Serving three market segments

Nov. 1, 2006
The year 1965 produced several milestones: Lyndon Baines Johnson took office as president of the United States in his own right after a landslide 1964

The year 1965 produced several milestones: Lyndon Baines Johnson took office as president of the United States in his own right after a landslide 1964 victory over Barry Goldwater; Jim Clark, a Scotsman, won the Indianapolis 500 in his third try, becoming the first driver to win using a rear-engined car [Parnelli Jones, one of the last winners in a front engine car is said to have wanted “the motor out in front where I can see it in case it does something weird”]; and Liberty Fruit Company was founded in Kansas City, Kansas. LBJ and Clark have both passed away — Clark crashing into a grove of trees while driving in a relatively minor race and Johnson suffering a stroke in 1973 while living in semi-seclusion on his Texas ranch following withdrawal from public life as a result of controversy over the Vietnam war.

Far from fading away, Liberty Fruit has grown about 20% every year for the past five years, now operating under the management of its second generation owners with third generation family members also part of the company. To serve produce customers in five midwestern states, Liberty Fruit is now housed in its third warehouse location with 126,000 sq ft of cooler space divided into 11 temperature zones.

Liberty Fruit operates a conventional produce distributorship catering to three customer categories. Foodservice customers account for 45% of total business with retail distribution following with 27% and wholesale delivery to other distributors taking up 28% of annual sales. The result is two distinct operating strategies. “On the retail side, we are a fill-in supplier rather than serving as the primary vendor to any store,” says Mike Logan, Liberty's vice-president of operations. “In our biggest operating segment, foodservice, we strive to be the primary supplier. The one limitation in that regard is that we are produce specialists; we don't sell groceries or frozen foods. Typically, that doesn't matter, because so many of our customers are high-end restaurants that demand perfect produce at every delivery. In the wholesale business, we concentrate on our customers and let them sell on the street. For instance, we have a partnership with some US Foodservice locations. When we sell to their warehouses, we don't try to recruit their customers.”

Five states, long miles

Customers range from Oklahoma City and Norman, Oklahoma, at the southern end of the trade area to Ames, Iowa, at the northern end. On the east side of the territory, Liberty Fruit serves St Louis plus a few customers across the river in Illinois. To the west, the delivery area stretches almost 500 miles to Oakley, Kansas, almost due west of Kansas on I-70 and to Cimarron, Kansas, in the southwestern quadrant of the state between Dodge City and Garden City and to North Platte in Nebraska.

Special products from Liberty Fruit carry the names of family members. The company was founded by Issie Caviar. Liberty Fruit's prepackaged and processed tomato products are marketed as Mary's Pride, a tribute to his wife. Allen Caviar serves as president of Liberty Fruit; the company's precut produce line goes to market as Carol's Cuts named after his wife. Mary's Pride and Carol's Cuts both operate in a separate, stand alone 5,000 sq ft building on the Liberty Fruit property.

The company operates a fleet of 46 units including 28 refrigerated straight trucks, 14 tandem drive tractors and trailers, two single axle tractor and trailer combinations, and two compact vans. That equipment runs an average of 425 routes a week. “We're probably operating at 115% of fleet capacity right now,” says Scott Danner, Liberty's chief operating officer. “That's particularly true with Kansas City metropolitan area (including St Joseph, Missouri) business where we routinely run 15 to 20 second routes following completion of the morning's primary deliveries.”

Flexible delivery schedule

In the metropolitan area, customers can have delivery seven days a week if needed. The frequency drops off only to six days a week for customers in Des Moines, Omaha, and St Louis. For customers in Oklahoma City and Tulsa, which is on the way, delivery frequency averages three times weekly.

Frequent deliveries in Des Moines, St Louis, and Wichita are possible, because Liberty Fruit has resident drivers in those areas. “We've been running shuttles to those cities for a little more than four years,” Danner says. “For Des Moines customers, we have a driver who lives in Indianola, Iowa, about half an hour south of Des Moines. For that 200-mile trip, our shuttle driver leaves Kansas City every morning at 2:00 am with a loaded straight truck and meets the resident driver at a truckstop south of Des Moines between 5:00 and 5:30. The two drivers trade equipment and paperwork. The shuttle driver brings the empty truck home while the resident driver makes about 15 delivery stops. When the shuttle driver gets back to Kansas City, he usually has enough time left to make a few local delivery stops.”

The shuttle procedure for deliveries in Wichita is a little different. Liberty Fruit uses a trailer for the shuttle along with a straight truck based in Wichita. When the trailer arrives in Wichita, the drivers position the two vehicles tail-to-tail and transfer an average of 10 pallets from the trailer to the straight truck using a pallet jack to move product across a dock plate laid between the rear doors. “Drivers have become quite proficient at the swap,” Logan says. “We do the work in the dark, but they have plenty of light from interior lamps in both vehicles. Getting the straight loaded usually takes 35 to 40 minutes.”

