Excellence in Execution

Balance must be established between these goals; serving the customer without regard to fulfillment costs will result in financial disaster. Alternately, focusing exclusively on financial goals can be detrimental to customer service, price competitiveness, and market share.

“The margins on food are not large and there are a lot of logistics expenses,” confirms Michael Kirk of Nature’s Garden Express, LLC in Tucker, GA. “Still, your prices have to be in line with the market. If you mark something up too much you will lose customers.”

Competitive Advantage
To achieve the logistics effectiveness, efficiency, and productivity goals that promote competitive advantage, fresh produce companies must overcome a glut of current challenges. Four of the biggest logistics issues are transportation bottlenecks, stakeholder compliance, order visibility, and operational excellence. Each is briefly presented along with experts’ recommendations for mitigating these problems.

Without question, freight bottlenecks have been the primary logistics pain point of the last 12 months. The West Coast port problems lasted far longer than anticipated, causing ship unloading delays and drayage slowdowns. Trucking capacity continues to be in short supply as carriers struggle to hire and retain qualified drivers. Intermodal rail is also experiencing growing pains as volume shifts from the trucking industry cause equipment shortages and delivery delays. Unfortunately, these problems are accompanied by freight rate increases.

Although there is no “silver bullet” solution to these transportation woes, savvy logistics professionals are taking a more strategic approach to carrier relationships. “Shippers need to shift away from the commoditization of transportation. Align with strong carriers and work to become the shipper of choice,” suggests Dr. Brent Williams, associate professor of SCM at the University of Arkansas. To achieve this status, Williams recommends realigning warehouse receiving processes to improve carrier productivity and making facilities more driver friendly.

Another way to become the shipper of choice is to consistently offer freight to your key carriers. Mark Hayes, president of Twin Garden Sales, Inc. of Harvard, IL, notes: “You’ve got to recruit strong trucking companies with enough capacity to cover your bases. Stick with them throughout the year so they’ll handle your logistics and transportation requirements during big volume swings like Memorial Day, when you need to move 15 to 20 loads a day.”

The second logistics challenge is the escalation of compliance requirements. An obvious source of anguish for produce growers and distributors is government regulation. Whole chain traceability, hours of service restrictions, and sanitary transportation standards add cost and complexity to the fresh supply chain. Produce companies that develop appropriate processes and work with proactive logistics service providers will build customer trust, minimize order fulfillment delays, and avoid financial penalties.

An even bigger compliance test comes from customers with stringent product specifications and logistics service quality requirements, according to Brendan Comito, chief operating officer for Des Moines, IA-based Capital City Fruit Company, Inc. “It’s a much more complex industry than it was 10 or 15 years ago,” he indicates. “Meeting customer specs is incredibly challenging. They don’t want a tomato, they want a 5/6 tomato, at a ‘three’ stage, in a particular type of box. Our frontline staff has to be much more sophisticated and make decisions very quickly on multiple fronts. You have to put a lot more resources into training.”