Food Outsourcing Best Practices: 7
Keys to Successful Food Supply Chains
By Danny Rimkus
Introduction: Food Outsourcing Best Practices
The purpose of this white paper is to inform food companies about
the best practices associated with the proper outsourcing and
distribution of food items. Th is guide provides a brief overview of the
following food outsourcing considerations:
1.
2.
3.
4.
5.
6.
7.
Outsourcing requirements
Operational excellence
Food safety
Technology integration
Specialization
Packaging
Location
If you are interested in delving deeper into these categories, please
refer to our website or contact Danny Rimkus with any questions.
Danny Rimkus
(815) 553-8920
[email protected]
http://dynamic3pl-llc.com
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 1
Section 1: Outsourcing Requirements
When it comes to food outsourcing, the first thing that should be
discussed between the supplier and their client is the outsourcing
requirements. These requirements can include: the companies’
operational and financial objectives, the scope of the operation,
KPI’s, deliverables, roles and responsibilities and expected
outcomes. W ithout a clear expectation of requirements,
miscommunication may occur and qua lity standards may not be met.
For a successful and rewarding partnership, heed the following
guidelines.
Food Shipper Needs Anal ysis
Communication is key. What are your internal needs? What would
you like to outsource? What functions would you like to outsource?
Can the 3rd party logistics provider (3PL) meet them? W here are
your operations located? W ill it meet quality expectations? How will
you measure success? W ill outsourcing save money? These are
important questions to be asking while meeting with your 3PL. In
return, they should be asking you questions as well. How much
product will we be moving? Does the product require temperature
control? When and where do you need the product delivered? As you
can see, a healthy flow of discussion will bring to light the critical
details needed to safely and effectively outsource a portion of your
food supply chain to a 3PL.
Creating Service & Cost Benchmarks
As with all operations, knowing which metrics need to be measured
is paramount. Establishing key performance indicators (KPI’s) for
key areas such as quality, on-time delivery, inventory management,
production, cost and customer service, can mean the difference
between the successful or failed outsourcing. Don’t fall into the trap
of ignoring this important aspect of your business. Another hidden
advantage is the cost avoidance gained by s electing a 3PL that is
already pre -equipped with both W MS (W arehouse Management
System) and TMS (Transportation Management System). This built -in
infrastructure allows you to focus on your core competencies.
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 2
Engineering a Fully Integrated Packaging, Logis tics &
Transportation Solution
Once the customer requirements and expectations are fully
understood, the 3PL should engineer a solution that fully integrates
all aspects of packaging, logistics, and transportation. The solution
should include not only the physical handling of the product, but also
the flow of information between the 3PL and your company.
Communication is essential for a fully integrated solution. Figure out
the best mode of communication and set standards for what is
expected for the transfer of information. For example, you may want
to agree on the timing and methodology for sharing production
number, volumes, order mix, new releases and delivery timing. Many
customers may find satisfaction with services offered a la carte;
however, the overall value proposition of a full package 3PL is very
important to keep in mind.
It is also important to train everyone within the organization about
the fully integrated technology set in place. You may find yourself in
a situation where a new process will take over a previous system —
this may require you to re -sell certain information to internal
employees.
Roles & Responsibilities
Clearly defining each party’s roles and responsibilities is a great
way to ensure everybody is on the same page. Spe nd some time
upfront developing a detailed roles and responsibilities matrix to
avoid future confusion. Define every step in the process and discuss
the physical product handoff, information required, processes and
running rules.
Section 2: Operational Excellence
In laymen’s terms, operational excellence can be described as a
business state of being where every employee knows and values the
objectives of their customer and actively strives to fulfill those
needs while ensuring the healthy developm ent of the operational
system. To achieve this, a 3PL must be process oriented and have a
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 3
culture of continuous improvement. The ideal 3PL will be effective,
efficient and have the KPIs and verification to prove it. Stringent
quality programs, such as Safe Quali ty Food (SQF), naturally have a
manner of enhancing and assuring operational excellence on all
fronts. To achieve operational excellence, a 3PL must to hire, train,
and retain great people.
For a 3PL to excel operationally in food contract packaging, the y
must provide a fully integrated solution that aligns these 3 important
functions: contract packaging, warehousing, and transportation.
Contract Packaging
When considering a company to fulfill your contract packaging
needs, keep efficiency in mind. As k yourself, “W hat is the work I am
outsourcing and does the 3PL have the necessary functions in
regards to proper shipping?” Consider the following: needs
assessment, financial stability, business, the correct technology,
equipment and facilities, expertis e and experience, and a solid
reputation.
Effective employees and packaging processes allow for the desired
result each and every time. Don’t be afraid to ask about the level of
experience and expertise that the company has with the packaging of
your particular product—specialization in your specific field of
operations is a good indicator that the distributer has these
qualities. Do your homework.
W ith food handling, it is especially important to inquire about the
cleanliness of the rooms and food safety certifications/standards
within the organization. By ensuring these things, you are mitigating
any future issues that may arise over the purity of your more
sensitive products and you are eliminating any contaminants that
may compromise your product in the future. Some benefits of using a
clean room are: the elimination of food safety concerns, intensely
monitored care for products, sanitary handler uniforms, temperature
control, and FSMA/food safety trained staff.
