Speeding the Process: The J.R. Simpot Company
To support a rapidly expanding business, J.R. Simplot used 3PLs to optimize a seamless merger and warehouse transition—while maintaining customer service expectations—all in 90 days.
Less than a year ago, The J.R. Simplot Company, a privately held food and agribusiness company, and Idahoan Foods, a manufacturer and distributor of dehydrated potato products, began exploring a relationship where Simplot would take over the sales/marketing and distribution arm for the foodservice line of Idahoan Foods products.
The Idahoan foodservice product complemented Simplot's existing dehydrated potato products, which it purchased from Nestle in 2000.
"We signed the Idahoan agreement late in the spring, and that's where the story begins from the supply chain point of view," observes Steve L. Brown, senior director of logistics for the Boise, Idaho-based J.R. Simplot Company.
The company previously handling marketing and distribution for the Idahoan foodservice and Simplot dehydrated potato products held some 7 million to 8 million pounds of the annual 50 million to 60 million pounds of sales volume in its private distribution chain.
Simplot had just 90 days to transition the business from the previous marketing and distribution company to its own operations. The company clearly need an optimization strategy.
"We had to go out and find new distribution facilities for this product," Brown explains. Simplot's other products are frozen foods, so the company had to set up a completely new distribution network—and fast.
To do so, the company sought third-party logistics providers (3PLs) that offered shared warehousing facilities, and could provide transportation management and freight carriage as well as multi-vendor order consolidation to some 300 customers.
Making the transition seamless and transparent to customers was of paramount importance. "Our overarching concern was delivering service to the customer," Brown says. Because a large number of Simplot's orders are customer pick-up, the company wanted to duplicate the previous distributor's network.
"There was never a doubt that putting the facilities where the customer already had a presence was the best solution," he says.
To develop the desired network of five Forward Distribution Centers (FDCs) that mirrored the existing network, Simplot issued a detailed Request for Proposal to eight 3PLs that met its criteria.
"We were looking for providers with good, solid consolidation programs that would minimize cost and maximize service levels," Brown says.
The evaluation team included a cross-section of Simplot logistics staff—including rail and motor carrier transportation managers—plus representatives from customer service and production planning.
Recognizing that "you only get one chance to make the right partner choices," says Brown, the company performed rigorous due diligence, reviewing proposals, listening to presentations, making site inspections, and seeking existing customers' evaluation of potential providers.
In May, Simplot selected DSC Logistics to provide full warehouse and transportation services out of FDCs in Joliet, Ill.; McDonough, Ga.; Roanoke, Texas; and Allentown, Pa. The company chose States Logistics Services Inc. to operate its FDC in Buena Park, Calif.
"At that point, we had 45 days until shipping the first order," Brown recalls. "That's when the work really began."
Simplot contacted each foodservice customer, describing the changes, the consolidation program, and what customers could expect, comparing the new arrangements to the previous ones. Several customers were already picking up orders at the new facilities.
Simplot and its third-party logistics providers also had to set up comprehensive electronic communications to facilitate effective order management. Additionally, product from the previous distributor's locations had to be moved, counted, racked, and ready for orders in just a few weeks. Simplot and its 3PLs physically moved the product over a two-week period.
When Simplot began taking orders on June 30, there was no interruption in service. "We took orders and we shipped orders that day," Brown says. "This was the most seamless transition I have ever seen. It worked flawlessly; I don't think we missed one order."
He attributes the smooth transition to preplanning, and lots of it. For a successful and swift implementation, "you'd better know what you need, and go out and get it," Brown says. In addition, involving customers early in the process was a critical success factor.
"We were very conscious that the first month would have a large impact on the customer's perception," he notes. Simplot effectively micromanaged every order for a period to make sure that customer expectations were met.
The successful transition was facilitated by Simplot's small but effective logistics staff, including a production planning and scheduling specialist, a sales forecaster, and FDC manager. "We are managing a 50-million to 60-million pound business with a lean staff," Brown says.
That's a tribute to the relationship the company has with its third-party providers.