Del Monte Closes the Loop in Intermodal
he question came out of the
blue. Bill Pollard, vice president
of customer service and transportation with Del Monte Foods
Co., was on the phone with a
representative of The Hub Group, one of
his major transportation providers. In the
course of a “normal, touch-base call,” Pollard happened to ask whether Hub had
done any continuous-loop routing, utilizing
intermodal services, on behalf of its other
customers. Thus began a major initiative,
crafted by Hub exclusively for Del Monte.
Pollard was accustomed to sounding
out his vendors for ideas on how to
improve service and cut costs. “As part of
our carrier strategy,” he says, “we specifically state that we value the insights that our
carrier partners can bring us. A lot of times
they can see opportunities from their perspective that we might not be able to see.”
Back in February 2008, Pollard was thinking about how he could better deploy Del
Monte’s extensive transportation network—
with $3.2bn in net sales last year, the company is one of the nation’s largest sellers of
branded food products – to drive efficiencies
in the supply chain. So he let the Hub Group
take a look at the company’s data.
A couple of weeks after that phone call,
Hub came back with a proposal. It saw
three or four opportunities to capture intermodal equipment in high-volume, closed
loops, Pollard says. Based on how effectively Del Monte could turn the equipment,
there was the potential for big savings.
Hub started with the simplest of the
opportunities that it had identified. Del
Monte has a pair of pet-food plants in eastern
Pennsylvania and northern Alabama, with
only partial overlap between products. The
vendor proposed to set up a loop whereby
canned pet food would move southbound
over the rails, from the Pennsylvania plant to
a Del Monte distribution center in Atlanta.
Then the equipment, consisting of 53-foot
containers, would travel empty to Alabama,
where they would be reloaded with dry pet
food destined for a regional DC that is
attached to the Pennsylvania plant.
Hub’s project manager visited each of
the sites, working closely with Del Monte’s
manager for intermodal transportation. In
the process, they were able to shift some of
Del Monte’s over-the-road business to cost-efficient rail. “Mode conversion was one of
the things we talked about early on,” says
David Marsh, chief marketing officer of the
Hub Group in Downers Grove, Ill.
In devising transportation strategy, Del
Monte managers have four basic “levers” at
their disposal: rate, utilization, miles and
mode. The program with Hub Group is “a
great example of our being able to pull that
mode handle,” Pollard says.
The first loop went live in August 2008.
Hub subsequently implemented three additional ones, each involving two-way transport between Del Monte plants and DCs
within the U.S.
Tight scheduling and coordination was
necessary to make the system work, says
Pollard. Intermodal has been criticized for
lagging long-haul truck in terms of service
quality, but that wasn’t a problem in this