Runs to Oklahoma City require a tandem trailer and tractor with a sleeper. Two days a week, the driver makes five stops. Other routes require only two to three stops. The long runs into western Kansas and Nebraska usually hold eight to 10 stops. “We make those runs with a 48-ft trailer,” Danner says. “Those are tightly controlled routes for specific customers. The trailer is rarely full. The driver makes all the deliveries on the outbound day, takes the required rest break, and returns to Kansas City the next morning.”

Drivers build sales

Customers are kept on repetitive routes so that drivers get to know the people receiving the deliveries. The training program at Liberty Fruit centers on showing drivers the difference in the various products and how to handle them. The produce business includes returns, so handling those is important. If drivers bring specialized knowledge about produce to the job, that's a plus. “Drivers are our best sales people, so we try to make sure they learn who the customers are and how to keep them happy,” Logan says.

Drivers have the authority to run routes in a flexible manner, particularly with regard to delivery delays. “Sometimes another vendor will be at the same stop,” Danner says. “If the driver can see that the wait will exceed 15 minutes, it's alright to go on the next stop and come back later in an attempt to keep all deliveries efficient. With GPS tracking from Nextel, we know where the trucks are. We get a location signal every five minutes.”

“Once a delivery starts, we want to finish within half an hour,” says James Rundle, transportation manager. “All foodservice deliveries are made by hand using a two-wheeler and a pull-out ramp from under the rear door. Drivers take in four to five cartons per trip down the ramp. Almost every delivery is different. Some customers want back door delivery, while others want the product put in the cooler.”

Making such frequent deliveries requires rapid inventory turns through the warehouse, with total inventory changing an average of 3½ times a week. Hardy products such as potatoes and onions stay in stock longer, but highly perishable goods such as leafy greens, mushrooms, and berries turn almost on a daily basis. To maintain such a high warehouse velocity, Liberty Fruit receives and ships 24 hours a day, seven days a week.

Liberty controls inbound, unloading

“We control all the inbound freight,” Logan says. “We work with 10 carriers on annual contracts. With our location in the middle of the country, freight costs from either coast are about equal.”

With its flexible receiving hours, Liberty Fruit handles all unloading. All the inbound driver needs to do is verify the load count. In practice, the company never refuses an inbound load. “If there's a problem, we transfer the product to our repack department for sorting and then sell it. If necessary, we make a settlement with the shipper.”

Once product is in the warehouse, it is subject to constant scrutiny. Inventory is inspected daily, and Liberty Fruit runs a report on any product that is three days old twice a week. Any problems go to repack. “We try to do all our quality control work before the selectors get involved so that all they have to do is pick orders for easy delivery,” Logan says.

Running a high velocity distribution operation requires a fleet that can meet the demands. To maintain a highly reliable fleet with minimal downtime, Liberty Fruit is in the process of replacing most of its equipment. By early 2007, the company will have 22 new refrigerated straight trucks, two single axle tractors, four tandem drive daycabs, and four sleeper tandems in service. In addition, new equipment will include two 32-ft trailers, one 48-footer, and one 53-ft reefer van. All this equipment will be supplied by MHC Truck Leasing, the PacLease franchise in Kansas City.

Assembly of the power units will all be complete before the end of 2006, meaning that the trucks will not be required to have 2007-compliant engines. Heavy trucks will have Caterpillar C15 engines, and the straight trucks will be powered by C7 Cats rated at 250 horsepower. Getting the trucks built is the important part; bodies mounted and refrigeration units can be installed after January 1, 2007.

Straight trucks mark a turning point for Liberty Fruit. Although the trucks mount 22-ft refrigerated bodies from Morgan Corporation, they will not require drivers to possess a commercial drivers license. To make the trucks easier and safer to operate in metropolitan traffic, they are equipped with Allison 3000HS automatic transmissions. Keeping the trucks below the weight classification requiring a CDL helps Liberty Fruit hire drivers from a larger labor pool, Logan says.

The Morgan bodies mount Carrier Transicold Supra 750 refrigeration units. Because Liberty Fruit delivers tomatoes in large volumes, box temperature is kept fairly high, 46°F, in transit. To ensure proper delivery condition for other products, leafy greens are held at 33°F until immediately before loading, and to keep bananas from becoming too chilled, they are shipped under insulated blankets. Over the course of a seven-hour delivery route, product temperature doesn't change much, Danner says.

About the Author

Gary Macklin

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