One step at a time

Feb. 3, 2004
One step at a time Balancing inbound and outbound transport to satisfy internal and external customers has gotten easier lately for Chiquita Fresh North

One step at a time

Balancing inbound and outbound transport to satisfy internal and external customers has gotten easier lately for Chiquita Fresh North America, best known for its bananas and other fresh produce. One of the secrets of Chiquita's recent logistics success has been its adoption of collaborative planning, forecasting and replenishment (CPFR).

Choosing to use one portion of a CPFR system — a transportation solution from LeanLogistics Inc. — allows Deverl Maserang, Chiquita's vice president, global supply chain strategy, to collaborate internally with many functional areas. Having access to transportation data lets these areas better manage on-time performance with their customers.

According to Maserang, Chiquita has three main business areas, each with its own specific transportation needs:

  • The company's core business is called Banana, and it has unique characteristics in terms of containerization versus palletization. In the North American market, Chiquita is primarily containerized for its bananas.
  • Maserang says the company is the top banana producer in Europe and looks to increase business on the Continent. Chiquita continues to expand globally, both with bananas and other fresh product. It has fruit going into the Mediterranean and Black Sea regions as well as Asia.
  • What's called Commercial is the backhaul side of the business. “For these operations,” explains Maserang, “we contract to move things like papers and resins and other commodities going southbound on our ocean liners, picking up those loads in North America. Within the Chiquita family we have a subsidiary called Great White Fleet, with both owned and leased chartered vessels.”
  • The third piece of Chiquita business is called Other Fresh, which includes all other commodities, such as melons, honeydews, grapes, avocados and pineapples. Maserang says this portion of the business “has more unique characteristics with less-than-container loads or less-than-truckload (LTL) moves, since most people don't order full containers of these other fresh products. We have more milkrun-type deliveries.”

Carriers are broken into groups. Those for Commercial backhaul are called liner or commercial carriers. For Banana there is a mix of one-ways and round trips, depending on lane activity. The Other Fresh component has its own carriers, mostly LTL.

Chiquita has a separate unit supporting Maserang's group with demand and supply forecasts, matching volume with demand. “We're challenged by sourcing for customers at an optimal location,” he notes. “We are constantly evaluating how much volume is moving from one part of the country to another to fulfill demand.”

When product reaches ports in North America, it moves by contracted vendor carriers managed through a centralized system. “We selected OneWorld from J.D. Edwards [now PeopleSoft Inc.] as our foundation platform,” says Maserang. “From that we are adding solutions as needed, such as the LeanLogistics solution for transportation.”

Chiquita now has increased visibility into its transportation supply chain and the web-based capability to share data with all stakeholders.

“As we continue to validate and ensure the integrity of the information, we will expose more of it to our internal and external customers to better manage expectations,” says Maserang. “The information will help overall collaboration and communication with those needing the data to manage transportation.”

Peter Stiles, vice president of strategy & business development for LeanLogistics, is active in the Voluntary Interindustry Commerce Standards (VICS) association, the organization that developed the steps for CPFR implementation. VICS has chartered a subcommittee to work on collaborative transportation management. Between his work with VICS and LeanLogistics, Stiles has found that the most benefit from CPFR comes from enabling continuous movements within one's own network. He cites the example of PepsiCo Inc., which uses CPFR to identify and eliminate repetition in continuing tours — moving from one point to another.

VICS is currently looking to produce a revitalized version of CPFR. “Some companies have looked at full implementation of CPFR and found it too big to swallow all at one time,” explains Ron Burnette, director of product consulting for solution provider Logility Inc. “So we are going to break it down into components, like collaborative planning, collaborative finance and so forth.”

Fragrance producer L'Oreal Paris, for instance, has achieved significant savings through collaborative implementation of Logility's transportation management system (TMS). Ralph Folkes, L'Oreal Paris' director of transportation, points to $1.8 million savings in the first year, and he's hoping for an additional $2.1 million in savings this year.

Previously five different buyers were placing separate orders with L'Oreal Paris' distribution centers (DCs). Orders are now placed into the system, scheduled, consolidated and shipped.

Besides expected service upgrades and better control of orders, the company is seeing its shipments move from small package delivery to LTL to truckload, resulting in real cost savings, according to Folkes.

In March 2003, workstation manufacturer Sun Microsystems Inc. expanded its global alliance with supply chain solutions vendor Manugistics Group Inc. to deliver web-based collaborative planning. The venture has been successful for both companies.

Sun is also a user of CPFR technology, having implemented a collaboration and monitoring tool for supplier relations.

Kevin McKale, Sun's go-to-market account executive, notes that the company outsources its manufacturing and previously had to use EDI, fax and telephone calls to consolidate data. Lead times were bad. “We needed a tool to collaborate with all of our contract manufacturers,” he explains.

Sun now uses an application from i2 Technologies for demand planning activities, the data from which is fed into its Manugistics collaborative planning tool.

“What we had been doing took five weeks to complete, which caused a huge bullwhip effect in our manufacturing process,” says McKale. “This CPFR solution took us from five weeks to five days. With the obsolescence innate in our industry, those five days are critical to our success.” LT


Chiquita Fresh North America