What a difference an extra day makes in the retail grocery business. Recognizing this fact, Associated Grocers Inc, a distributor in Baton Rouge, Louisiana, recently changed its warehouse order selection schedule to accommodate same-day delivery.
“Everything we do is for independent retailers. They are the reason we exist,” says J H Campbell Jr, president and CEO. “If we can't deliver when they need something, we might as well convert to a casino. Associated is privately owned by retailers.”
Pointing to a black sky out an office window as Tropical Storm Allison dumped rain, Campbell gave an example of extraordinary service the company provides: “If we get calls from retailers at 4:30 this afternoon asking for more bottled water, we are ready to roll quickly,” he says. “Bottled water is a huge issue when a storm knocks out the water supply, especially during hurricane season. We put the orders on a truck and deliver within six or seven hours.”
Improving service is much easier in a comfortable work environment, adds John Gillespie, vice-president in charge of distribution. Happy employees respond better to customer needs than unhappy ones. In addition to rescheduling warehouse selection hours, Associated has improved the work environment by embracing technology and updating equipment. This has reduced costs, labor turnover, and absenteeism.
Associated initially took two steps to achieve its goals. First, it conducted market research to update inventory. The company stocked more items for optimum availability, minimizing slow movers. To ensure an accurate picture of current consumer tastes, Associated Grocers encourages retailers to provide feedback.
“Our SKUs have increased tremendously over the last 10 years,” Campbell says. “In frozen, for instance, there has been a great increase in heat-and-eat meals.”
Secondly, the company shifted the warehouse schedule. Loads are staged earlier to provide warehouse selectors more attractive working conditions, Campbell says. “We load during the day and deliver in the wee hours the next morning,” he says. “This allows pickers to spend evenings with their families. We ship mostly combination loads of frozen, refrigerated, and dry, with the frozen in insulated containers in the trailer nose and refrigerated and dry loaded together in the rear.”
Associated Grocers runs Carrier Transicold Extra units in the start-stop mode overnight. Units are set at 38° F. Delicate produce items such as bananas are covered with insulated blankets.
“Temperature control is critical, especially in hot and humid southern Louisiana,” he says. “We handle everything from groceries to produce to dairy items including ice cream. We rely on good refrigeration to maintain product integrity.”
Delivery to 230 Stores
One factor in favor of maintaining product integrity is route duration. All runs are completed in a day. Associated delivers to 230 stores in Louisiana, Texas, and Mississippi. They range in size from mom and pop operations to superstores. The trade area serves Baton Rouge, New Orleans, Lafayette, and Lake Charles in Louisiana, Natchez in Mississippi, and some communities along the Texas Gulf Coast. The company's 66 tractors log about 3.5 million miles per year.
Though trips are relatively short, unloading at individual stops sometimes take longer than company managers would like. Average unloading time is 40 minutes. “We want to standardize on pallet unloading, which obviously is more efficient than unloading by hand, but we serve some rural stores that don't have docks,” Campbell says. “Six years ago we delivered to more than 60 stores where drivers had to unload by hand. Today we have only 31. The geography of southern Louisiana is a factor. It is difficult to dig a pit for a dock on marshy land at sea level. However, most of our customers have docks or hydraulic platforms that accommodate pallets.”
Retailers want most deliveries between 4 and 9 am, Campbell says. However, emergencies arise when it is a godsend for them to be able to order late in the morning and receive that same afternoon. These runs account for a maximum of 10% of a total day's deliveries. Associated delivers about 65 loads a day, Monday through Friday. Of these, six or seven may be delivered in the afternoon. Drivers make one to three stops per route.
“If we owned the retail outlets, we could tell them when to take delivery, but our customers are independent retailers,” he says. “Each has unique needs, and we must provide for them all.”
From its 500,000-sq-ft warehouse, Associated supplies 50% to 60% of their customers' stock. “We don't sell liquor, wine, beer, name-brand soft drinks, potato chips, or bread. These direct-delivery items represent roughly 40% to 50% of what the stores get.”
Improved Service Levels
Since daytime order selection began 18 months ago, Associated has improved its service level from about 94% to 97%, and is headed toward its current goal of 98%. In other words, what stores want, the company delivers almost all the time. Service level is defined by three factors: the correct items at the correct price and in the correct quantities.
