Defining A Decade Massachusetts

1997

January: Membership in the Council of Logistics Management (now Council of Supply Chain Management Professionals) nearly doubles since 1992, with 12,600 members.

February: Food Logistics is launched.

March: Self-scanning supermarket checkout systems debut at the Food Marketing Institute's MarkeTechnics show.

May: The role of the warehouse is changing. It's no longer just a storage center, but a supply chain coordinator, a knowledge reservoir and marketing tool, according to a speaker at annual Warehousing Education and Research Council's conference.

July: Proctor & Gamble's Streamlined Logistics '97 gets underway. The effort saves P&G more than $25 million.

October Uniform Code Council establishes a sunset date of Jan. 1, 2005, for members to accept the 13-digit EAN-13 code at point-of-sale.

December: Despite strides made with Efficient Consumer Response, new study finds there are still more than 104 days of inventory in the dry grocery supply chain.

1998

January: HACCP (Hazard Analysis of Critical Control Points) regulations go into effect for large facilities (500+ workers).

April: Wal-Mart, which carries about $17 billion in inventory, says it will reduce inventory by 25 percent—some $4 billion—within two years.

June: Lucky Stores and Albertson's announce a merger creating the largest supermarket chain in the U.S.

July: Nabisco Inc. and Wegmans Food Market begin a 13-week CPFR (Collaborative Planning, Forecasting and Replenishment) project. Pilot deemed a success.

September: Supervalu Inc. in negotiations with Kroger Co. to provide third-party logistics services to Kroger's Michigan marketing area.

October: For the first time, public refrigerated warehouse space exceeds 2 billion cubic feet, outpacing private and semi-private storage by a wide margin.

November: McLane Co. signs an agreement to become a third-party logistics provider for Philip Morris Brasil S.A. and Kraft Lacta Suchard S.A. in Brazil.

1997

In 1997, leading food manufacturers such as Nabisco Foods Group, Kraft Foods North America and Procter & Gamble were realizing the value of logistics. Nabisco was using logistics as a key resource in transforming itself into a customer-oriented company. Kraft had opened up its isolated silo's of business functions and reorganized a direct channel between the logistics folks within the organization and the top executives.

And P&G instituted "Streamline Logistics," a system of efficiency-based pricing. P&G picked the best elements of Efficient Consumer Response, those which offered the company and its customers the greatest savings and created an incentive for its customers to start using these elements.

"As a result, our delivery expense has dropped, administrative costs have dropped and savings have been passed on to our customers, which is in turn, improving consumer value," said P&G's Ralph Drayer.

P&G was by no means finished. The company's focus would remain on simplifying and streamlining business practices, especially in the damaged goods arena.

1998

In 1998, the CPFR (Collaborative, Planning, Replenishment and Forecasting) initiative was underway, with more than 30 manufacturers and retailers participating in pilots. Trading partners such as Nabisco Foods and Wegmans and Schnucks; Wal-Mart and P&G; H.E. Butt and P&G; and K-Mart and Kimberly Clark were all sharing demand forecasts in key categories.

With the millennium approaching, we asked industry veterans what trends they expected to take shape over the next decade. Their top predictions:

1. Consumer will be king;
2. The supply chain will take center stage and become more flexible and agile;
3. Selling solutions, such as home meal replacement, will take root in supermarkets;
4. More reliance on third-party logistics providers, especially for processes like multi-vendor consolidation and value-added services;
5. Going direct to the consumer, as in online grocers, despite logistical challenges.P&G's Drayer

1999

January: Fleming Cos. closes seven distribution centers and Nash Finch Co. shutters two to consolidate operations.

March: Lift truck operators must supplement classroom learning with hands-on training as part of a new OSHA training and certification regs that go into effect this month.

April: Price, lack of knowledge and no clear cost justification are the three top barriers to investing in RFID, according to a study.

June: Abertson's acquires American Stores.

July: Supervalu Inc., the nation's largest food distributor, acquires Richfood Holdings Inc., the seventh largest distributor.

September: On-line grocer Webvan Group Inc. announces it will build 26 automated facilities in major markets across the U.S.

November: Certified Grocers of California Ltd. and United Grocers Inc. merge to form Unified Western Grocers, the largest retail-owned cooperative in the U.S.

