Bristol Farms has been outsourcing logistics management since 1996. The upscale specialty grocery store operator initiated logistics outsourcing to aid growth. But the retailer has since used it to improve delivery efficiency.
“In the mid-’90s, nobody had heard of the term ‘3PL,’” said Sam Masterson, executive VP operations, Bristol Farms, Carson, Calif., which operates 15 stores in Southern California. “But the owners at the time, who had purchased Bristol Farms from the original founders, had a rapid expansion plan.”
To support its growth, Bristol Farms started partnering with APL (at the time, the supply chain services provider was known as GATX Logistics). The plan required the retailer to move beyond cross-docking dry merchandise and produce, some of which had a shelf life as brief as 72 hours, from the pallet and container levels to the case and item levels, with as quick a turnaround time as possible.
APL modified the proprietary legacy warehouse management system to accommodate Bristol Farms’ unique requirements, resulting in an operation where the grocery store operator is able to ship and receive merchandise almost simultaneously.
The High Cost of Driving
In 2008, Bristol Farms faced a new distribution challenge. Faltering general economic conditions, coupled with sharply increasing fuel costs, bumped up the cost of distribution as a percent of sales well beyond historical rates. The company determined it would need to cut $372,000 annually from its distribution costs to reach its desired rate, and launched a project with APL to get there.
The project used total distribution cost as a primary success metric, with secondary metrics of truck fleet utilization, number of miles driven by the fleet and number of hours behind the wheel.
In addition, Bristol Farms sought to eliminate problems of a high in-store shrink rate of fresh prepared foods.
Bristol and APL determined the best solution to these various issues hiking up distribution costs would be to achieve a 20% reduction in delivery frequency by removing one day from the five-day delivery week.
As part of the distribution process overhaul, Bristol Farms began using a “single pass” ordering system where store associates go up and down the aisles scanning tags of items that needed replenishment. Orders then show up premoduled at the warehouse dock.
Less Truly Is More
As a result of successfully removing a day from its weekly distribution cycle, Bristol Farms has reduced the number of miles driven per month by 20% and the percentage of total driver hours paid as overtime by 45%.
In addition, distribution expense as a percentage of sales has fallen 18 basis points. Other “soft” benefits that have developed from the project in the past few years have included better planning resulting from having 20% less ordering opportunity, reduced receiving time at stores, having the fleet available for vendor pickups on Wednesdays and improved driver compliance with Department of Transportation regulations.
“Our stores get big chain distribution benefits without the big chain investment in warehousing and inventory,” Masterson said.