New Technology Changes Dairy Distribution

June 1, 2000
Dairy distribution once evoked an uncomplicated image of routes, drivers, and stores. Trucks left full and returned with empty cases. Drivers checked

Dairy distribution once evoked an uncomplicated image of routes, drivers, and stores. Trucks left full and returned with empty cases. Drivers checked in, tallied sales, and made sure trucks were plugged in.

Now, fleets are busy installing new technology that is changing the face of the industry, said speakers at the 2000 Dairy Distribution and Fleet Management Conference in Newark, California. Wireless fleet tracking systems and software for routing and maintenance management are some of those new electronic tools.

"The dairy industry is changing all the way from cows to carts to cash register," Koren Lilburn, senior product manager for Qualcomm Wireless Business Solutions, San Diego, California, said. "Everything is evolving, and you are in the front lines making that happen."

Besides implementing new technologies for the farm, for processing and packaging, dairies are improving distribution efficiency by using transport technology such as multi-temp refrigeration, Lilburn said.

Onboard recorders help distribution managers analyze costs. Wireless systems track and report transit status. Scanning is used in various ways, from inventory management to sales history and trend analysis.

$30-Billion Savings Experts estimate an annual savings of $30 billion from the rippling effect of implementing new technology, Lilburn said. Increased customer demand for just-in-time delivery drives the changes. Manufacturers and distributors share data electronically to provide efficient consumer response.

Lilburn said that Internet commerce is expanding rapidly. The Council on Logistics Management says that managers spend up to half of every day at a computer. "About 78 percent of the growth for logistics in the next decade is tied to information technologies," she said. "For dairy distribution, this means that moving milk and ice cream through the supply chain isn't enough anymore. Distributors need to look at how they will serve customers who are adopting new technology."

According to the Council on Logistics Management survey, the primary influence on logistics growth in the next decade will be supply chain addition and integration, Lilburn added. Other big influences will include e-commerce and information technology.

Add Value Many dairies already are managing information and making it available to customers, she said. They may do it annually, monthly, or weekly by mail or fax. But the goal is to compress the collection, processing, and dissemination cycle. Doing this adds value to a dairy's service.

"Adding value beyond simply moving products from Point A to Point B may require a change in business culture," Lilburn said. "It's not an easy thing to do. Third-party logistics providers have been fairly quick to adopt new technology in their operations. If you're a private fleet or for-hire carrier who hasn't yet done so, I'd encourage you to look at how to make the change."

The starting point in this change is to collaborate with customers, she said. The goal is to discover what technology will enable dairies to work better with their customers. "Different technologies are available, and you won't work with just one," Lilburn said. "Implementing new technology one at a time builds a digital nervous system that requires total integration."

Some technology serves as infrastructure for other more specific tools, she said. These include hardware platforms, operating systems, communication methods, wireless systems, and the Internet.

Specialists and Integrators Specialized routines run within the general computer infrastructure. For example, an accounts receivable or billing module generates invoices and post balances. Other routines include routing and payroll packages. Other technology integrates this information for management reports.

Likewise, fleets received new technology recently. Examples are electronic fuel controls for engines, cellular and digital communications, high-speed wireless data, global positioning, temperature monitoring, trailer tracking with door and volume sensors, portable data collection, and onboard recorders.

"One of the challenges as we move into the new millennium is to take that data provided by all these systems, integrate it, and make it available throughout the distribution chain," Lilburn said. "Add value by turning information into data for action. Use it internally to measure costs and set service goals. Use it externally to fuel customers' information management systems."

Wireless Systems Trucking began adopting wireless communication several years ago. Qualcomm and others provide such applications as real-time truck status and vehicle location for improved employee and maintenance management. Wireless technology includes cellular phones, one-way and two-way pagers, and radio.

Vehicle location has been used for the past 12 years by truckload carriers. Too expensive for local operations, the price should come down in the next five years, she said.

Most tracking systems use satellites. "In the next five years, you'll see a dramatic shift toward more cellular tracking systems," Lilburn said.

Fleets should consider five factors when investigating wireless systems- cost, coverage, capacity, customer service, and clarity. "Cost is tightly tied to the coverage of a particular system," she said. "For example, a dairy running from Miami to Tampa doesn't need a satellite system. Cellular coverage there is good enough to allow using a lower-cost system."

Lilburn suggested testing tracking with three or four trucks. "Even if you get it free, test before outfitting the entire fleet to ensure it works in the operation," she said.

