April 2005 | Case Studies | Casebook

Time to Deliver the Donuts

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Installing creme-of-the-crop technology helps a Dunkin' Donuts regional distribution center brew up transportation and delivery efficiencies.

When it's time for Dunkin' Donuts franchises in nine eastern U.S. states to make the donuts—and muffins, coffee, and other menu items—they turn to the Dunkin' Donuts Mid-Atlantic Distribution Center (MADC). Located in Easthampton, N.J., MADC supplies the raw materials—flour, glaze, muffin mix, and other ingredients—that end up as your morning coffee and donut combo.

MADC is one of four cooperative Dunkin' Donuts distribution centers located in the eastern United States. Each regional center is an independently owned nonprofit corporation.

"We handle all of New York, New Jersey, Delaware, Maryland, Virginia, West Virginia, Pennsylvania, Delaware, and the eastern side of Ohio," explains Tim Kennedy, MADC's director of transportation. "We support more than 1,700 locations."

As a distribution hub, products continually flow into and out of the MADC facility. It operates an over-the-road division, which brings product inbound from suppliers such as Pillsbury, General Foods, Rich Products, and Tropicana, as well as a route division providing deliveries to Dunkin' Donuts franchise stores.

The divisional split was created three years ago, when MADC took control of inbound shipments. Kennedy estimates that 75 percent of inbound shipments now arrive on MADC trucks. MADC currently operates 65 tractors on its inbound routes and 95 tractors on its outbound service, racking up 6.5 million miles per year.

This extensive travel is compounded by the fact that MADC's suppliers and stores are scattered across one of the nation's most volatile weather regions. Snow and ice storms, fog, heat waves, thunderstorms, hurricanes, and other treacherous weather conditions can wreak havoc on routes that routinely cover hundreds of miles.

"In our delivery area, the weather is always a factor," says Kennedy. "We move products all the way up to the Canadian border." Add in other travel-related headaches, such as road construction and vehicle breakdowns, and it's easy to understand MADC's need for a sophisticated IT infrastructure allowing maximum flexibility in vehicle and route scheduling.

"If the product isn't at our facility when we need to make an outbound delivery, we have to find another way to get that product to the store," says Kennedy.

The solution to MADC's weather and travel woes? A technology overhaul that revamped its IT capabilities—a major change from the way the organization previously managed logistics. It implemented transportation and operations management software, as well as wireless, satellite, and speech recognition systems.

"In the past, we managed transportation manually," says Kennedy. The new technology allows MADC to effectively cope with scheduling changes required by weather conditions as well as sudden fluctuations in demand.

MADC's IT operation is based on a transportation management system (TMS) from Appian Logistics Software, Oklahoma City. At the heart of the system is ResourcePRO, a scheduling application that uses sophisticated algorithms to assign routes to drivers and trucks, and minimize transportation resources needed for the upcoming week. Vehicle and driver assignments are presented in a Gantt chart format, enabling MADC to change assignments and route departure times manually, as needed.

ResourcePRO's scheduling charts provide a graphic representation of various events, such as arrivals, layovers, and wait times. Each event is presented in a different color or bar size. When planning a prospective change to a route's time, day, or resource, the route is automatically re-simulated and re-scheduled to check feasibility. If an infeasible move is requested, the system automatically alerts the user.

ResourcePRO works in conjunction with another Appian application, TerritoryPRO, which helps MADC adjust and design route territories based on specific constraints, such as stops per route or sales volume. The program automatically calculates territories that meet the company's maximum volume criteria, saving hours of processing time as customer sites are added or requirements change.

TerritoryPRO also allows MADC to analyze and realign current territories. As adjustments are made, statistics are updated and each account is assigned a territory number. Printing the account spreadsheet by territory, MADC can give its drivers a list of their current accounts and a map of the local region down to a one-mile area.

Optimizing Routes

MADC also uses Appian's Direct Route, an automated route scheduling system. Direct Route optimizes truck routes based on customer locations and types, volume and time requirements, road network distances, and vehicle costs and capacities. It also calculates and accommodates customer time windows, driver work time parameters, and dispatch parameters. The software creates optimized routes that can be quickly modified to meet real-world conditions.

Appian's DR Track completes the major portion of MADC's new TMS. This reporting module posts real-time route schedules from Direct Route to the Web for fast access by MADC managers and other key personnel. The software works with Nextel GPS phones issued to each driver—the phones allow the software to pinpoint a specific MADC vehicle to within a few feet of its current location. The Nextel phones also give drivers fast access to MADC managers, and allow them to summon help during emergencies.