Warehousing
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 4
W ithout proper warehouse management, food items can easily be
wasted. It is important that your warehousing company properly
stores your products and distributes them in a timely manner. Make
sure that the distributer practices first-in-first out as they ship your
product. Inventory management is equally important. By using the
proper technology, your warehousing provider can safely and
effectively maintain and monitor your inventory. Nothing looks worse
than when a client orders your product and you do not carry it on
your shelves, have obsolete items or have an excessive inventory.
Transportation
The right transportation mode is critical to success in food
distribution. Do you want to spend more than what is n ecessary on
moving your goods? No! At Dynamic 3PL we ship in any mode to
anywhere. This includes: truckload, LTL, small parcel and courier
transportation. When shipping with us, we can guarantee world-class
expertise.
We are fortunate enough to be partnered Echo Global Logistics and
their carrier network. The Echo brand is one of the best known
brands in the transportation and logistics industry. Because of our
relationship, we have accesses to un -paralleled buying power,
shipping technology, and leverage Echo’s enormous volume.
Some things to consider while looking for sanitary food
transportation are: prior loads, truck cleanout, temperature control,
on-time performance, cost, packaging, billing accuracy and damage.
Project Management
Before outsourcing your food, make sure the company you are usin g
has top notch project management. You should have a single point of
contact for your day-to-day business activities with the 3PL. The
project manager is responsible for communicating the status of your
business and deliverables through daily verbal and written
communication. By streamlining your operation to a single point of
contact, you are cutting out the unnecessary headaches that come
with tracking down your shipments at various po ints in the logistics
process. It also allows for a go -to contact when you are in need any
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 5
updates or troubleshooting. As with all the other facets related to
shipping, having the proper people that are up to date on your
specialized needs is extremely advantageous. Dynamic 3PL offers all
of the before mentioned services and executes them flawlessly so
you don’t have to.
Facilities & Location
How big is the facility and where is it located? How close is the
facility to my customer? W hat types of products have previously
been held in the facility? These are valuable questions to ask
because of their relationship with your end cost. If you are sh ipping
your food product to New York it makes much more sense for the
facility to be in Chicago than it does in Dallas. Lower transportation
costs and higher food quality will come from making the proper
decision when it comes to location.
People & Processes
The 3PL you choose needs to display a culture of food safety,
accountability and must be process oriented. The people used to
package and ship your food products should not be over looked.
Dedicated and happy employees tend to produce better work due to
their investment into the company and the high value they place on
their work and job. Employees should have received food safety
training and should possess the knowledge on how to correctly
package any product.
There are many ways to go about certain tasks and through a
collaborative effort you may be able to come up with a new way to
achieve operational excellence by designing a faster and more
efficient packaging process. On a regular basis, review the process
with your 3PL. Use a continual collaborative effort in order to
improve service, money and customer experiences.
Section 3: Food Safety
What good is a logistics company that can’t prepare, store, and
safely manage your food ite ms? By properly following state,
regional, and national food safety standards and guidelines, Dynamic
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 6
3PL is ensuring that you are delivering a satisfactory product to your
client and their customers.
Food Safety Standards & Certificates
When it comes to successful food outsourcing, food safety is one of
the most important aspects. W ithout the proper incorporation of food
safety standards and certifications, your business is sure to miss the
necessary quality benchmarks. Make sure to choose a company that
will fulfill all of your food safety needs and follow FSMA and SQF
standards while doing so.
The FSMA ensures safety and security of the food and feed supply to
protect human and animal health. The FSMA represents the biggest
overhaul of the FDA since its inception in 2011 and has a significant
impact on any company that produces, distributes, transports or sells
food in the United States.
Companies that are working within FSMA compliance must complete
the following processes: write a food safety plan, identify potential
hazards and risks, implement preventative control to mitigate risks,
monitor controls to ensure they are done correctly, training, and
documentation. FSMA aims to prevent food borne illnesses instead of
responding to contamination.
Safe Quality Food Certifications
The Safe Quality Food Institute (SQFI) is an organization that sets
certain standards for food outsourcing and distribution. Their
mission is “to deliver consistent, globally recognized food safety and
quality certification programs based on sound scientific principles,
consistently applied across all industry sectors, and value by all
stakeholders.” It makes sense to work with a company that has SQF
certification because it ensures the highest level of compliance.
Safe Quality Food certification is comprised of four different
standards. The standards are: 1) the SQF code, 2) safe feed/safe
food, 3) ethical sourcing, and 4) gluten-free certification program.
The SQF Code requires that all suppliers in the food distribution
industry follow a systematic approach to the gui delines set forth by
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 7
the HACCP for the safe handling of food products. The safe
feed/safe/food component requires operational excellence that go es
above and beyond what is already set in motio n by current safety
standards. This affects regulatory agencies, customers and
consumers. Ethical sourcing requires an assurance that all food
products have been grown or sourced in a way that meets co rporate
social responsibility. By following the Gluten-Free Certification
Program (GFCP), distributers are pledging to ensure that their
products meet certain standards that differentiated their products
from others that include gluten allergens.
