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Necessity is the mother of invention, or in the case of TLC's new MACC (Mixing and Configuration Center), it's the mother of reinvention. Based in Milwaukee, the first MACC began operations in October 2005.
By combining multiple—and sometimes competing—vendors' products into truckload volumes destined for grocery distribution centers, this consolidation model is proving to drive new value into the grocery supply chain.
The premise of the MACC is that vendors shipping LTL volumes of temperature-controlled goods are getting squeezed by capacity shortages and escalating costs. They are often unable to take advantage of truckload savings, plus they are often subject to lumper fees and service penalties. Realizing that these frictions also represented problems on the grocer side, TLC created the MACC concept.
Similar to operating models that have been tried with limited success by other companies, the MACC serves as a consolidation point for multiple vendors' products. By combining these shipments, including products that are direct competitors, TLC delivers truckload volumes on a pull basis to regional grocery distribution centers. The combination of savings and service level increases attracted many early adopters to the MACC. TLC states that the number of customers will double in the coming months.
TLC had a major advantage in launching this concept—a ready and willing grocer. Phase I of the MACC concept serves Supervalu (TLC's parent company) grocery distribution centers. This immediate customer, and their willingness to accept shipments from the MACC, made rapid rollout possible, and is a key element in the continued strong growth of the MACC.
Phase II of the program, which is already beginning, will expand the MACC to serve other grocers in the region. This will place directly competitive products onto truckload volumes serving directly competitive grocery distribution centers. "Unthinkable in the very recent past, the MACC concept represents what many believe will soon be an industry norm," predicts TLC CEO and president Bob Koerner.
An Evolving Cost Model
With the dual shock of escalating fuel prices and transportation shortages, LTL shipment costs continue to climb, currently outstripping the increases for truckload volumes. These sharp increases, teamed with increasingly strict requirements from customers, have created the marketplace need for concepts like the MACC. In addition to increasing customer service levels, companies that use the MACC are also freed from LTL costs, lumper fees and service penalties from participating grocers. "Once we have the goods in the MACC, we take the responsibility to ship them according to the grocers' demands. This removes the vendor's responsibility for late fees and other changes," says Chris Owens, vice president of sales for TLC.
Based in an existing TLC temperature-controlled facility, the MACC retasked the entire operation. The company believes that the concept is portable. Phase III of the MACC is to roll out the model to other regions of the country and perhaps to formats other than temperature-controlled grocery.
Another appeal of the MACC is the breadth of products it can accommodate. Not limited to frozen foods, the facility also handles fresh meats and other refrigerated items, raising the potential SKU count and product mix. As the name implies, the MACC also serves as a configuration center. Capable of overwrapping, secondary packaging, bundling and other post-production services, the facility enables vendors to move such functions as far down the supply chain as possible, without adding an extra logistic element. This affords maximum inventory flexibility and cost containment.
Broad Spectrum Of Products To Mix
According to Gary Sarner, TLC's chairman, who also oversaw the early development of the MACC, "The mission of the MACC is to lower overall supply chain costs, reduce inventory levels, remove frictions and redundancies while increasing overall customer service levels. In the end, this serves the consumer and everyone wins."
As for competing customers using the same solution, TLC's Chris Owens takes a philosophical view. "There was initial reluctance for competitors traveling on the same truck, but this seems to have been largely overridden by the savings and customer service benefits," he says. "Most vendors realize that the best place to compete is on the retail shelves."
With an initial mix of seven customers at startup, the MACC now has 15 companies either in full operation or startup. A recent kick-off meeting with 50 additional customers, according to Owens, will result in another 12 customers.
The MACC is ideally optimized for vendors currently shipping one or more temperature-controlled products to regional grocer distribution centers in LTL quantities. Not every company benefits from the MACC equally. TLC has developed a comprehensive supply chain model that analyzes the customer's current network and seeks benefits from the MACC. Companies that do not garner a benefit from the MACC, including those that can ship in truckload volumes to all DCs today, would see less benefit from this model.
The MACC represents what many supply chain executives might consider a bold move, but in reality, the MACC has proven to be a sound business solution for TLC's customers, even for those who do daily battle on the store shelves.
author: By Denise Dorman