MADC managers use the GPS data fed into the system to update arrival and departure times at customer locations, and to track planned versus actual route mileage and hours. The software also lets managers analyze driver performance and route data over time, and view updated route schedules to see if drivers are ahead or behind on their routes. Managers can also track a route's "bread crumb" trail, overlaid onto a map, to see where a truck has been during its journey.

MADC deployed the Appian software suite one year ago, and has quickly made efficiency improvements. "At certain locations, for example, demand increases during the summer," notes Kennedy. "A route that has one truck at other times of the year will have five or six trucks during the summer."

Manually rerouting these trucks required significant manpower. "Now the software does it for us," says Kennedy. "It saves a lot of time."

Powering the Operation

IT also plays an important role in MADC's on-site business operations. The company's current operations management system, supplied by Ronkonkoma, N.Y.-based Vormittag Associates, handles operations, but has become outdated.

"We've had this system for years, and because we've modified and customized it significantly ourselves, Vormittag didn't want to service it anymore," says Kennedy.

In its place, MADC will implement an operations management system produced by Integrated Distribution Solutions (IDS), Omaha, Neb. Designed specifically for route-based, multi-stop food distribution operations, it provides an accurate match for MADC's needs.

MADC is deploying the new software this summer. Once online, IDS' Power Enterprise will provide a set of core financial applications.

The online, real-time software will handle a variety of specific tasks for MADC, including accounting, order processing, bid/contract pricing, purchasing, inventory control, and sales analysis functions. A separate module, Power Warehouse, will provide operational support in areas such as receipt scheduling, receiving, returns processing, and inventory control.

For business continuity and disaster recovery purposes, MADC is deploying the IDC software in tandem with its Southeast and Midwest counterparts. All three sites are interconnected on a network.

"Our computer will host the other two centers, and a Chicago site will be set up as our backup," says Kennedy. "That way, if we go down, all three centers can operate off the Midwest site."

Last August, MADC moved from a cramped 125,000-square-foot warehouse in Swedesboro, N.J., to a new 300,000-square-foot facility located a few miles north. The new warehouse increases the number of available shipping doors from 22 to 134, and offers ample space for future needs. Though the DC currently ships 60,000 cases a day, the facility may eventually handle up to 280,000 cases.

Wireless technology serves a critical function in the new warehouse. An 802.11 wireless network, supplied by Airespace, San Jose, Calif., provides the foundation for a voice-based order picking system. Developed by Lawrenceville, N.J.-based Voxware, the VoiceLogistics picking system nearly eliminates ordering mistakes, saving time and boosting efficiency for MADC.

When using the system, the warehouse pickers may look as if they're talking to themselves, but they're actually controlling inventory by voice commands. The system replaces the traditional clipboard-oriented approach to product picking by sending automated voice instructions to pickers, telling them what items to pick and how many to select. The picker then repeats and confirms the instructions with a voice response.

The system is comprised of a client device worn by the picker, and wireless access points and controllers located at key points within the facility. Providing nearly 100-percent accuracy, the system allowed MADC to eliminate order-checking positions, says Kennedy.

The facility has also achieved cost benefits from reduced training time. It used to take up to eight weeks for a new worker to reach MADC's standard performance level. With VoiceLogistics, a new hire with little or no warehouse experience can be ready for work in about half the time.

Kennedy also reports that accuracy gains are immediate with VoiceLogistics, so training time can focus on teaching trainees the floor layout, and helping them get up to speed physically. "Most new hires have to get into shape in order to lift 50-pound bags and reach our performance standard of 200 picks per hour," he notes.

Gaining Complete Control

Integrating the voice picking technology with the IDS software is the next step for MADC. The combined systems promise to provide MADC with complete management control over warehouse inventory.

"Voxware and IDS have agreed to write the applications and interfaces to integrate the two systems, and will share the development costs," Kennedy says. The vendors are footing the bill because MADC's integrated system will serve as a model for other food distributors.

One technology MADC has yet to wholeheartedly embrace is RFID. Without a Wal-Mart or other major partner forcing its hand, MADC is biding its time on the tracking technology. "I don't know that the technology is ready for us, or that we're ready for the technology," Kennedy says.

Yet Kennedy believes that RFID will definitely play a role in MADC's future. "I'm waiting to see how the technology shakes out," he says. "In a few years, everyone will move toward using RFID."

MADC's main goal when selecting new technologies is finding systems that help fulfill its mission of keeping Dunkin' Donuts stores stocked and ready to serve hungry customers.

"Our goal is to hit every shop on the delivery date within one hour of the scheduled time," Kennedy says. "If we can find new technologies that help us reach this goal, I'm willing to consider them."

Sweet words for the people who make the donuts—and those who eagerly consume them.

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