While it’s fairly common for mega-bottlers to have fleet assets spread nationwide, most multi-location distributors generally constrain their operations to one or two contiguous regions. A key exception on the distributor side of the business is in the wine and spirits segments, where already large distributors are partnering, building or acquiring their way to nationwide operations.
Miami-based Southern Wine & Spirits is a prime example of this nationwide business model with more than 60 locations serving customers from Alaska, to Hawaii, to Florida, to New York, New England, and nearly everywhere in between. Founded in 1968, Southern has consistently grown internally, as well as by partnership and acquisition, now operating in 35 states.
A “hub and spoke” warehousing and distribution strategy is one key to Southern’s ability to cost-effectively service such an expansive market area. Typically, Southern will receive truckload deliveries of product at a centrally located distribution center in each major market area. Then instead of sending bulk product to each location for order picking, the orders are picked at the distribution center and packed into bins (logistics carts), each with a capacity of about two pallets. These carts are then hauled by the trailer-load to each local facility where they are easily cross-docked into straight trucks for local delivery. “We put eight to 10 stops in an individual bin, with about three bins equaling a route, and three routes fitting into a 53-foot trailer,” says Southern’s VP of Supply Chain Services, Larry Sullivan.
Another key to Southern’s nationwide success has been the shift to centralized fleet management over the last few years.
Optimizing truck specs was one change early in the centralization shift. “When we first started about three years ago, there was a single specification that was used throughout the country, no matter what market we were in. So the same tires that we used in Florida were also used in Nevada and the same size battery used in Florida was trying to stand up to cold mornings in Chicago,” says Sullivan. “For a straight truck, we now have three specification categories, Basic, Intermediate and Mountain.” Starting with one of these categories, managers in the regional divisions can add options like a winter package with bigger batteries and heated mirrors. Sullivan also has developed spec categories for the company’s single and tandem axle tractors and trailers.
“We continue to refine the actual specifications from driver feedback,” says Sullivan. “We did a survey of about 180 drivers of trucks that were two years old or less, and the only spec we ended up changing was they wanted more space to keep their paperwork. So we asked Freightliner for a larger door pocket, and a larger spot in the middle of the cab for paperwork.”
“Our next area of focus is creating a fleet asset management system that takes us from cradle to grave for the assets,” notes Sullivan. “We are presently using more manual approaches.” Beyond the asset management capability, Sullivan is looking for fleet management software that can integrate with Southern’s other data sources including its Roadnet telematics/routing software and Penske “My Fleet” maintenance reporting. The goal is to track all vehicle costs to determine the cost to serve each account.
With no end to the volatility of fuel prices in sight, Southern also is centralizing the management of its fuel purchasing. “We are rolling out a fuel management program with Mansfield Oil that will help us manage the delivery and provisioning of the fuel as well as the cost,” says Sullivan. “By the end of this year we will have all of our locations under that program, minimizing our costs of fuel acquisition.”
The consolidated purchasing and reporting will allow Southern to consider the comprehensive fuel conservation and hedging programs.
Even while he is centralizing Southern’s fleet management, Sullivan offers this closing advice: “The most insightful thing that we have learned is that the best information comes from the drivers in the field, the driver managers and supervisors. Whether it be truck specifications, feedback on the maintenance and upkeep of the truck or best driving practices, I have found it imperative to listen to my colleagues on the frontlines carefully—not forcing a one-size-fits-all standard.”