Executive Brief: Food Distribution Mobility Solutions

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1 Executive Brief: Food Distribution Mobility Solutions SEPTEMBER 2010

2 INTRODUCTION Leveraging Logistics Beyond the Walls Extending the Reach of Supply Chain Technology in Food Distribution The delivery of products efficiently and quickly is an issue all producers and distributors face...one of the essential final links in the supply chain.the basic components of supply chain management seek to ease these challenges by breaking the distribution process into four simple actions: deliver the right products to the right people at the right time in the right condition In the world of perishable food products, the stakes are even higher. Inventory tracking and timely, efficient delivery are vital when the products stored and transported can completely lose their value in a matter of days.the concept is simple enough. Getting it right not so easy. The quest for an economical and efficient method to manage the supply chain is fraught with peaks and valleys.there are success stories to model and cautionary tales pointing-out areas for improvement. Retail industry observers, for example, credit Walmart's early adoption of supply chain management technologies as a competitive advantage, an essential factor in their journey to market dominance. However, for every Walmart there are hundreds of less heralded enterprises where a lack of viable inventory and delivery processes led to poor performance, or even failure. One of the strongest areas of supply chain success is warehouse management; automating warehouse management into backoffice systems, and bringing new levels of efficiency and automation to the operations inside-the-four-walls. However, if the management of product within the controlled environment of the warehouse is an example of success in supply chain organization, then we quickly enter a new frontier when the product leaves the dock especially perishable food. Until recently, only the largest producers and distributors had some view and control of their supply chain once product was in the truck and out on the open road. But with the thoughtful integration of the right hardware and software tools, food processors and distributors of all sizes can achieve new efficiencies in the last mile of the supply chain and improve the bottom line results. Page 2 of 11

3 THE OPPORTUNITY A few years ago, the grocery industry sponsored the Efficient Consumer Response (ECR) study.the study examined processes within the food industry and identified $14.3 billion in potential savings. Improvements in logistics accounted for $2.7 billion of that amount, with transportation representing the largest portion (37 percent). In a fiercely competitive industry, savings of this magnitude cannot be ignored. To realize a portion of these potential savings, grocery and food service distributors are encouraged to focus on the following key areas: Inventory Management Asset Management Financial Management and Reporting Customer Experience Compliance Implementation and Integration Some of the above disciplines are extensions of warehouse management best practices. Others are unique to mobile supply chain management.the benefits of mobile supply chain improvements and inventory control can dramatically impact efficiency and profitability in the food distribution industry, enabling inside-the-walls efficiency to in-transit logistics. Page 3 of 11

4 INVENTORY MANAGEMENT Inventory Management: The Art of Knowing What s Where When The first step in accurate product delivery is in knowing exactly where the product is. Food tracking is inherently more difficult than manufactured products due to the simple challenge of attaching labels and barcodes to often tender and fragile produce stored in problematic environments. (It is harder to label a peach than a can of peas.) However, with the advent of new hardware and labeling techniques, such as license plating palettes and safe, adhesive barcode labeling for individual fruits and vegetables, many of the barriers to advanced logistics management are removed. To realize the efficiencies common to warehouse management systems and extend these systems beyond the four walls, we need to add the vehicle operators into the mix. Drivers equipped with handheld or wireless bar code scanners can identify and record inventory in the truck or on the customer's dock. The driver accurately records overages, shortages, damaged items and returns at the customer's dock in real-time. Equipped with a mobile printing device, the driver can present the customer with an accurate, updated, clean invoice completely in-synch with the distributor's master inventory supply chain management and financial system. Now, inventory management can track product on the road as if it were still in the warehouse. Proof of delivery and electronic capture of customer signatures dramatically reduces disputes by accurately confirming all items delivered and services rendered. Customer sign-off is captured by an electronic signature screen or, in industries requiring hard-copy documentation, the bill of lading or receipt can be manually signed, scanned, then digitally transmitted. Undisputable documentation streamlines back-office work, eliminating unnecessary damage and shortage claims. Page 4 of 11