2000

January: Food sales are slipping away to alternative channels, according to a study by Food Distributors International, which finds that one-third of responding distributors report less volume than the previous year.

March: Industry reels from diesel price increase. Average fuel prices jump 44 percent from the previous year, from 97 cents per gallon to $1.41 per gallon.

April: Dutch-based Royal Ahold acquires U.S. Foodservice, the nation's second largest foodservice distributor.

May: Vons, a division of Safeway, tests 60 natural gas trucks as part of a clean fuel project.

June: Unilever agrees to buy Best Foods for a $20.3 billion deal creating the world's largest food company.

September: The Great Atlantic & Pacific Tea Co. implements a warehouse management system in the first of its warehouses as part of its "Great Renewal," a four-year effort to standardize and improve processes across all its DCs.

December: Fleming Cos. consolidates numerous regional DCs into four super-regional centers, which handle more than $1 billion of product volume per year. It also plans to sell off more than 100 stores.

1999

In 1999, the role of the warehouse starts to shift in the food industry. Cross docking, vendor managed inventory, and custom labeling and postponement programs are becoming more commonplace.

"Our DCs used to perform like storage points along the supply chain," said Stephen Tibey of Kraft Foods.

"Now, we use our facilities as flow-through sites and are concentrating on how to move product out quickly and satisfy customer demand rather than optimizing the storage space in warehouses."

Inventory in the U.S. was up 6 percent per year for the past three years, however, despite supply chain initiatives such as Efficient Consumer Response, which were designed to reduce it.

"Inventory should have vanished two years ago," said Mike Jenkins of the International Warehouse Logistics Association. "Instead, it is scattered across the supply chain as retailers and manufacturers push it back to suppliers."

2000

In 2000, industry veterans weighed in on their vision of the future. "Consolidation of the food industry will continue at all levels: retail, wholesale and in the manufacturing sector," said Mike Wright of Supervalu. "Fewer and stronger players will be the norm."

"With the year 2000 now finally, mercifully here, the temptation is to join the choir in singing the high praises of technology—at the risk of minimizing the role of people—in efficient supply chain management of the future," said William Gisel of Rich Products. "At Rich's, we see our people and our culture of reliability and dedication to execution as the masters of technology—not the other way around."

2001

In 2001, collaborative logistics came to the forefront. Transportation alliances were formed among groups of manufacturers and their suppliers. General Mills Operations Inc., The Pillsbury Co., Land O'Lakes, Graphic Packaging and Fort James Corp. were one such group.

"We had decided that we needed to get out of walls of supply chain within General Mills and begin working with other companies and alliance partners to leverage scale," said Randy Darcy of General Mills, who turned to Nistevo Inc., one of a growing number of emerging logistics exchange (LX) providers.

LX's offered a wide variety of services, such as facilitating in the matching of carriers and shippers, and assisting in executing transactions. Nistevo allowed competing companies to work together to create savings.

"Before meeting with Nistevo, we had been successful in developing alliances with companies," said Darcy. "But we realized that it would be a very nourishing thing if we could bring other manufacturers to the table. This collaborative capability allows you to fundamentally take inefficiencies out of the logistics system."

2002

By 2002, the number of grocery wholesalers in the United States had dwindled down to less than 100—from upwards of 700 just two decades earlier.

But Wakefern Food Corp., a 56-year-old grocery co-op serving the Northeast, was stronger than ever. Better known by the ShopRite banner carried by most of the 200 stores it serves, the company generated $5.9 billion in sales in 2001, up from $5.8 billion the previous year. Its stores did $7.3 billion in sales in 2001, making them some of the highest -volume independents in the industry.

To accommodate this growth, and better serve its customers, Wakefern opened a $45 million state-of-the art perishables DC in Keasby, NJ. "We're here for the long haul, so we invested up front in a lot of cost-saving features," said Peter Rolandelli. Those features included larger docks and storage areas to allow crossdocking for fast-moving goods.

2001

January: First generation of on-line grocers pack it up—Streamline.com and Shoplink.com cease operations. Leader Webvan is soon to follow.