Associated delivers about 350 loads a week, mostly Monday through Friday, but the fleet runs seven days a week. The company receives about 60 inbound loads per day, and backhauls four to five loads per day.
Though a relatively small distributor in a small market, Associated has implemented some of the best practices of large wholesalers, Gillespie says. The company uses advanced technology including Eaton Fleet Advisor and radio-frequency warehouse management.
Associated uses TRICEPS, a warehouse management system supplied by OMI International and designed to utilize RF technology. The company also uses two other OMI software products — BICEPS for procurement and PROMPT for invoice reconciliation and accounts payable functions. The installer of the warehouse's new 2.4GHz RF network utilizing 802.11b wireless open standard is Genesta, a system integrator for several portable data collection suppliers.
“The RF network is the backbone of our warehouse management system,” says Randy Fletcher, vice-president of logistics and supply chain management. “TRICEPS generates work assignments that are processed as paper labels for selection. We currently are evaluating scan and voice selection options to replace paper label selection in the near future. Forklift drivers are assigned tasks such as putaways, letdowns, and full pallet picks. They receive messages through TRICEPS, utilizing forklift display terminals. We also use hand-held units in inventory control to manage live inventory adjustments.”
Fleet Advisor uses global-positioning satellites to track vehicles. It monitors performance and provides cellular communication between drivers and dispatch. Since it was installed in all tractors two and a half years ago, the system has eliminated manual driver logs.
“Since we mostly run repetitive routes, we use GPS to track real-time location only by exception,” Gillespie says. “We use it after drivers return to determine performance such as on-time delivery.”
Associated owns its tractors and trailers and has a service contract with Ryder Transportation Services for maintenance at an on-site shop. The shop has two service bays, a wash bay, and a two-lane fuel island. Ryder refuels vehicles after each run and washes trailers interiors every day. Tractors and trailer exteriors are washed at least once a week.
“Outsourcing maintenance focuses us on our main task of serving our member stores,” Gillespie says. “Ryder handles tractor and trailer maintenance, and Transport Refrigeration Service, the Carrier Transicold dealer in Baton Rouge, sends a mobile service truck to check refrigeration units five nights a week.”
Most of Associated's tractors are Freightliner FLD 120s. The fleet also includes twenty 1999 Volvo VN64 STs, and some older Peterbilts. The company has 100 trailers, all but six of which are refrigerated. Most reefer trailers are from Trailmobile or Utility.
“Tractors are replaced after seven years, and trailers are kept a maximum of 10 years,” Gillespie adds. “We replace about 15% of our equipment annually.”
To help trim costs after a growth period, Associated purchased Roadshow routing and scheduling software four years ago. Joe Phelan, routing manager, uses the program to set the most efficient and economical routes each day. Roadshow has helped Associated reduce fleet mileage by 5% to 6%, Phelan says.
“Most of our routes stay the same,” Gillespie says. “But Roadshow helps us deal with weekly anomalies or unpredictable store buying patterns. Some of these anomalies are the result of seasonal business or emergencies, such as storms.”
Workplace Changes
Associated has taken other steps to ensure a better work environment. The company recently had 40 of its 60 distribution supervisors attend training conducted by Louisiana State University. The class focused on responding to changes in the workplace and communicating better with employees, customers, and vendors. Distribution supervisors include managers in charge of drivers, dock personnel, inventory control, and facility maintenance.
“All our supervisors are e-mail literate and use an e-mail system,” Gillespie says. “The LSU program has helped internal communication. Driver turnover over the past nine months has decreased to a minimal level.”
Associated has 80 drivers including three who spot trailers. Three driver supervisors oversee about 26 drivers each. The company recently hired a fleet safety coordinator, Karl Tassin, who trains new drivers on company policy and procedure, use of the onboard recorder, and accident procedures. New drivers must have at least a year's commercial driving experience, Tassin says.
“We started an annual in-house truck rodeo two years ago to promote safety,” Gillespie says. “The first year we had it on the Louisiana State University campus in Baton Rouge, and the winner, Eddie Harleaux, went on to compete in the state championship. He placed third in his class for 48-ft trailers. We hold the rodeos all-day Sunday. We feed the drivers and their families doughnuts and later serve them lunch. We conduct the rodeos in the spring to avoid the threat of storms.”
Gillespie added later that although Tropical Storm Allison dumped 20 inches of rain in Louisiana, Associated delivered groceries on time.