5 ASSET MANAGEMENT Asset Management: Taking Care of Business Tools Managing assets is critical to profitability in most commercial endeavors. For transportation industries, managing the moving parts becomes literal (i.e., trucks, drivers and all things related to them).the tightening margins and higher customer expectations facing food distributors can make managing key assets, such as fleet expenses and driver efficiency, the difference between a profitable or struggling business. Advanced mobile technology also allows companies to take advantage of dynamic route optimization, by which a software application enables new delivery points or modifies the route if delivery instructions change. Dynamic routing sequences the stops to save fuel, lower equipment wear-and-tear and reduce time behind the wheel. Incorrect directions and wrong turns consume time, fuel and customer patience. The stress puts the driver and equipment at an elevated risk for accidents, tickets and injury. Route optimization reduces these risks, as well as reducing mileage, maintenance and fuel costs. In-transit visibility systems help organizations improve vehicle utilization. From the fuel efficiency of an individual vehicle to the optimization of the entire fleet, the latest in-transit visibility systems provide the data needed to improve operational efficiency, extend supply chain management and create opportunities to generate new revenue.yet for all this high-technology, in-transit logistic's most valuable player remains the driver. From the moment a driver begins the workday, how their time is used is critical to productivity and profit. Any reduction in efficiency - such as waiting for new instructions, getting lost or being delayed by a talkative customer - costs time, which results in loss of company revenue and earning potential for the driver. Implementing technology and automated systems to improve driver efficiency has great potential, but does present some unique problems and perhaps some understandable resistance. In-transit visibility systems seek to understand routes, inventory location and the driver's hours of service. The goal is to bring visibility and control to drivers, and to empower managers to help them work more safely, efficiently and with less stress. Processes can often be improved and drivers coached, increasing efficiencies that translate into increased profits for the organization and a higher pay for the driver. Understanding driver activities empowers a company to help the driver develop best practices and improve reporting. In-transit management systems enable all driver activities to automatically receive timestamps for billing and payroll, including nonservice activities such as breaks, meals and fuelling. Real-time electronic logs reduce company liability for reporting errors, and very often increases the time a driver is available to the company. An automated, electronic reporting system ensures fulltime, real-time visibility and control over this valuable and finite resource. Page 5 of 11

6 FINANCIAL MANAGEMENT Financial Management and Reporting: The Road to Riches Stretching advanced supply chain management and automation beyond the warehouse pays dividends through almost immediate cost savings. Armed with the right equipment, drivers are able to accurately verify deliveries and present a clean, precise invoice to the customer, in turn accelerating cash flow. With invoices verified and presented at the time of delivery, payments can be requested and accepted immediately. Electronic signature capture, versus the traditional pen and paper signature, significantly reduces time between completed service and collection - therefore improving invoice cycles and cash flow. Putting scanning and printing abilities in the driver's hand eliminates paperwork and data entry errors in the field, for more efficient and consistent workflow. This removes the need for scanning paperwork at the distribution center or home office. Reporting and management of overages, shortages and damaged items occurs in real-time, at each stop, without calling the office on each occasion of variances. Changes are made quickly and management can easily trace payments, credits and re-bills for complete accountability. Accurate data, collected at the point of transaction, becomes immediately available to back-office systems and on-line portals. Transportation organizations are able to reduce costs by eliminating general inquiry calls from the customer and verify details such as date and time of customer signature and who signed for the shipment. GPS stamping can confirm the exact location and time of the completed delivery, providing precise information to the customer and the service provider. This eliminates the costly and time-consuming chore of retrieving and redelivering shipments gone astray. Route optimization quickly benefits the bottom line. A reduction of five miles a day, or a few less miles and 20 minutes of idle time, can save a gallon of fuel. At today's prices for a gallon of fuel, saving approximately $3 a day, three days a week, translates into $39 per month or $ per year, dropping $46,800 a year to the bottom line of a 100-vehicle fleet. (That's simply direct fuel cost savings. Productivity gains, reduced maintenance, and increased customer satisfaction are all significant benefits resulting from route optimization). In today's economy, with high fuel and labor prices, assets and processes must be closely monitored so they operate efficiently on the road and don't bleed profit from the organization. Data collection and analysis give management the facts needed to clearly analyze and improve their mobile supply chain processes. Metrics can include mileage, engine-idle time, shortages, overages, returned product, scan and signature capture rates and driver activity. These metrics feed the analysis, enabling a realistic view of asset use and comparisons of planned vs. actual use of assets. With accurate data, organizations can review cost assumptions against actual performance and identify those hidden processes that are costing the company money. Understanding current activities and collection of reliable data on all service-exceptions provides the foundation for any review and modification leading to better inventory control, asset utilization and improved profitability. Page 6 of 11