March: Kmart Corp. awards contract to Fleming Cos. as sole food distributor to its more than 2,000 stores nationwide.

April: Kraft Foods and Shaw's Supermarkets successfully synchronize product life cycle information via UCCnet.

May: Due to rising raw sugar prices, U.S. candy manufacturers, including Brach Confectionery Co. and Bob's Candy, relocate production to Mexico and South America.

August: Wal-Mart announces plans to build eight DCs, totaling 8.1 million square feet, by 2002. Half of the space will be devoted to perishable grocery products.

September: Food executives deal with shipment delays and security issues in the wake of 9/11. Tighter inspections at borders, tunnels and bridges—especially around New York City—create massive traffic jams.

October: Wal-Mart and P&G begin RFID tag test on pallets carrying Bounty paper towels.

2002

January: Fleming withholds grocery shipments to financially troubled Kmart, its biggest customer. Kmart files for bankruptcy protection and Fleming resumes shipments.

March: Food industry trade associations come together to create anti-terror documents containing preventative safety measures.

June: Fleming acquires Core-Mark International and Head Distributing, two leading convenience store distributors.

September: Campbell Soup and ConAgra sign multi-year agreements with ES3, a multi-vendor consolidation center.

October: Almost 200 cargo ships carrying food and retail goods sit idle all along the West Coast after four days of talks fail to bring an end to the longest work stoppage in the region in 30 years.

December: The rapid growth of Wal-Mart continues to be the biggest influence on the food industry, according to a report by the Food Distributors International. In just 12 years since it began selling groceries, Wal-Mart becomes the No. 1 food retailer in the U.S.

2003

January: Food Marketing Institute and Food Distributors International merge. The International Foodservice Distributors Association, a division of FDI, does not become part of the merged associations but continues as an independent group.

February: The national average price of diesel rises 4.2 cents a gallon to a new record high of $1.70.

March: The Port Authority of New York and New Jersey rejuvenate the Port of Albany, NY, in an effort to reduce traffic among container ships and trucks at docks in Newark and Elizabeth, NJ.

May: Wal-Mart sells McLane Co. to Berkshire Hathaway Inc. McLane was acquired by Wal-Mart in 1990.

June: Voice recognition technology is hailed as the "next big thing" in warehouse automation by industry experts.

July: Wal-Mart mandates that its top 100 suppliers put RFID tags on all pallets and cases by 2005.

August: A blackout in the Northeast leaves 50 million residents in eight states and parts of Canada in the dark. While tens of millions of dollars are lost to food spoilage in restaurants, groceries and retail stores without power, there was minimal impact on the supply chain.

November: Congress decides to postpone by two years the implementation of the controversial rules requiring country-of-origin labeling (COOL) on foreign meat and produce.

2004

January: New Hours of Service regulations roll into effect, dramatically affecting rates, productivity and drivers.

May: Activity-based costing comes back into vogue as companies try to maximize return on investment and capital.

August: Core-Mark Holdings emerges from Chapter 11 after Fleming spins it off.

September: More than 80 percent of Fortune 100 companies use 3PLs for some function within their supply chain, according to a study. Food and CPG companies lead the list.

November: German retailer Metro Group starts to use RFID throughout its entire supply chain, which includes 10 central warehouses and 250 stores.

2003

In 2003, everybody was keeping tabs on two wholesalers: C&S Wholesale Grocers and Supervalu Inc.

In August, Vermont-based C&S completed a $400 million acquisition of bankrupt Fleming Cos., making it a national player as it began supplying supermarkets in California. C&S then sold most of the assets to other wholesalers, including Supervalu, Associated Grocers of Florida, Grocers Supply and Associated Wholesale Grocers.

In September, C&S and Supervalu swapped assets, strengthening the market positions of both companies. C&S acquired Supervalu's New England operations, while Supervalu acquired the Midwest operations of C&S.

"It's like a game of musical chairs," said Ron Lunde of The Lunde Co. "There is over-supply of retail space, there is over-capacity of retail space and Wal-Mart keeps taking a chair away."

2004

In 2004, radio frequency identification was on everybody's mind—thanks to Wal-Mart's infamous RFID mandate.

