Outsourcing your FF&E sourcing needs allows you to focus on your core business.
To keep pace in the competitive retail supermarket industry, grocers continue to build, remodel and retrofit their existing stores to attract current and future customers by keeping up with the latest equipment and technology.
In this process, grocers need to coordinate the movement of equipment and other items from the manufacturer to the respective project site, not necessarily to the store, which isn’t an easy task. Today’s existing paradigm involves several steps to assure the equipment reaches the appropriate destination. First, grocers spend significant time and energy purchasing equipment from manufacturers, and vetting quality and price. Once the equipment order is complete, the grocer then tasks the manufacturer with the responsibility of determining the appropriate mode of transportation and getting the equipment to the specified destination on time.
It’s in that hand-off to the manufacturer where the typical grocer loses control of costs and timing of deliveries. Often, the grocer has no guarantee that the freight gets to the right place at the right time.
Transportation of equipment is truly an afterthought for many grocers and retailers, as their main focus is on the movement of saleable products. The expression in the grocery industry is “Freight is freight.” However, that’s not the case with several grocery and foodservice members of TopSource, a Quincy, Mass.-based sourcing cooperative, whose main purpose is to drive value to the heart of its membership in not-for-resale areas.
TopSource has several alternatives for transporting equipment, or “FF&E” (furniture, fixtures and equipment) to a retailer’s desired destination. Grocers in particular are constantly exploring better ways to transport their equipment from Point A to Point B.
“We recognized the current environment for transporting FF&E did not provide strong alternative solutions for our grocery customers,” says Susan McNamara, director of sourcing, logistics and distribution at TopSource. “Through our due diligence, we discovered three primary ways grocers handled it today, and knew we needed to uncover a more feasible solution.”
These handling methods are:
Manufacturer executes transportation. Grocers tasked the manufacturer with coordinating transportation on their behalf, and either added the cost of transportation on the material invoice or purchased it as an all-inclusive product and service.
Grocer executes transportation. Most grocers’ transportation departments coordinate the movement of for-resale items or merchandise from their distribution centers outbound to their store sites. They have done this for years and are highly efficient in executing it. However, moving FF&E presents a different set of challenges and a level of expertise that’s outside a grocer’s normal course of business. With FF&E, different modes of transportation are needed for different types of equipment, and shipments are often made to a construction site that’s in-process rather than a fully operational store. Delivery dates are constantly in flux as well.
The fact that many grocers have multiple projects going on simultaneously, coupled with the fact that the purchased equipment has to be delivered in a timely manner, can make this process an insurmountable challenge.
Manufacturer and grocer execute transportation. A hybrid of the above scenarios is another way grocers handle transportation of FF&E. This scenario is where many of the less expensive “ship-to” items, or items deemed less critical, are manufacturer-controlled while the more critical or expensive ship-to items are grocer-controlled. In either scenario, this would typically be handled through a routing guide, a document by which a grocer has gone to the transportation market, assessed trucking companies’ pricing and service offerings, and stipulated which manufacturer is to ship the equipment for the particular grocer. While at first this solution appears to be a reasonable compromise offering the best of both worlds, the guides are often not followed, or else they become a static document that doesn’t evolve over time as needs and capabilities of providers change.
Third-party providers with experience in transporting FF&E, as well as the flexibility and project management experience to execute such initiatives, are positioned to deliver against the three challenges that continually plague grocers.
“A strong third-party service offers transparency in tracking purchase orders, allows flexibility for scheduling changes, controls all shipment tracking and provides visibility of all equipment deliveries,” says McNamara. “It usually provides a project management team, led by a dedicated account manager, that essentially becomes part of the grocer’s team and absorbs all the work surrounding a grocer’s FF&E delivery. The team interfaces directly with the grocer’s purchasing, construction and store development departments, and creates a project time line/delivery schedule from the purchase orders directly associated with the project.”
The goal, essentially, is to free the grocer’s internal departments from the burden of coordinating the transportation of FF&E, so they can focus on their core business areas.
For example, Carlsbad, Calif.-based Sol-Source, one such third-party provider, has assisted grocery clients such as Wegmans Food Markets, Whole Foods Market and The Fresh Market with FF&E transportation associated with new store buildouts, remodels and special projects. It uses proprietary software to provide visibility into the complete FF&E supply chain, and tailors communication of status reports or updates based on the grocer’s requirements. For example, some grocers want reports on any or all changes, while others adopt a “no news is good news” strategy.
The efficient project management and execution of such third-party providers often result in a minimum of 5 percent to 10 percent cost savings in FF&E transportation. Additional savings can be recognized by avoiding state tax because a third party has coordinated transportation.
Even more important, however, is freeing the retailer to focus on its core business to increase sales, making third-party FF&E transportation outsourcing the logical best choice for retailers.
The efficient project management and execution of third-party providers often result in a minimum of 5 percent to 10 percent cost savings in FF&E transportation.