7 THE CUSTOMER EXPERIENCE The Customer Experience: Shaking the Hand that Feeds You In-transit logistics technology improves the customer experience even more dramatically than warehouse technology. Customer-facing professionals, drivers and their managers know that providing accurate count, condition, date and time of a completed shipment can be as important as the actual delivery. Shippers are able to prove deliveries were completed on time and damage-free. Customers become accustomed to receiving real-time, detailed and accurate information. Disputes are decreased; creating a less confrontational relationship and securing a more loyal customer. Grocery and food service transporters sometimes feel the burden of strict reporting requirements. However, mobile supplychain technology can automate these activities and allow these reports to become an extension of the company's services provided to its customers. Companies can even charge a premium for some reporting services. Improved accuracy and reliability help differentiate your business from the competition, endearing current customers and inviting new customers in search of a better level of service. Real-time data imports/exports enable full integration with other systems, allowing the food transporter to serve as a central reporting portal for the customer. Customers can access order status and history via self-serve portals on their service provider's web site. Customer organizations can also receive automated updates, check on pending deliveries and review past orders and delivery data. This activity reduces customer queries and disputes, improves satisfaction and helps bind the customer to the transporter. Page 7 of 11

8 COMPLIANCE Compliance: Tracking,Tracing and Regulation From highway safety to food safety, it seems that every day, headlines point to more and more regulation of the food supply chain. Safe operation, from both a fleet maintenance and driver performance perspective, has long been a concern for federal and state regulatory agencies. Compliance with rules regulating working hours and activity is often left in the hands of drivers. Like many professionals whose individual performance is a source of pride and revenue, there is often a temptation to achieve results first, and bureaucratic paperwork is an obstacle to achieving the objective.to keep logs up-to-date, drivers often must pull over to the side of the road to maintain required logs on paper, consuming time otherwise used moving product and making money for themselves and their employer. Paper-based hours-of-service reporting systems reduces the fleet operator's ability to control productivity and introduces the opportunity for human error, it also increases the risk of reporting and compliance discrepancies. From a food safety perspective, recent high-profile recalls of produce and ongoing concern of terrorism and tampering highlight the need to quickly identify and track the distribution and origins of produce throughout the supply chain. Outbreaks of food pathogens and food recalls are not only extremely costly but they can cause tremendous long-term damage to a company s brand. Consumer concern is high and the FDA is examining increased government regulation. The International Food Service Distributors Association recently commented that, Given the increased attention food safety is receiving and the more aggressive efforts on the part of FDA and USDA, the food industry must make more effective traceability a priority. In-transit logistics technology delivers superior product traceability, providing visibility into every piece of inventory in the warehouse, truck and onto the customer s shelves. In the event of an outbreak or recall, distributors can immediately determine which stores received product from the affected lots and pull it quickly. The result: tremendous savings, security and control. Extending supply chain technology beyond the warehouse gives distributors a head start on impending FDA food traceability regulations, and provides customers the confidence to know their product is safe and/or to quickly react if a problem is discovered. Page 8 of 11

