More than a rolling bread tray
March 20, 2014
by Joanie Spencer
The baking process isn’t over until the product hits store shelves — and ultimately consumers’ tables. The responsibility of ensuring this happens lies mostly with logistics, and how bakeries manage their fleets can often make the difference in profitability. During the past few years, this has become increasingly (and sometimes painfully) challenging, from changes in legislation, to increased maintenance and replacement costs, to unexpected events such as winter storms that crippled roadways across the country.
To keep products moving, bakeries must recognize that each and every truck — and each and every driver — play an integral role in the process. “It’s almost a culture thing,” said Bob McGuire, director of logistics for Chicago-based Alpha Baking Co. and chair of the Logistics Committee for the American Bakers Association. “You have to look at the truck as more than a glorified bread tray. When you see it as part of your livelihood, as an important asset,” he said, “you’re willing to give your vehicles that extra attention, and it goes a long way.”
Of course, sustainability is about corporate responsibility for both environmental and efficiency reasons. Bakeries place a heavy emphasis on sustainability in nearly every aspect of their operations to reduce their carbon footprints, but it’s also about operating as efficiently and cost-effectively as possible. “Many bakers are addressing this issue by developing green initiatives within their supply chains, such as optimizing their networks to place distribution centers closer to the customer or utilizing routing guides and optimization to lower miles traveled,” said Clay Gentry, vice-president, logistics operations for Transportation Insight, Hickory, NC.
Streamlining a paper process also helps. “Many bakers are working with an archaic system for processing orders, which causes waste throughout the entire distribution channel,” noted Marc Braun, president of US operations, Pcdata, East Granby, CT. “Most of the biggest players in the market are putting technology in their distribution chain to track what has come off the production line, when it was used to fill which order, and when it was loaded and unloaded for final delivery. Automation also allows order filling at 20 to 50% less time.”
Fuel economy is a hot-button issue when it comes to green initiatives, and some bakeries, such as Alpha Baking, are turning toward alternative fuels for both sustainability and efficiency. In April 2013, the bakery launched a fleet of 22 step vans that run on liquid propane. Based in Aurora, IL, this fleet of the nation’s only Ford/Roush propane-powered step vans will create about 2 million fewer lb of carbon dioxide over the vehicles’ lifetimes, according to Mr. McGuire.
“Overall, this first year has been a success,” Mr. McGuire said. “For local delivery trucks, propane-fueled distribution vehicles is a perfect application, and the CNG/LNG application for the class 8 vehicles is an efficient, clean-energy, sustainable type of transportation model,” he added. This month, Alpha Baking will begin testing a class 8 CNG tractor to expand the application into Indiana and Wisconsin.
At Alpha Baking’s Aurora location, the company operates its own private propane station, which increases efficiency as well as cost savings because the company can negotiate a fixed rate on its propane. “The beauty of propane autogas is that it’s a domestic source of energy; it’s not a ground contaminant, and it’s cheaper and easier to install than a gasoline or diesel station,” said Todd Mouw, vice president of sales and marketing for Roush CleanTech, Livonia, MI. “In many cases, propane companies will install the infrastructure for a business like Alpha Baking for very little cost.”
Although propane can run about 30% less per gallon than traditional fuels, it’s important to work with a provider to lock in a fixed rate in advance in order to maintain that cost savings. “Propane providers like Amerigas can lock in a fixed-price contract for a certain period of time, which would remove price instability,” Mr. Mouw said. The key is to lock in a rate while business — and weather conditions — are good.
Going into a harsh winter without a fixed rate can be a costly mistake, especially if propane shortages cause the fuel to be rationed.
TLC for trucks
Caring for a fleet goes far beyond the type of fuel a driver is pumping into it. Fleet maintenance can extend the usable life of the trucks and run the entire operation more efficiently, not to mention ensure the safety of the people who are driving them.
