SUPERVALU: CROSS DOCK PAYS; SNAGS STILL PRESENT

MIAMI -- Supervalu, Minneapolis, is forging ahead with initiatives such as cross docking to bolster operating efficiencies and cut costs for all parties served by the wholesaler.But while Supervalu has successfully tapped into the potential of cross docking on a limited basis, widespread implementation remains a somewhat elusive goal, said John Vegter, vice president of logistics for Supervalu's Northern

MIAMI -- Supervalu, Minneapolis, is forging ahead with initiatives such as cross docking to bolster operating efficiencies and cut costs for all parties served by the wholesaler.

But while Supervalu has successfully tapped into the potential of cross docking on a limited basis, widespread implementation remains a somewhat elusive goal, said John Vegter, vice president of logistics for Supervalu's Northern marketing region.

Vegter spoke at a workshop session on cross docking at the Food Industry Productivity Conference here late last month. The event was sponsored by Food Distributors International, Falls Church, Va., and Grocery Manufacturers of America, Washington, along with nearly one dozen other leading trade associations.

Supervalu now cross docks about 15% to 20% of all grocery volume, including 22% of product supplied by Procter & Gamble, Cincinnati, at its distribution facility in Minneapolis, Vegter said. That figure surpasses the 10% to 12% of dry grocery product, on average, cross docked at all the wholesaler's distribution centers, he said.

Vegter said that about 9% of grocery volume is now estimated to be handled via cross docking on an industrywide basis.

While cross docking holds great promise, however, expanding the program to encompass a much wider volume of products and regions will require considerable effort and education, he noted.

For example, Supervalu is now in the process of reconfiguring staging areas at many of its distribution facilities to handle more cross docking -- a task that requires considerable time and expense.

"We are limited with our dock space because we traditionally didn't have a staging area. So we're now looking at our operations and creating some additional dock space," Vegter said. Supervalu is now reconfiguring its dock areas for grocery, which were 60 feet deep, to 80 feet to 100 feet deep to handle the cross docking.

But the challenges involved in implementing cross docking extend beyond physical limitations. It also requires a major educational push involving employees and retailers.

Personnel at the distribution center must be taught to identify which product arriving is destined for cross docking and which for traditional stocking.

"We sometimes end up having two inventories of the same product, which presents a challenge within the distribution center to keep all that straight," Vegter said.

Retailers also must be educated about the cross-docking requirements. Products that are cross docked typically are offered to retailers at a lower price but cannot be returned to the wholesaler.

"These are prebooked orders that are not supposed to involve any returns," Vegter said. "You have to educate the retailer about that. We still get some retailers that return [cross-docked products] to us that didn't sell -- and that's not part of the program. It's still part of the challenge we have to work with."

If products are returned, that also causes confusion and questions at the warehouse. "Is this a case of Tide that was part of the cross-docked program or was it turn stock?" he said. "That's another challenge."

Supervalu is forging ahead with its cross-docking program even though it has not yet made use of expanded 128 bar code labels or advance ship notices, Vegter said. "Even though we see the 128 scannable label and ASN as enablers to improve the process, we don't have those now. But we are in the process without them now."

He also cited research conducted by P&G indicating that cross docking can cut 43 cents off a distributor's total cost of 64.2 cents per case to get product to the store.

These represent "substantial savings," which can then be passed on to retailers, Vegter added.

Gary Glomski, custom team logistics manager at Procter & Gamble, who also spoke at the session, also emphasized that education is a key issue in terms of fostering cross-docking success.

"Don't assume if one group of stores is behaving nicely in this program you can just offer it to another group of stores and it'll work. In fact, we ran into some problems because we didn't educate a second group of stores about the program," he said.

From this point of view, "even our sales organization has to be involved. Let's not try to throw three unit loads in there when two is all that is needed," Glomski said.

Reliable delivery is another important issue to address when approaching cross docking. "If the manufacturer can't get it to you on time or you're picking up from the vendor and your back haul agent is not reliable, don't do it. You need to be at least 95% reliable on cross-dock deliveries. You can not tolerate 85% reliability at your dock," he said.