CINCINNATI. “Lean distribution is the key to our success,” guest speaker Tom Nartker, vice president of Safeway, Inc., told the audience of private fleet executives and industry suppliers here at the National Private Truck Council Annual Education Management Conference and Exhibition. Nartker went on to share an insider’s look at Safeway’s fleet management processes, offering insights and tips for taking cost out of fleet operations while improving safety, sustainability, quality and asset utilization—pillars of the company.
“Control is the reason we maintain a private fleet,” he said, “control, predictable cost and superior service through just-in-time delivery.”
Safeway is the 21st largest private fleet in the U.S., with 970 tractors, 3,950 trailers, 19 distribution offices and 16 full-service truck maintenance and repair shops. The fleet delivered some 536,000 truckloads of goods in 2010—a lot to keep lean.
According to Nartker, one thing that is essential to lean logistics is to remove waste from the system. Safeway uses a “Five S” process for removing waste, he noted: “sort, set, shine, standardize and sustain.” Anything that consumes resources and does not add value is considered waste. For Safeway, that list includes non-value processing, inventory, waiting, transporting and under-utilized people.
“We track numerous key performance indicators (KPI’s), do an annual lean audit, do root cause analysis and use a corrective action scorecard to deal with our misses,” he noted. Measurements are tied back to compensation, including for company executives. Among Safeway’s KPI’s are safety; injury frequency rates and vehicle accident rates; quality, as measured in terms of on-time delivery; and asset utilization, measured in terms of trailer cube utilization and tractor utilization.
Equipment is replaced based on miles and operating cost indicators, he added, noting that the company invests $30 to $40 million per year on replacement equipment. Nartker counted improving miles per gallon by about 7% between 2006 and 2010 as one of the fleet’s significant successes, achieved in spite of the engine emissions standards promulgated during the same period.
When it comes to challenges and opportunities in the future, Nartker shared his short list. On the challenges side: rising costs for diesel and for employee benefits; an aging workforce in the trucking industry made worse by a lack of young people interested in entering the business; and the regulatory burdens imposed by various governmental agencies on the federal and state levels. Offsetting those challenges were three tools or opportunities for growth and improvement: technology, people and benchmarking.
Safeway is taking several measures to help guarantee the fleet’s future success, Nartker noted:
- Nurturing and developing the team
- Practicing lean distribution
- Benchmarking to continually justify the fleet
- Collaborating, both internally and externally with customers, suppliers and industry partners
- Investing in more cost-effective and sustainable equipment and in people
- Using “reverse logistics,” that is recycling materials back into the revenue stream
- Embracing sustainability, which can help to reduce costs
Safeway is also very involved in corporate responsibility initiatives, he added. Initiatives focus on “people, the community and the planet.” The company, with the help of its customers, raised more than $50 million for various charities in 2010.
The grocery giant is also a founding member of the Sustainability Consortium and is an EPA SmartWay carrier and shipper partner. Among it numerous greenhouse gas reduction initiatives, Nartker mentioned two new programs—the use of refrigerated trailers running on cryogenic liquid nitrogen for cooling (each unit saves 15 tons of carbon as compared to its diesel counterparts) and a program to convert the fryer grease from store delis to biodiesel.