Move aside, Alice. Restaurants that do business with a small regional supplier called Robert's Foods have almost unlimited menu choices thanks to a space-age ordering system called the Virtual Warehouse.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
Ordering food-service supplies from Robert's Foods is not a job for the indecisive. Want french fries? You'll need to specify 1/2-inch cut, 3/8-inch cut or 5/16; long or extra long; and standard or fancy. Ordering food handlers' gloves? You'll have to choose between vinyl or latex; medium, large or extra large. And that's not the half of it. The catalog Robert's sales reps hand out to customers in the upper Midwest—restaurants, hospitals, schools, even a sub-shop chain—lists no fewer than 5,500 items carried in stock at the regional distributor's Springfield, Ill., distribution center.
Not bad, you might think. But actually, 5,500 items is not good enough to compete in a world dominated by the giant food-service suppliers known as broadliners. And it's definitely not good enough to expand market share. "Our mix of 5,500 products was limiting our ability to grow," says Dean "Robbie" Robert Jr., the company's president and CEO. Time and again, he says, customers told him: 'We love your service but wish you had a better product offering.'"
Robert contemplated a couple of ways of fighting back. He thought about building a larger DC, which would allow the company to expand its selection of everything from powdered cheese sauce mix to hairnets. Or he could expand his menu via the digital route. Robert chose the latter. He signed on to participate in a high-tech program run by his principal supplier, Dot Foods, one of the nation's largest food-service redistributors with $1.5 billion in annual sales. Known as the Virtual Warehouse, the program has allowed Robert's to quadruple the number of items it offers by tapping into its principal supplier's extensive inventories.
Today, sales reps for Robert's take orders using laptops that let them link directly into Dot Foods' inventory. That's a substantial inventory—Dot Foods carries 25,000 items, which it distributes through six DCs located around the country.With that capability, Robert's, a $45 million regional player with about 790 regular customers in a 120-mile radius of Springfield, can offer one of the largest inventories in the food-service industry while cutting back on stocks of slow-moving items and limiting costly special orders. "In the food distribution business, there's lots of opportunity to take inventory out of the pipeline," says Robert. "That's … what this is all about."
Connecting with Dot
Robert says the idea began germinating about three years ago, when he was contemplating building a new distribution center in order to expand his inventory. As he and his managers kicked around alternatives, he recalls, "we asked ourselves 'What if we develop software that electronically loads our sales reps' computers with [Dot Foods] products and offers the total inventory for next-day service?'"
Dot Foods proved an enthusiastic participant. "What the Virtual Warehouse program accomplishes is that distributors can sell products they don't physically house," says Pat Tracy, CEO of Dot Foods. Tracy explains that Dot Foods has been experimenting with the concept for about 10 years now, letting restaurants order from the Virtual Warehouse via seven formats ranging from printed catalogs to Dot Expressway, an online ordering system. But none of those initiatives has been as comprehensive as the one used by Robert's Foods.
"The model Robbie is utilizing, which supports next-day delivery and real-time cross-dock fulfillment, is more sophisticated," says Tracy. "It requires sophisticated software." That software was developed for Robert's by Distribution Management Systems Inc. (DMS), a Milford, Conn.-based software company, which readied the system for a March 2003 launch.
The system developed by DMS allows every member of the Robert's sales force to upload orders to Robert's DMS Eagle Food Distribution System software, which extracts orders for Dot and transmits those at the 3 p.m. cut-off time. Dot then picks and packs those orders at its Mount Sterling, Ill., DC, labeled by route and stop. The orders are palletized and shrinkwrapped by delivery route. When the Virtual Warehouse orders arrive at Robert's 750,000-square-foot Springfield distribution center, they can be cross-docked to the outbound delivery vehicles. (Deliveries are made by Robert's Foods' 17-vehicle private fleet.)
The system is virtually invisible to Robert's Foods' customers, who receive a single invoice and a unified shipment. "We just say, 'Here's our offering,'" Robert says.
Out of touch?
At this time, the Virtual Warehouse system, which has a 99-percent fill rate, can handle dry goods, refrigerated and frozen products, and perishables (though not variable-weight items). That's an undeniable advantage for Robert's Foods. Because his company is able to offer a broader range of products, Robert expects a 20-percent increase in his street business this year.
He expects efficiency gains as well. "One of the ways to take costs out of the distribution system is to eliminate touches," Robert says. "We averaged five touches for everything we had in inventory.We average two touches with the Virtual Warehouse."
The system has already allowed Robert to reduce his in-stock SKUs (stock-keeping units) by about 250 items. As he cuts back on those items—his slowest movers—he'll be able to devote more space in his facility to the fast movers, which normally ship in full pallets. Right now, the volume of goods delivered to Robert's Foods' customers through the Virtual Warehouse system is still relatively small—about 4 percent of the total cases shipped. But Robert says he would eventually like to get about 20 percent of his cases delivered through the Virtual Warehouse system, with the remaining 80 percent delivered in full-pallet loads from his DC's stock.
Robert believes the next big opportunity for the Virtual Warehouse will come when manufacturers —Dot Foods' suppliers—begin to realize what the system's all about."Our big challenge is educating the manufacturing community of the opportunity," he says. "Traditionally, manufacturers' reps or brokers spend a fair amount of time coming in and saying, 'What do we need to do to get into your warehouse?'" In the past, he says, he'd encourage them to get rid of the slow movers and liquidate the dead inventory. Now, he says, he can refocus their attention on creating demand for their products. "With the Virtual Warehouse, that whole inefficient part of the food supply chain disappears."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."