Mid-tier frozen food manufacturers face an uphill challenge in delivering smaller, more frequent orders to retail and food service DC’s throughout the US. The key is collaborating through a successful consolidation program, such as the Hanson Logistics Velocities™ MVC. Velocities™ Multi-Vendor Consolidation program is a load consolidation program designed specifically for mid-market food manufacturers. Through the program, food manufacturers can leverage the economies and other benefits of load consolidation while improving their ability to profitably fulfill smaller, higher frequency orders. Manufacturers’ relationships with retailers are also improved, since retailers will receive scheduled, consolidated deliveries in line with their continuous fulfillment strategies.
Load consolidation can significantly reduce overall shipping costs because manufacturers no longer pay for the inefficiencies of single LTL rates. Instead, their orders are paired with those of other manufacturers with similar LTL shipping needs (all have orders going to the same retail distribution center) to create TLs. According to many industry estimates, transportation costs can be reduced by up to one-third by moving from LTL to consolidated TL.
Being more efficient in shipping translates to better optimization of the overall supply chain. Having the critical mass of collaborative food processors is the foundation of a success consolidation program; one that can offer scheduled national deliveries. On a macro level, the global supply chain for food manufacturers is also better optimized as manufacturers work together to remove waste from their individual supply chains and reduce overall shipping costs.
Load consolidation can also significantly improve food manufacturers’ relationships with retailers, wholesalers and other buyers by helping ensure that buyers’ service requirements and preferences are met. Consolidated shipping improves manufacturers’ ability to abide by retailers’ receiving preferences, accurately fulfill orders and execute their continuous fulfillment strategies. Retailers benefit from reduced dock congestion, improved on-time delivery, improved purchase order compliance and shorter lead times, which allows for more frequent orders with reduced inventory carrying costs, without the risk of the product being out-of-stock.
Manufacturers that oversee their logistics in-house often lack the investment in the technology necessary to properly manage complex, high velocity distribution systems. Working with Hanson can help improve the accuracy of data mid-market food manufacturers have at their fingertips. Manufacturers can see the status of various shipments in real time and have better, more granular information on shipping costs. Manufacturers can then use this enhanced data to make more informed decisions surrounding their shipping and logistics choices.
At the picking level, 3PL’s typically employ automated and highly accurate order picking processes. Service mistakes—such as wrong volume or product (i.e., wrong SKU), damaged product or late deliveries—can negatively impact a manufacturer’s relationship with its customers. While the consequences of a service error vary, a major mistake with a large, national retailer could be detrimental to a food manufacturer’s success. As a result, mid-market food manufacturers that lack expertise in logistics should consider using a 3PL that is experienced in servicing orders correctly and on time to reduce their risk of service errors.
Load consolidation can reduce transit time. Trucks with consolidated loads make fewer stops, reducing the need for separate pickups. The consolidator can pull product directly from the manufacturer’s forward inventory in its regional warehouse. The result is a shorter lead time from when a retailer or other buyer places an order until it is fulfilled (i.e., shorter lead time), allowing food manufacturers to be more responsive in the eyes of their customers. Load consolidation through a 3PL also improves the consistency of transit times, which improves the level of service manufacturers can provide to their buyers. This allows manufacturers to better respond to more frequent, smaller orders.
From a customer service standpoint, one of the things we’ve gained is we have a consistent delivery schedule. In the past we were constantly changing around PO dates, due dates because with multi-order consolidation you had one truck hitting maybe three to four DCs. With the Velocities Program they typically have one truck hitting one DC, as one delivery appointment. The other thing that allowed us to do is have standardized lead-time, so it hits the same DC every day of the week. And it’s worked out very well. The buyers love it because they aren’t changing PO due dates. It’s really a seamless process.
Consolidated loads also reduce the risk of product being damaged in transit. Transit times are shorter, which in itself helps reduce risk of damage. Product shipped in consolidated loads is also handled less (moved from trailer to trailer or within a trailer), whereas product shipped via LTL may be handled multiple times. In LTL shipping, securing product can be more difficult due to empty space within a trailer. Consolidated loads help reduce the likelihood that product will shift in transit, which reduces the risk of a manufacturer’s product arriving damaged, further protecting the manufacturer’s relationship with its buyers.
Load consolidation is also “greener” than LTL shipping. Fewer trucks are required when companies collaborate through consolidation. Fewer diesel trucks on the road means reduced carbon emissions and a more sustainable supply chain. Although being green isn’t often one of the primary reasons food manufacturers choose consolidated shipping, knowing that their supply decisions are having a positive impact on their carbon footprint and the environment—and sharing that with customers—is a value-added benefit!
Hanson offers expertise in all areas of logistics, saving mid-market food manufacturers from using their valuable resources to build up in-house expertise. Hanson draws on experienced staff and technology to help food manufacturers develop national, and even global, distribution networks. Additionally, Hanson allows manufacturers to scale space, labor and transportation based on needs, something that is much more challenging with in-house logistics.
Finally, load consolidation allows mid-market food manufacturers to avoid giving their margins up to transportation. Load consolidation creates economies of scale in fuel, labor, equipment and overhead, and allows manufacturers to purchase warehousing and transportation on demand, all while helping them avoid costly mistakes and improve their relationships with major national retailers and buyers. As a result, mid-market food manufacturers that utilize load consolidation benefit not only their buyers and the environment, but also their bottom lines—perhaps the most important measure impacting success in the competitive food market.
While mid-market food manufacturers face a number of challenges getting their products to national retailers, the high costs and other drawbacks of LTL shipments can now be removed from their list of concerns through load consolidation, available through Hanson Logistics. Load consolidation provides many benefits to manufacturers and is also appealing to retailers, who hold the key to the growth and ultimate success of these mid-market companies.