9 IMPLEMENTATION Implementation and Integration: Getting Everyone and Everything Talking The benefits are clear, but how does a food distribution company get there from here. There are a myriad of hardware options and software applications that can get you part of the way there, but for the complete solution, organizations are encouraged to turn to an integrator familiar with the hardware options, software platforms, application integration challenges, and the specific needs of food distribution logistics. An experienced integrator, with in-depth knowledge both within the four walls, as well as out on the open road, is essential. Integration is the key word. A stand-alone mobility solution can introduce new complications, perhaps simply moving the bottleneck, rather than eliminating it. Complete integration with warehouse and back office systems is necessary to achieve the system's full benefits. Your integrator should be experienced in all aspects of supply chain automation and inventory management solutions, including Auto ID, RFID, wireless, mobile, printing systems and ERP integration. A flexible, integrated software platform cannot be selected in a vacuum. In addition to hardware and back-end system compatibility, there are software products developed specifically for the unique needs of the food distribution industry. These can save countless man-hours of custom programming to shoehorn a generic in-transit logistics package into your food-centric operation. What's more, Software as a Service models can offer the scalability and economic efficiency to deploy and adapt your solution on a precisely-as-needed basis. Hardware is critical to any complete solution's success and must, of course, work with the software. The latest mobile devices can integrate all tasks into a single device (rather than loading drivers with multiple devices to carry, learn and operate.) With lower support costs and improved device utilization, the return on investment is clear. The best solutions are often based on a single device model that can be used in the truck cab, at the customer door, in the back-office and warehouse. Consider ruggedized equipment that incorporates a scanner, imager, cell phone, data and voice communications with GPS so there is only one solution to purchase, learn, support, carry and power. It may be tempting to save with more economical hardware, but rugged devices enjoy lower total cost of ownership with fewer repairs, higher solution uptime and longer life. Broadly, the integrator should offer a platform that is easy-to-deploy, presents a clear migration path and that is backed with a nationwide support organization to future-proof the solution you implement today. The integrator should have the capabilities to stage mobile hardware, load and test software, provision hardware on a wide area wireless carrier, install hardware and associated accessories into your vehicles, as well as ship preloaded, deployment-ready handheld devices to your individual sites. An experienced mobility team will manage the entire process, assuring that your application will be deployed with the highest level of quality and the lowest amount of risk. Page 9 of 11

10 SUMMARY Extend Inside-the-Walls-Efficiency Out to the Open Road A comprehensive mobile supply chain product custom-designed for grocery and food distribution will offer the benefits typically associated with a full-featured warehouse management system, while adding last mile essentials, including the ability to: Quickly create a clean invoice for every delivery, in real-time, via electronic manifests, barcode scanning and printing on-demand receipts 'in-the-field' Easily manage over, short and damaged items as they happen, at each stop, without calling the office on every occasion to report variances Swiftly process payments at any delivery point, thus improving invoice cycles and reducing days until payment Greatly reduce inventory shrinkage - and your costs - by barcode scanning at load, upon delivery and customer return, and again at check-in Instantly get up-to-the-minute delivery status with detailed visibility into your supply chain, and send new or updated jobs to a driver, wherever they are, within seconds Easily eliminate paperwork and data entry errors in the field, for more efficient and consistent workflow - eliminating the need for scanning paperwork at the distribution center or home office Maintaining and growing margins in the competitive food distribution industry has never been more challenging. Reliably connecting drivers to operations staff and computer-based information systems, a food distribution mobility solution helps you efficiently transfer time-sensitive and perishable products more cost-effectively, improve productivity, increase cash flow and shorten invoice cycles. With the right combination of hardware, software and integration, investments made today can not only boost the bottom line, but can create a competitive advantage enabling market growth and sustainable profits. Page 10 of 11

11 ABOUT US ABOUT INTERMEC Delivering the broadest In-Transit Visibility (ITV) solution set in the industry with solutions and partners experienced in many specific applications, Intermec provides a one-stop, standards-based solution and boasts a long history of serving the transportation and logistics industry. Intermec s plug and play hardware solutions are easy to support and make for easy, quick application development and deployment.the solutions deliver real time information as well as features such as a color camera and GPS, specific applications including turn by turn tracking, and economically priced, rugged hardware. For more information on Intermec s suite of ITV solutions, visit ABOUT AIRCLIC Airclic provides best-in-class mobile supply chain and logistics software products. Scalable, reliable and hardware-independent, the Company s SaaS-based products drive efficiencies and productivity that measurably reduce costs and increase service. As a market leader, Airclic s customer portfolio includes more than 270 global enterprises that are realizing improvements in their business operations. ABOUT PEAK TECHNOLOGIES PEAK Technologies is a systems integrator of supply chain automation and inventory management solutions delivering tangible return on investment to some of the world s largest corporations. PEAK s primary applications include solutions for warehousing, manufacturing, and distribution operations. PEAK s portfolio of solutions and services include business process consulting, Enterprise Resource Planning (ERP) systems integration, wireless professional services, project management, printing/media solutions, and life-cycle support services. PEAK Technologies has locations throughout North America providing a comprehensive foot print for national, multi-site life cycle service and support. Contact: PEAK Technologies, Inc Old Columbia Road Columbia, MD Phone: (888-ASK-PEAK) info@peaktech.com Page 11 of 11

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