs, consolidation and distribution is a very popular concept. Consolidation and distribution allows companies to reduce costs by transporting the company's truck less than carload goods through the recycled materials collected in the domestic market to replace the imported materials and transport them with the appropriate goods of other companies in the same target geographical area. Lanter provides consolidation and distribution services, as well as less than carload, vehicle, warehousing and consolidated transportation support services
lanter's specialty is to transport temperature controlled food to grocer customers who are most important to chef solution. "When you are transporting perishable food products, such work is crucial."
plan a plan
it needs careful planning to transform the key parts of chef solution's complex, time sensitive and widely distributed transportation network into a centralized distribution mode. Chef solutions will operate 12 production sites across North America, and will be divided by function and location. For example, the company specializes in bread and puffed food in Thorofare, New Jersey, fruit products in Linares, Mexico, and cakes and doughnuts in rogerst, New York, and Dalton, Georgia
it takes months of analysis time to match the company's geographical location and products with the right transporters and routes. Chef solution also keeps in touch with suppliers all over the world who sell a variety of different devices to it. "We have many suppliers in Europe. For example, the ingredients of some products include unprocessed olive oil imported from Italy," Egan said. "Due to the seasonality of fruits and some vegetables, we need to buy these things in different parts of the world during the peak sales season, from Australia to South America." Egan estimates that 1000 different suppliers provide supply services to the company
chef solutions is proud of its commitment to providing fresh, high-quality products. "We don't sell goods by price, we rely on quality." Egan said. The company implements strict quality standards for its products, which is why chef solutions decided not to sacrifice quality standards while seeking ways to improve distribution efficiency and reduce costs. Lanter's final plan is to carefully design the plan so that chef solutions can reduce costs according to its needs without affecting the quality of products
"we deliver the products to lanter, and then they unload our truck, mix our goods with the goods of other trucks, and finally deliver the goods to the customers," Egan explained. Lante (2). In recent years, China's increasing environmental protection supervision has led to the closure of many small and medium-sized enterprises. R operates seven distribution centers, located in Chicago, St. Louis, Kansas City, Memphis, Nashville, Knoxville and Atlanta
for chef solution, a key advantage is that it can deliver small quantities of goods to customers more quickly and economically. Once chef solutions ships its products, lanter will integrate the goods of different shippers and coordinate the transportation time. "The goods of 10 or 12 shippers are combined into a whole vehicle for transportation, so as long as lanter transports them once, it is equivalent to that each shipper transports its own goods to the destination by truck." Egan explained
orval Kent food store is the first manufacturer to enjoy the logistics distribution of chef solutions using integrated distribution at the end of 2003. Orval Kent started the distribution because this manufacturer specializing in refrigerated food has a particularly frequent demand for less than carload transportation
"the average order size of Orval Kent is very small, and 88% of the orders weigh less than 10000 pounds," Egan said. Because the weight of vehicle transportation is 43000 pounds, vehicle transportation is almost not required for distribution. "Nearly 74% of orders are less than 5000 pounds, which is a great opportunity for large-scale consolidation and distribution." Egan added
the decision whether to transport through consolidation and distribution is usually based on weight. "Usually, our default limit is 7500 pounds. Below this weight, it is very advantageous to adopt set and distribution, both from the point of view of service and cost." Egan said
the next step of the plan
the next business unit of chef solutions is to switch the supply mode of frozen food in Pennant food store to collection and distribution. Transporting frozen food through collection and distribution requires skills, which Egan also acknowledges. "There are fewer providers of Refrigeration Services than providers of cryogenic services." He explained
however, he was confident that lanter could find enough shippers to work together to meet Pennant's needs. It's just that the delivery time of frozen food is not as short as that of low-temperature food. Egan hopes to switch Pennant's distribution mode to centralized distribution in the fourth quarter of this year
consolidation and distribution can benefit chef solutions by reducing costs and accelerating shipments. However, customers of the company can also benefit from this system, especially those with small order quantities. "Many competitors regard small orders as second-class citizens." Egan said, "our collection and distribution network is very fast. Our service for the transportation of 2000 pounds of goods is now about the same as the transportation speed of 40000 pounds of goods!"
pool DDISTRIBUTION forced chef solutions to establish detailed instructions for its customers' order placement, transportation and distribution plans, which established a mechanism to provide first-class services to small batch orders. "In the past, a customer could tell us to send 5000 pounds of cold cabbage to any place in the United States at any time of any day of the week, and the fluctuation of its demand was simply confusing." Collect and deliver to deal with some chaotic orders for chef solutions. But the company must work hard to let customers know that a well structured order and distribution system will be very beneficial to them
"customers were worried at first that we were making their flexibility disappear," Egan said. "I have to spend a lot of time explaining to customers that we are actually trying to maximize flexibility by adding rules in appropriate places." In essence, centralized distribution can provide taxi service at the price of public transportation
by using the integrated distribution system, chef solutions has been able to avoid irregular and contradictory routes caused by less than carload distribution, and also greatly reduce the transportation cost. The new model has improved its operational efficiency and customer service level. "At present, the penetration rate of our consolidation and distribution is about 80%," Egan said. "The other 20% of orders will be immediately transported by trailer, or stopped halfway, or directly transported by vehicle."
in general, our consolidation and distribution has enabled chef solutions to reduce its outward transportation volume by 70%. There are still many companies that need to schedule and coordinate, which is much better than the era dominated by Lufthansa
more importantly, consolidation and distribution has provided a measurable return. "We realized that the distribution cost was reduced by 5% to 7%, he explained.
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