Thanks to new emission requirements, advancing technology and good old-fashioned inflation, replacement costs on vehicles have increased at a staggering rate, sometimes as high as 50-75%, according to Mr. McGuire. “It used to be that, in the trucking industry, you got a few hundred thousand miles out of your tractor, and right before you had to do any major work on it, you moved on to a brand new vehicle. But that’s not the way it works today,” he said, noting that a truck that once cost $65,000 to 70,000 might now come with a $110,000 price tag. “If you’re talking about replacing 10 to 12 trucks, you’re talking about some serious sticker shock,” he said.
Because of this, bakeries are putting more care into their fleets to get as much use from them as possible. It also means that they’re looking at trucks that are built for time as well as distance. “The more you have to spend on maintenance and repairs for a fleet over the life of its vehicles, the less incentive you have to maintain it,” said Gordie Taylor, product manager for commercial chassis, Freightliner Custom Chassis Corp. (FCCC), Gaffney, SC. Simple, routine maintenance, such as tire pressure, routine oil changes and clean fuel and air filters, can make a world of difference in extending usable life.
It’s worth noting that vehicle maintenance is not just about extending the life of the truck; it’s also about the driver safety. When a truck — often by definition a commercial motor vehicle — barrels down the highway, it’s not just hauling your product; it’s carrying your human capital, as well. Keeping that vehicle in top condition requires keeping the driver out of harm’s way.
Putting maintenance in this context, it makes sense to incorporate it into the driver safety program. “We see a stronger focus on safety measures and features among fleet managers,” Mr. Taylor observed. “They see a lot of opportunity for cost savings by making trucks, fleets and drivers safer, which is in itself a form of efficiency.” In recent years, FCCC has seen safety features become an increasingly important feature in custom chassis design.
The responsibility of vehicle maintenance doesn’t have to be exclusive to the fleet or logistics manager. And a little incentive never hurt anyone.
“Almost without exception, drivers are incentivized toward speed and productivity; fleet managers can look at ways to incentivize or compensate drivers based on how efficiently they run,” Mr. Taylor said.
For drivers who are independent distributors rather than bakery employees, that incentive often becomes much stronger, according to John Staker, president, Distribution Consultants, Inc., Purchase, NY. “Independent distributors who own their vehicle and pay their own fuel expenses, tend to take better care of that equipment and reduce their fuel consumption through more thoughtful practices,” Mr. Staker noted. “Those ‘self’-motivated economics tend to reduce the ultimate percentage you have to pay them. It sustains their profitability, which ultimately makes the bakery more profitable.”
“The difference between drivers who take care of their trucks and those who don’t is remarkable,” Mr. McGuire added.
Weathering the weather
From the Northeast Atlantic region to Atlanta, Texas, the Midwest and more, the 2013-2014 winter disrupted — if not halted — bakery distribution throughout the country. Although no one can ever control, or even predict, Mother Nature’s plans, there are some precautions companies can take that might help get the product where it needs to be.
The best thing a bakery can do is plan ahead. And, although no one likes to assume the worst, it’s better to anticipate when times are good than scramble when they’re bad — be they from an act of God or an act of the economy. “By knowing your company’s areas of vulnerability and carrying enough stock in critical raw materials, bakeries can keep production moving,” Mr. Gentry advised. “Although some events create infrastructure challenges that limit the ability to deliver materials, a good contingency plan, one that includes strong strategic relationships with vendors such as a third-party logistics provider, can help companies reduce risk.”
In terms of hardware, keep the climate and geography of the routes in mind when purchasing new vehicles. “FCCC offers the option to include engine block heaters on our chassis, which can prevent diesel engines from freezing in extremely cold temps,” Mr. Taylor said. “On the inside, anti-slip products are becoming popular in helping ensure fleet drivers have safe and steady footing moving around inside the truck,” he added.
Lastly, it’s important to communicate with your customers in order to maintain appropriate levels of safety stock, especially during seasons when unexpected weather is likely to strike in particular regions.
No, the baking process doesn’t end when a product comes off the line. In fact, a product that doesn’t efficiently reach the customer — and end consumer — is one not living up to its purpose. Distribution is the difference.