During the past decade, companies that have efficiently and effectively managed core business operations have gained competitive advantage and larger market share. The new IFDA report, provides operational research that is completely foodservice distributor focused. All previous industry efforts commingled results with other industries such as retail and wholesale grocery.
"The metrics, graphs, and information contained in this benchmark study will help executives identify areas of opportunity that have not yet been discovered or implemented within their organization," said Steve Potter, senior vice president of industry relations at IFDA and author of the report. "The report is designed to provide foodservice distributors with a tool to evaluate existing performance and to identify new ways to create improvement. The benchmarks and best practices contained in the report will help distributors make strategic and operational decisions to attain higher efficiency and greater profitability, and deliver added value to customers."
To identify trends across the industry, data and certain operational practices were gathered from a total of 164 distribution facilities (148 broadline and 16 systems). Firms that completed the survey receive a complimentary customized report that identifies their company and allows them to compare their results with the results of others in the study.
Companies that participated were guaranteed anonymity. For this reason, no annual sales or locations are identified.
The 93-page report presents information in the following areas:
Warehouse General — to identify such practices as safety and sanitation, information sharing, product handling, inventory frequencies, productivity measurements, and personnel;
Inbound Operations — to identify receiving, put-away, and inventory control practices and processes;
Outbound Operations — to identify order selection, slot replenishment, palletizing, and loading practices and processes;
Transportation — to identify routing practices, routing systems, driver training and safety programs, fleet mix, and equipment specifications; and
Fleet Maintenance — to identify ownership/leasing practices, repair shop sizes, training programs, computerized maintenance systems, and equipment washing and tire maintenance practices.
In addition to the above information, participants provided operational data for the month of August 2005. This month was chosen because it contained no holidays, and therefore would reflect an "average" four weeks, without anomalies. Included in this data were such metrics as the number of cases received, cases shipped, loads delivered, miles traveled, and hours worked, to determine averages that could be used to analyze and quantify results.
The report is designed to cluster results based on Customer Mix and Location (Urban or Rural). In the context of the report, "Customer Mix" is the percentage of Street business (salesperson-driven) and the percentage of Contract business (contract-driven). Information is provided in this format to allow distributors to identify the customer mix and facility location (urban or rural) in which their company best "fits" and make comparisons that are more "apples-to-apples" in nature to their business.
KEY FINDINGS The report identifies rising fuel prices as having a major impact on the way distributors look at their warehousing and transportation functions. Best-in-Class distributors are looking to those areas for opportunities to combat eroding margins. As a result, these companies are:
Investing heavily in technology to improve warehousing and transportation efficiencies;
Tracking and reducing nonproductive or indirect time;
Identifying and eliminating the causes of errors, returns and reships;
Focusing on accountability and expected results;
Improving inbound freight scheduling;
Reducing inbound product re-handling;
Tracking vendor/shipper performance and accuracy levels; and
Addressing vendor/shipper performance and accuracy issues.
The report identified that best-in-class distributors realize that greater accuracy in warehousing and transportation will not only reduce errors and costs within the operational area, but will also increase customer satisfaction. Sales staff can redirect time spent on problem solving to growing business. The improved accuracy is made possible through the implementation of such technologies as bar coding, voice recognition picking systems, computerized routing and scheduling, and vehicle tracking systems that provide faster access to realtime information.
Best-in-class distributors also recognize that making major technology investments without changing internal processes will not harvest the full benefits of those investments. Effective process change can only come about after the consistent gathering and review of performance metrics.
In developing the report, it was found that within the foodservice distribution industry there is a wide disparity in the metrics that are tracked as well as how certain operational terms are defined. It became apparent in compiling the report that the larger the company, the more information is being tracked. Ranges were significant