“High freight, fuel and labor costs are forcing food distributors to streamline their businesses,” begins the recent article in the Wall Street Journal. The piece revealed a rise in operating expenses of 6% at world’s largest food distributor, Sysco Foods and a boost of 2% at US Foods. Read on to understand the driving factors behind the rising costs and the steps food shippers are taking to bend the cost curve back down and how TMS solutions can make a significant difference.
— Food Shippers Lag in Terms of Automation Levels in their Supply Chains
— TMS Solutions Make it Easier to Plan Efficient Routes
— Automating Pickup & Delivery Scheduling is a Boon
— Cost Avoidance via Real-Time Temperature Controlled Shipment Tracking
While the perfect storm of record-low unemployment and rising fuel prices driving transportation costs may prove to be temporary, it is clear that food shippers in particular must expand their use of technology to remain profitable and competitive in the coming years. For while the cyclical nature of labor and fuel costs will inevitably provide some relief to food shippers feeling the bite today, the food industry faces some industry-specific challenges that leave them particularly vulnerable.
As WSJ noted, “Food distributors, the intermediaries between packaged-food makers and farmers on one side and restaurants and grocers on the other, are especially sensitive to cost pressures. Their operations are less automated than those of some other businesses, increasing their exposure to the worker shortages and rising wages that come with a tight labor market. Surging demand is also pushing up the cost of for-hire transportation.”
Clearly, supply chain automation technologies hold the key to helping food shippers overcome the disadvantages they’re facing. But what does that look like in reality?
Changing delivery routes, shipping lanes and shipping times – Distributors have begun revisiting their transportation planning practices in an attempt to optimize routes and boost efficiency in execution of multi-stop truckloads. They’re also looking at planning movements outside of previously established business hours. All these changes would require significant time and labor to plan and execute if performed by hand.
TMS solutions effectively automate much of the planning process using powerful optimization algorithms allowing fewer transportation planners to test different model plans and to understand the impact on time and costs that could result from making changes. Once they’ve determined a more efficient and effective plan, it is quick and easy to execute with TMS technology. Moreover, with the superior data collection and visibility delivered by TMS solutions, a food shipper can quickly gauge the results and perform analyses to drive continuous improvements in equipment utilization, route efficiency, fuel costs and a host of other metrics.
Improving scheduling at DCs and pickup/delivery locations – Long lines, narrow delivery windows and highly perishable product all conspire to make scheduling a pain point for food shippers. Powerful scheduling solutions tied into optimization engines and cascade tendering help planners minimize time wasted by more aggressively planning pickup and delivery schedules. With the specific hours of operation and dock-door layouts for each pickup/delivery location stored in the TMS, advanced scheduling is a boon that helps maximize efficiency.
Cost avoidance with real-time temperature control tracking – Not mentioned in the WSJ article is the significant potential for loss when temperature controlled shipments of high protein food items are spoiled in transit. With margins already tight, food shippers cannot sustain losses due to avoidable spoilage. TMS platforms integrate with cutting edge shipment tracking tech solutions to deliver up-to-the-minute monitoring of reefer unit temperatures. This technology helps not only avoid spoilage losses but also protect against claims after outbreaks of food borne illnesses like the current romaine lettuce fiasco by maintaining a verifiable record of in-transit temperature compliance.
There are many additional ways that TMS platforms and associated technologies are helping food shippers protect their positions. For details specific to your food shipping challenges, request a consultation today.