Baking&Snack - October 2011 - 93

LOGISTICS Q&A

BOB MCGUIRE Veterans of the baking industry remember the old days when the hot distribution topic involved designing the proverbial Route Truck of the Future. Experts in shipping and transportation spent endless hours engineering a truck that reduced workplace injuries, enhanced driver safety, provided fuel savings, weighed less and carried maximum loads in minimal space. The American Bakers Association (ABA) even had a full-size prototype of what this futuristic truck might look like at a Transpo show in the 1990s. How times have changed, according to Robb MacKie, ABA’s president and CEO. With smaller fleets and the movement toward outsourcing distribution, including direct-store delivery (DSD), the focus has shifted to broader logistic issues and driving costs out of the system, he said. Baking companies face a host of issues such as tray loss, cumbersome regulations, aging fleets and equipment that’s more expensive to replace partly because of new emission requirements, according to Bob McGuire, chair of the ABA Logistics Committee. He noted that new trucks offer better miles per gallon, but the price of fuel has risen so much that the cost per mile is greater than ever. As he put it, “Most of the low-hanging fruit has been already picked. We’re running about as efficiently as we can. Any regulatory or infrastructure issues that disrupt this system add costs to the bottom line.” Working with Jula Kinnaird, Washington representative and ABA liaison to the committee, Mr. McGuire and Logistics Committee members are exploring tray tracking systems and alternativefueled fleets. This interview with Mr. McGuire, who is vice-president, director of logistics, Alpha Baking Co., Chicago, IL, is part of an exclusive series from Baking & Snack magazine on how ABA’s key committees’ decisions can affect its members’ bottom lines and why more bakers should become further involved and be at the table. For more information, visit www.americanbakers.org.

ABA’s Logistics Committee tackles tough challenges such as tray loss and higher fuel costs that directly affect the bottom line.
DAN MALOVANY What are the biggest logistical issues facing the baking industry today? BOB MCGUIRE One of the challenges we grapple with all the time is tracking of trays, dollies, carts, baskets and other reusable fixed assets. We’re trying to employ a technology that will provide a sustainable program to comfortably track these assets so we can continue to use them instead of continually buying them. It’s not a new initiative, but hopefully, technology has caught up to assist us with this initiative. In the past, it has been hard to calculate the return on investment (ROI) with a tracking system, but that might be beginning to change. Another serious issue involves the purchase price of new equipment. As an industry, we are replacing trucks up to 10 years old, and the new trucks are 40 to 50% more expensive because of new emission standards and other regulations. Talk about a demand on cash flow! Where do the efficiencies come to offset such a cost increase? Years ago, a step van cost in the mid-$40,000 range. Today, it’s more than $60,000. Talk about sticker shock! That’s because of stricter regulatory programs. How big of an issue is tray loss? With the rise in oil prices, we’re seeing organized crime and theft as an issue because they are getting more and more for regrinding these trays, and there is more motivation to make a living by stealing trays or other reusables, including dollies — their casters are very expensive. All of us have hundreds of thousands of trays, and every day, you send out a fourth or a fifth of your inventory of trays. You hope they come back. The problem is we have not been tracking where we sent out trays and which ones come back.

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October 2011 / BAKING & SNACK

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Baking&Snack - October 2011

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