BUSINESS PROBLEM

The United States’ largest boxed chocolate maker was not able to make the shift from a DSD model to Vendor Managed Inventory through major distribution point model. The company was beginning to send truck-load shipment through distribution systems like McLanes for Wal-Mart. All the while, their distribution network was configured for direct store delivery (DSD) via UPS.

During the same time period, SKU proliferation was causing an item growth of 1% per month. Shipping centers and shipping lines were not robust enough to suffice. Costs were rising, while on-time distribution was falling. The Vice President of Distribution was terminated.

SOLUTION

David Copas had just successfully completed the turn-around of the information systems department and installing its current management team at Stover. The owners of Stover Candies approached Copas to perform a similar fix-it maneuver on their distribution operation. As the senior operations executive, Copas became responsible for a private fleet of operations, contracted carriers, distribution centers (16), finished goods inventories and information systems. A total budgetary responsibility of $54 million.

Using the same divide and conquer techniques, solving one problem at a time, Copas attacked the distribution and logistics mess. With his background gained from Payless Shoes and Western Auto, he was able to put together a program to:

• Implement improved cross-DC handling of order demand.
• Establish SOPs within the system.
• Implement pick, pack and ship systems to improve efficiencies and ensure cross-network performance.
• Converted private fleet to automated dispatch and tracking systems. Improved on-time distribution from 76% to 96%.
• Lower distribution cost.
• Conceive and implemented product allocation and inventory management.
• Implement multi-national distribution operations in England, Mexico and Canada.
• Set up CPFR and VMI departments, streamlined and improved in-stock percentages.

RESULTS

The Russell Stover Candies Companies were rated by CVS as the number two overall vendor for on-time delivery and accuracy the next year. Overall, Russel Stover Candies’ vendors have increased service levels from 85% to 98%.

The private fleet load factors increased by 11%. Operating cost per mile were kept flat in the face of rising fuel prices. Distribution costs were lowered by 2% in addition to closing under-performing operations. A strategy was laid out to reconfigure the DSD operation from thirteen centers to three with a $3,000,000 per year cost savings.