Early Delivery Pains
According to the International Food Service Distribution Association (IFDA), it takes 2,500 companies operating thousands of warehouses and massive transportation fleets to power the foodservice distributorship in the United States, a $200 billion market.
Three types of distributors power the industry:
- Broadline distributors: who serve anywhere from 1,000 to 6,000 accounts from a single distribution center and offer more than 10,000 items to meet specific operator needs.
- Systems distributors: who serve fast-food chains with more frequent deliveries of fewer SKUs.
- Specialty distributors: who focus on a product category such as seafood or produce, or a customer segment, like government.
Distributors that deliver to restaurants, healthcare and hospitality facilities, government operations and educational institutions operate in a challenging supply chain where customer service is paramount. The foodservice distributor is working to ensure that the company they are delivering to is satisfied so that they can in turn make sure their customer, the person who is eating the meal, is satisfied.
There are several nuances to delivering in the foodservice supply chain. Unlike other industries, early deliveries can be extremely problematic; orders are almost never delivered at the exact weight they were ordered at (causing the need for invoice updates) and the freshness and temperature of the product during the delivery process needs to be closely monitored.
While there will always be new standards to comply with, such as the recent updates to GS1 barcodes, this article will examine the evergreen challenges associated with supply chain distribution in the foodservice industry and recommended solutions.
Challenge #1: The Time of Delivery Has to Be Accurate; Early ETA=DOA
Picture ordering some supplies – paper towels, staplers and stamps – for your office. You expect them to arrive on a Thursday afternoon, but the order comes hours ahead of schedule on Thursday morning. It is likely that this is not a problem; in fact, getting your supplies ahead of schedule is probablly pretty exciting. Even orders that arrive late, in most industries, will only be an annoyance to the recipient, not something that is going to make or break the businesses’ daily operations. In the foodservice industry, however, deliveries that don’t arrive right on schedule are much more than an annoyance.
The people who field foodservice delivery orders at restaurants, chains, schools and hospitals typically wear many hats and there are times when fielding an order is difficult. Maybe it’s a school where there won’t be room for tomorrow’s lunch delivery until today’s lunch inventory has been cleared out of the kitchen. If that happens, the food can spoil and be a loss to the business – or, more likely, the business refuses to take the order and the distributor has to take the loss on the delivery and re-deliver.
Orders that arrive late can be very problematic as well. At a restaurant, for example, if an order of salmon (the daily dinner special) arrives late and the kitchen doesn’t have enough time to prepare it ahead of the dinner rush, there will be customers with dinner reservations who may not be able to be served in a timely manner. This is why in this supply chain environment, the expected time of arrival of the order (ETA) needs to be strictly adhered to.
Challenge #2: Workflows
There are two workflow challenges that foodservice distributors are up against.
The first is ensuring that drivers have delivered the right products to the right locations, and when they leave a location that they have delivered everything that was supposed to go to that stop.
The challenge is that drivers have several stops in a given day and at each stop, items can be delivered either in pallets or in cases. It is easy for a driver to leave a location and realize that a case of something is still on the truck that was supposed to have been delivered at the last stop and was overlooked. Alternatively, a case of green beans that is supposed to be delivered at the next stop could be accidentally delivered at the last stop, which now makes the driver a case short for his next delivery.
A short delivery creates two problems:
- The distributor is short product at the time of delivery and also has to redeliver the expected product or find it and redeliver it at cost to them.
- The customer is now unhappy.
The second workflow challenge is ensuring that the quality of what is being delivered is correct. If frozen chicken is delivered, the driver needs to ensure that it is in fact fully frozen at the time of delivery, and not partially thawed. The temperature of the food in transit is a crucial component of delivering an order that is going to be accepted by the customer. If the food is expired or not fresh, then the restaurant or company will refuse delivery, which means the distributor will need to destroy the spoiled food and redeliver fresh food, all at a cost to them. These errors need to be eliminated in the first place order to avoid the large expense and customer dissatisfaction associated with fixing them.
Electronic Proof of Delivery (ePOD) technologies can be used as a remedy to the first two challenges outlined above – the time of delivery and workflows:
- In terms of delivery times, ePOD technology helps manage the sequencing of when deliveries are being made so that they are on time, and that customers are being alerted during the course of the day so that they know the status of the order and when to expect it. It also helps prove the quality of the food being delivered, and its freshness, to the customer.
- In terms of workflows, ePOD technology helps a driver ensure that they have completed the delivery at a single location through item-level tracking and reconciliation. If a driver scans a product that is not supposed to be delivered to a location, or forgets a product, they will be alerted. This ensures mistakes are corrected quickly, and are less costly.
Challenge #3: The Error-Prone Invoicing Process
The complex invoicing process of a foodservice distributor is extremely costly and error-prone. There are changes that can happen at the point of delivery, such as the customer changing their mind on the quantity of an item being delivered, the customer disputing an order, refusal of an item that is damaged and adjustments in the exact weight of an item that is delivered versus the weight that was ordered (catch weights). Additionally, many distributors use multiple part invoices for each customer, resulting in reams and reams of paper. By simply eliminating the paper of the multi-part invoice, foodservice distributors save millions of dollars in paper and processing costs and create “clean invoices.”
A “clean invoice” for a food distributor allows invoice adjustments to be made and payments to be collected right at the point of delivery; delays in payments related to issuing credits or revising invoices are eliminated. Additionally, through the advanced visibility and control, foodservice distributors reduce overages, shortages, and damaged (OS&Ds) items, resulting in superior order accuracy and happier customers.
From a delayed order confirmation email, to a missed delivery time, to a damaged or incorrect order – these are the make-or-break occurrences that represent the distinction between happy customers and a suddenly precarious customer/ distributor dynamic. Providing customers with information throughout the distribution process and using technology at the point of delivery to rectify issues in real time will ensure the longevity and quality of the professional relationship between distributor and customer.
Michael B. Lee is the Chief Executive Officer of Airclic, a global provider of cloud-based software that transforms the accuracy, efficiency and competitiveness of mobile supply chain and logistics operations.