One business that remained very strong during the past year and a half of the pandemic is that of alcohol distribution. The State of Iowa experienced this with steadily increasing sales at a time when product variety was also growing.
"We were deemed an essential business during the pandemic, so it was very important that we were able to fulfill our obligations to our stores," says Herb Sutton Jr., chief operations officer at the Iowa Alcoholic Beverages Division (ABD). "The suppliers are very creative in what they provide to the state, and it provides a good opportunity for Iowans to have choice."
Sutton says that sales really began to explode when state law changed in 2011 to allow convenience stores to sell liquor. About five years ago, the state realized it would need some transportation and distribution expertise to meet its growing obligations.
"Our strategic plan is always looking for ways to improve service to our customers," explains Stephen Larson, administrator for the Iowa ABD. "We did not feel that the model that we had then was a sustainable model to meet the needs of our customers as the Iowa marketplace continued to grow in the number of distribution points. So, we made a decision strategically to look at a public-private partnership for the distribution of alcohol."
Larson says they sought a company that had expertise in both warehousing and transportation. The new partner would run the state's distribution warehouse in Ankeny, Iowa, and also transport and deliver orders to the more than 1,850 customer locations that the state currently serves. After an extensive evaluation process, the Iowa ABD found their partner right in their own backyard with Ruan Transportation Management Systems, a Des Moines-based provider of integrated supply chain solutions.
A PARTNERSHIP WITH THE RIGHT MIX The partnership between Ruan and the Iowa Alcoholic Beverages Division launched in 2019, when Ruan began managing and staffing the Ankeny warehouse that distributes all of the alcoholic spirits statewide. The work includes receiving inventory from suppliers and filling customer orders, which consist primarily of full cases and mixed cases of individually picked bottles.
Ruan also implemented an optimized transportation network using 19 tractors and 29 trailers to deliver all of the orders picked by the warehouse. Ruan continues to optimize the routes within the network to incorporate new customer destinations efficiently. In a typical week, the drivers travel about 18,000 miles to deliver some 58,000 cases of liquor. Many of the drivers had been state employees but transferred to Ruan employment with the partnership. That helped to provide a seamless transition that maintained and then exceeded the prior performance levels.
"It was very important for us to have a seamless transition because public-private partnerships can become very public if they go wrong. But the customer-service levels have been really good," says Sutton.
Volumes have also increased. Last year, a 20,000-square-foot warehouse expansion was completed to add storage. The layout of the warehouse is also being redesigned to make picking more efficient. Transitioning to Ruan's warehouse management system and in-house software provided better integration between the distribution and transportation operations. Overall, the partnership has exceeded the expected cost savings.
"The hard costs, which are the distribution costs of transportation and warehousing, are also lower than what they would have been under the prior model," explains Larson. "One of the benefits to the seamless transition is Ruan 'gets it'. I feel very strongly we will have a long-term strategic partnership with Ruan."
For information on Ruan, please visit www.ruan.com.
Situated at the crossroads of the Choctaw Nation in Durant, Oklahoma, Big Lots' 1.2 million square foot distribution center serves 235 stores within a network of more than 1,300 stores across 48 states. Big Lots is a large national discount retailer, providing everything from furniture to food, as well as household goods and seasonal décor.
The Durant facility serves stores in parts of 16 states, stretching from the Canadian to Mexican borders. Such a vast area makes it difficult to find reliable transportation. For years, Big Lots utilized multiple carriers, but the complexity as the chain grew resulted in products not being delivered to stores on time. This complicated retail operations, as products often were not available to sell in a timely manner.
"We have a long average distance to our stores, which made it very difficult to hit the appointment times consistently that our stores expect," explains Kory Shinlever, director of domestic transportation at Big Lots. "We also had issues with DC productivity we needed to solve because we had a lot of transportation partners supporting that store delivery. It made our trailer pool very complex."
Big Lots needed a partner who could replace that complex mix of transportation providers with one dedicated fleet. They found that partner in Ruan.
"The services we provide Big Lots out of the Durant facility are dedicated contract transportation, yard services, as well as brokerage services during times of surge or other nuances that they have within their network to support," says Jeremy Carmichael, vice president of operations at Ruan. "Our partnership with Big Lots is one of a similar culture. Being people-first and people-oriented, we believe in enduring partnerships. We believe that shared culture fosters a long-term relationship."
Big Lots has improved service dramatically since moving its store deliveries to Ruan. Trailers are always available at the Durant DC, something that was a problem before and slowed down distribution operations.
"It's a great partnership from senior management down to the local management here," says Edwin Boothe, Big Lots' director of distribution at the Durant DC. "Drivers are courteous, professional, and they do a good job with the store personnel. On-time percentage has been great. Service levels have improved since we've been with Ruan."
"The working relationship is amazing," adds Holly Valcik, Ruan's dedicated transportation manager who works onsite in Durant. "The team here at Big Lots has been amazing and very supportive. Anytime I have any questions or needs, they are there to support me."
"Our stores from the Durant distribution center now are serviced at the highest level they ever have been at this point," notes Shinlever. "That makes a huge difference to the stores because they're able to improve their productivity. The stores don't have associates waiting for the truck. And because of that, they're more efficient at the unload. They've improved not only their productivity, but they decreased their total detention costs."
He adds that productivity at the Durant DC has also improved since Ruan right sized the trailer pool with units now always available at the 40 outbound doors. Warehouse associates can finish their picking and not have products stacking up at the docks, as trailers can be loaded on time.
Shinlever says that with Ruan, they found a long-term partner. "We wanted a partner who would be able to solve solutions at scale, who could grow with us and also matched our own company culture - one of being able to succeed together and playing to win," he shares.
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