It’s incredible to realize how far we’ve come in logistics, distribution, fleet operating and management technology, just in my own business career, writes Don Wilson.
It’s incredible to realize how far we’ve come in logistics, distribution, fleet operating and management technology, just in my own business career. Many in the dairy and ice cream industry today will find it hard to believe that the majority of companies were still using comptometer operators to input and calculate daily route sales and production numbers in the late 1960s and early 1970s. (If you don’t know what it is, it was patented in 1887. Google it.)
By 1974, Southland Corp., which oversees the 7-Eleven franchise, became one of the first to use IBM’s new 360 VSP (vehicle scheduling software) for its first company operated distribution center serving its 7-Eleven stores in Florida. This was a dynamic daily batch-processed routing system for the next day’s 7-11 delivery routes. Using a “dumb” computer terminal, each store input its store order of dry goods and perishables by number of individual sales units needed, rather than the previous full-case orders that were given to third-party grocery wholesalers. However, direct-store delivery of dairy, ice cream, bakery and beverage products were excluded from this system.
During this early- to mid-1970s period, we were also beginning to see companies adopt the first batch-process computerized production, processing and inventory management systems. Keep in mind that these were all data batch-process systems where production, sales, payroll, payables, etc. was input during the business day and processed overnight for next-day reporting. Operators were always looking at yesterday’s numbers. Virtually all these new systems were designed as financial reporting systems rather than operating management systems. By the mid- and late-1970s, the early migration from pure inventory financial systems began to incorporate those systems into actual warehouse management systems, as evidenced by Southland shifting into its own distribution centers with dynamic warehouse and delivery routing systems for its U.S. stores.
Southland took the lead
The first same-day, nearly real-time inventory management system I am personally familiar with is the one we built in the mid-1980s. It was a national motor fuels management system connecting Southland’s 7-Eleven gasoline sales with its Citgo Petroleum subsidiary supplier. The system enabled a single Citgo dispatch group to manage the national 7-11 inventory and replenishment (3,400 stores) by store, tank and fuel type. The group placed fuel delivery orders, confirmed actual deliveries as they were made and created a current day-by-store delivery payable for 7-Eleven and a concurrent by-store receivable for Citgo at the same time. In order to make this possible, we purchased the first “Tandem” dual processor mainframe computer that was designed to be a real-time transaction processor rather than a traditional “giant calculator.” National gasoline inventory was probably within a two-hour window of real time.
By the late 1980s, we were seeing the broad use of robust WMS designed and installed by a host of software companies that were developing specialties in such systems. In broad terms, the implementation of new distribution and logistics management and operating technology generally occurred in the warehouse area of the business first. It was also often implemented in fleet operations and management systems even before the first uses for inventory management in the warehouse. Route delivery systems, transportation scheduling and driver management have typically been the last to see the benefits of new operating technology in most dairy and ice cream operations, thus frequently extending the old adage “out of sight and out of mind,” which set in when the load left the dock door. You hoped that it got where it was supposed to go when it was supposed to be there and that the driver brought the truck back. (I once had one who did not.)
Common implementation of comprehensive logistics combining massive “enterprise” management and financial systems for the entire business with warehouse, distribution and fleet management finally began to take hold in large companies in the late 1990s. But it was clearly evident these systems were generally based along classic financial and general-ledger reporting structures with little or no understanding or inclusion of logistics, distribution, fleet operating or management systems.
Companies with strong pre-existing logistics, distribution and fleet management systems soon realized not to turn these operations to most of the “enterprise systems” vendors, but to instead build a “bridge” to pass necessary summary data to and from the logistics, distribution and fleet management systems, which generally were built and implemented by experienced specialists in these particular areas.
Managing and using real-time data
In today’s world of real-time geographic location and worldwide status tracking (that is, product temperature, engine performance, driver activity, etc.), processors are able to operate in a direct hands-on basis at any point across the entire logistics process. The trick is in understanding the entire process well enough to have the vision for implementing and integrating these new capabilities on an efficient and complete beginning-to-end design basis rather than looking only at individual departments or processes.
However, there is a scarcity of people in dairy and ice cream management who have this comprehensive overview and understanding of how all of these pieces work and relate. This is a by-product of how traditional industry departmental organization and management structure works.
As a result, few executives or managers have an adequate understanding of, or exposure to, other departments of the business and how the entire business process works. I see that scarcity of knowledge as one of the industry’s greatest challenges. The tools are available, but having the people to implement and profitably use them is the key.