Route Analysis Private fleets are more likely to use trip recorders. Smith's Dairy, a regional fleet in Orrville, Ohio, put Meritor Tripmaster recorders in 100 tractors about two years ago.

"We wanted to track our costs," said Ron Them, vice-president of distribution for Smith's. "After installing recorders, we realized we could do more than merely track costs. We could reduce them."

Smith's used Tripmaster to print daily delivery reports for drivers. "Our drivers are competitive, Them said. "They like to compare their performance to each other. We use exception reports to look at driver productivity, especially for wasted time."

Smith's focused on engine idle time. However, the company did not specify to drivers what it was looking for. "It was amazing. The first week after recorders were installed, total route time dropped," he said. "Idle time decreased as well."

Fuel Savings Before Tripmaster, idle time averaged 75 percent of route time. But within a week after Tripmaster installation, it decreased to 5 percent. Within 18 months, the fuel saved from reduced idling paid for the recorders.

Smith's also uses Tripmaster to track hard braking. This is defined as reducing speed eight mph in one second. "We're in some big cities - Columbus, Toledo, and Cleveland," Them said. "Drivers have people pull out in front of them, and they have to hit the brakes hard. When a driver has 10 to 12 hard-braking incidents in a day, we talk to him. Tripmaster gives us an extra pair of eyes to see potential accidents in driver behavior."

Tripmaster can be used for accident investigation. It stores such data as speed and braking activity prior to impact. In some instances, Tripmaster reports have cleared drivers in court.

Recorders can prepare driver logs. "Last year, we went through a two-week DOT audit," Them said. "Checking log compliance was much easier because we had Tripmaster. We were able to generate 350 logs and provide all the information the auditor needed."

Drivers used to spend at least 15 minutes on logs at check-in. "Using computer-generated logs helps save hundreds of thousands of dollars," Them said. "We get greater route productivity, and we give managers a tool to measure performance daily."

Maintenance Management New maintenance management software can help do more than merely cut costs. It can help turn maintenance operations into profit centers, said Dan Zumwalt, mobile computing specialist with Squarerigger Corporation, Sonora, California.

"Some in-house shops have decided to open to the public instead of shutting down or outsourcing maintenance," Zumwalt said. "One company turned its shop into a profit center in just that way. Later, when the dairy sold, it split off the shop as a separate profit center."

Other companies are using computers to manage data from regular engine oil analyses and to purchase parts, Zumwalt said. "These tools are capable of doing 'what if' analysis that can help managers make purchasing decisions," Zumwalt said. "For instance, what is the result of using a different clutch or tire? It's worth seeing the data. But it must be presented in a useful way. No matter how expensive a program is or how many bells and whistles it has, it's worthless unless it improves the bottom line."

Older technology isn't always user-friendly. Some spreadsheet programs are knowledge- and time-intensive. Word processing basically turns a computer into a typewriter. Data bases require some training to create forms for listing of customer names, addresses, and other information. "Most of these options require setup and training expense," Zumwalt said.

Today's technology is better, but managers should look for features not found in all programs, he said. For example, software that tracks miles or hours for oil changes may work, but what if the odometer or hour meter breaks? What if a new odometer is installed? "About 99 percent of the available software can't handle this," Zumwalt said.

Not Really Paperless Programs claiming to produce paperless shops don't really do that. "The reality is paper with barcodes and a barcode wand for scanning," Zumwalt said.

Some maintenance software does not eliminate closing the shop for physical inventory. Typically, inventory requires every employee to work, counting everything. But some programs allow an on-the-spot inventory without closing the shop. "Any program comes with inventory reports," he said. "But does it produce reports specific to the business?"

Some software doesn't work for cascading preventive maintenance, he said. When this software indicates the need for a service, it doesn't take into account that a C inspection includes the tasks in the A and B services. This results in erroneous scheduling. Effective maintenance software also tracks parts warranties.

Computers are getting smaller. Laptops have thousands of times more processing capability than those on lunar missions. Handheld computers can record information, communicate with other computers, and scan barcodes. "Mechanics can enter work orders easily with the handheld systems provided by Squarerigger," he said. "This eliminates a separate person reading a mechanic's handwriting and typing a work order."

Zumwalt suggested trying new software before purchasing. "When making a transition, maintain paperwork for awhile to ensure that results match," he said.

Fleets should be sure their software is usable and easy to learn, provides strong reporting, has the capability for invoicing and work orders, and provides a bottom-line cost-per-mile, Zumwalt said. "If you can't try it before buying it, then just say 'No,'" he said.

About the Author

The Refrigerated Transporter Staff

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