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IS/LD: COLLABORATING FOR SUCCESS IN THE CPG INDUSTRY


April 13, 2005, Palm Beach Gardens, Fla. – Cost savings through improved supply chain logistics is "found money," according to featured speakers at the Grocery Manufacturers of America’s (GMA) Information Systems and Logistics/Distribution (IS/LD) Conference.

"Supply chain logistics are positive contributions to CVS’s bottom line," said Kevin Smith, CVS/pharmacy senior vice president of supply chain and logistics. According to Smith, for every dollar saved through supply chain efficiencies, his team contributes a dollar to the company’s bottom line.

The company’s new, state-of-the-art distribution center in Ennis, Texas, is just one example of how the company is improving its supply chain. Maximizing its use of space and using technologies such as automated induction and "goods to person" picking, CVS designed a facility that is half the size of conventional distribution centers but provides the same level of service. With this new distribution center format, CVS is able to reduce its real estate and building costs, investing in fewer pieces of equipment to transport product within the facility and hiring one-third fewer employees to operate the distribution center.

Sustaining those gains, however, will require industrywide collaboration in emerging technologies and logistics initiatives. "We need to devise a common methodology for sharing data," Smith said. He does not advocate for the creation of a system unique to CVS though. Smith believes it is imperative that CPG companies and drug store chains work together to develop systems that address the specific needs of the drug store channel.

The call for industrywide solutions was echoed during panel discussions on global data synchronization (GDS) and transportation.

Global Data Synchronization

Convening executives from Wegmans Food Markets, Ahold USA, Nestle Purina Pet Care and ConAgra Foods, GMA’s IS/LD Conference identified GDS as a critical area for manufacturer/retailer collaboration. Ahold’s Mike Scott, vice president of logistics, explained that GDS is the foundation for all forms of e-collaboration that will benefit the bottom line "if we can get this right."

Wegmans Director of Business-to-Business Marianne Timmons seconded this view, saying, "Data accuracy is pre-requisite for data synchronization." Timmons and executives from Nestle Purina Pet Care and ConAgra Foods also underscored the need for CPG companies and retailers to work together to identify what data can and should be collected and to set global standards for data measurements.

Transportation

Carriers, retailers and manufacturers should work together to utilize the "untapped capacity" of deadhead trailers, regardless of the name on the side of the truck. Among the cost-saving options discussed, this idea was one that had the universal approval of supply chain executives from Wegmans Food Markets, ConAgra Foods, Welch Foods, Inc., and Total Logistics Control. Rick Blasgen of ConAgra said partnering across industries to utilize empty trailers would result in actual savings for the industry, especially in light of the driver shortage, increasing fuel costs and the finite capacity of the trucking industry.

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Based in Washington, D.C., the Grocery Manufacturers Association is the voice of more than 300 leading food, beverage and consumer product companies that sustain and enhance the quality of life for hundreds of millions of people in the United States and around the globe.

Founded in 1908, GMA is an active, vocal advocate for its member companies and a trusted source of information about the industry and the products consumers rely on and enjoy every day. The association and its member companies are committed to meeting the needs of consumers through product innovation, responsible business practices and effective public policy solutions developed through a genuine partnership with policymakers and other stakeholders.

In keeping with its founding principles, GMA helps its members produce safe products through a strong and ongoing commitment to scientific research, testing and evaluation and to providing consumers with the products, tools and information they need to achieve a healthy diet and an active lifestyle. The food, beverage and consumer packaged goods industry in the United States generates sales of $2.1 trillion annually, employs 14 million workers and contributes $1 trillion in added value to the economy every year.
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