The retailing giant wanted its top 100 suppliers to put RFID tags on all cases and pallets heading to its three Dallas/Fort Worth warehouses starting Jan. 1, 2005.

As the deadline loomed, many suppliers were concerned that the technology or standards needed to make RFID work would not be in place. One such company was Unilever.

"As much as 95 percent of what we sell will be difficult for RF tags, but most of our major retailers—Wal-Mart, Albertsons, Target, Metro, Tesco—will require us to do it soon," said Simon Ellis, Unilever's supply chain futurist.

Ellis' concern was that many of his company's product are shipped in foil packaging or are liquids—neither of which supported RFID technology very well at the time.

Others in the industry were concerned that there would not be one universal platform upon which all RFID and product data would be stored in place before January.

"I worry that we can't get the industry standards out the door quick enough to meet the mandates," said David Hutchings of Kraft Foods.

Hutchings was also expecting a low return on his company's investment when RFID first rolled out across the system.

"We are very focused on what the RFID business case proposition is for moving low-value items, such as we do, through the supply chain," he said.

2005

2005 saw more food companies working with suppliers to improve performance.

"Most of Kroger's thousands of suppliers don't have a clear picture of how they are doing or what is expected in terms of performance, and are therefore lacking in accountability," said Mike Heschel of Kroger.

"Throughout 2005, we're rolling out an automated and broad-based scorecard reporting and collaboration program to support this process, using GNX's Supplier Performance Management solution," said Heschel.

"A key element of success is demonstrating to both internal users and suppliers that the technology and processes will actually improve effectiveness and save time, instead of adding another layer of overhead."

Other companies sought to integrate their systems, both internally and externally. "There are hundreds of software applications available for us to improve our business," said Bill Scorse of Banta Foods.

"You only gain advantage if they are fully integrated into the mix of applications that you have within your organization. As a distributor, you have choices that come your way and you have to decide with whom and how you want to partner with software.".

2006

In the summer of 2006, three people died and more than 200 were sickened after eating bagged spinach tainted with E. coli. The ensuing product recall highlighted the vulnerability of the nation's food supply chain—and the importance of being able to track and trace product from source to consumption.

Solution providers said they see sales of tracking software picking up as a result of this and other produce-related E. coli outbreaks, but with about half of all processors keeping manual records, there's much room for improvement. Industry watchers expect the Food and Drug Administration to tighten Bioterrorism Act enforcement. After a disastrous field test last summer, FDA officials know their current system is flawed.

2005

January: Supervalu Inc. acquires Total Logistics Control (TLC), a major third-party logistics provider.

February: Winn-Dixie Stores Inc., which has struggled to compete with Wal-Mart, files for bankruptcy reorganization.

April: Sysco Corp. and other food distributors complete trial using RFID to monitor temperature and conditions during food transport.

May: Transportation costs now account for 62 percent of all logistics costs, according to a study by the Grocery Manufacturers of America.

September: Hurricane Katrina closes all ports, airports and railroad tracks on the Gulf Coast, and severely damages key highways, bridges and roads that are crucial for freight movement.

October: The Great Atlantic & Pacific Tea Co. turns over all distribution operations and assets to C&S Wholesale Grocers. The deal is expected to save A&P as much as $40 million a year.

November: UCCnet and Transora merge to form 1Sync. GNX (Global Net Exchange) and WWRE (Worldwide Retail Exchange) merge to form Agentrics.

December: Industry applauds new bioterrorism rules that take effect this month.

2006

January: Supervalu becomes the second largest supermarket retailer after it acquires more than 1,000 Albertson's stores.

February: Tesco, Britain's biggest retailer and the world's third largest, says it preparing to take on Wal-Mart on its on turf after unveiling plans to set up shop in the U.S. next year.

May: The Grocery Manufacturers of America and the Food Products Association announce plans to merge in 2007.

July: Wal-Mart study finds that RFID reduces out-of-stocks by 30 percent on fast-moving items.

September: Outbreak of E.coli from tainted spinach results in three deaths, hundreds of illnesses and a massive recall—highlighting the vulnerability of the nation's supply chain.

November: Martin-Brower Co. announces it has saved millions of dollars in transportation costs by switching all inbound shipments from its supplier's frozen potato processing plant in Canada to rail.