FDA Certified & FSMA Compliant
The legislation provided by the FDA states that inspection is one of
the most important channels for holding companies accountable for
implementing food safe practices and FSMA compliance. In order for
an item to be FDA certified, it must pass a series of tests that prove
that the product is not harmful for human consumption or health.
Training
As part of FSMA, companies in the food supply chain are required to
train their employees. Rigorous and detailed training allows for all of
the necessary food handling procedures and laws to become
ingrained in the workers mind. As with many industries, training may
not be one size fits all. There are different courses that can be
completed based off the needs of the organization. Ask for a list of
the specific types of training the employees have gone through so
you are able to see if it matches with your food handling needs.
Documentation
Documentation of food outsourcing processes should be an important
part of your business. A written food safety plan w ill assist with
eliminating hazards, mitigation plans, and will provide your
employees with a reference in case of an emergency. Having a plan
in place will also assist with the training of your current and future
workers. It is also necessary to document prior loads, truck
cleanout, and temperature control. This data informs the 3PL of the
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 8
types of contaminants that may reside in the shipping containers or
the warehouse.
Section 4: Technology Integration
To successfully outsource any function of your logistics needs,
technology is vital. The proper use of technology is integral for
cohesion between you, your partners, and various food outsourcing
processes. Not only can system integration provide improved
communication, but it can streamline shipping technology and the
various nuances of the project at hand.
Technology Connecting the Customer, Suppliers, Outsourcing
Partners and End Customers
Technology integration is especially important for enterprise
resource planning (ERP). Having a database th at allows for accurate
shipping and billing information will minimize any confusion that may
arise from individual operator error. If you choose to outsource a
piece of your business, it will allow for your TMS and W MS to be
synched together within the ERP system. It also allows for an online
communication system that eliminates the need for hard copies when
it comes to ordering goods and filing logistics documents. In short,
system integration is important for your business because it allows
for all the various digital components to be connected together while
providing real time access and visibility to all the individuals
involved.
Real Time Access and Visibility
We live in a global economy where information is expected to be
updated continuously. Using a fully integrated online system is a
great way to stay on top of outsourcing and distribution processes
while keeping everyone informed.
Section 5: Specialization
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 9
When outsourcing to a food contract packager, make sure they
specialize in food. One of the benefits of working with Dynamic 3PL
is that we provide you with a one-stop shop for the specialization of
food contract packaging. Our warehousing, food contact packaging
and transportation divisions all work together seamlessly to provide
you with the high level of expertise that you are looking for.
At Dynamic 3PL, we pride ourselves on our experienced personnel,
expertise, winning culture, and our single point of contact. 3PL’s
that don’t specialize in food often don’t know all of the requirements,
regulations and safety measures that come with the proper
transportation in the food supply chain. Companies that do not
specialize in food probably do not know all of the requirements,
regulations and safety measure that come with the prope r
transportation of said items.
Section 6: Packaging
One of Dynamic’s divisions is contract packaging. Packaging is one
of the keys to a safe and successful food supply chain. W ithout the
proper container for your food products, an organization cannot
successfully transport and maintain the integrity of the product
inside. Follow these guidelines to ensure maximum transportation
potential.
Safe & Clean Packaging Environment
When it comes to food, nothing is more important than a safe and
clean packaging environment. W ithout the proper precautions,
unwanted contaminants can find their way into your product and
cause a whole slew of problems down the line from spoilage to
health issues. Make sure that your contract packaging company is in
compliance with all the appropriate health codes.
Automated Process
Through automation, a company can ensure a consistent packaging
solution, faster service, and can achieve lower costs . Our automated
processes help reduce or eliminate operator variation and errors.
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 10
This is done by integrating software applications and restructuring
our labor force.
Meets Industry Best Practices
The packaging used for your product has a large impact on your
shipping costs, the quality of the product it contains, and the method
of transportation. Make sure to source the right type of packaging
and that you adhere to space utilization guidelines and load
optimization. It may sound odd, but think of the arcade game Tetris—
you want to fit each piece of the puzzle together in a way that
maximizes the space that you are given.
Keep in mind the different packaging requirements for different
products. It is important that your 3PL understands the best
solutions for each of your food items and is aware of how the type of
package used may reduce the integrity of the product inside or
hinder the consumer from accessing it. For example, you wouldn’t
put ice cream in a plastic bag or you wouldn’t place candy in a glass
bottle.
Section 7: Location
If you ask anyone in real estate, the one thing they will always tell
you is that the three most important aspects when choosing a
property are location, location, location. The same counts for
transportation logistics. W ithout the proper access to ports,
highways, airports, and rail, a food transportation company cannot
effectively move their clients’ product within the designated
parameters. Dynamic 3PL is located in Chicago—this means that we
are located in a central hub that allows us to reach about 70% of the
United States population within one to two days.
Located in Bolingbrook, Illinois, Dynamic 3PL is perfectly situa ted
for national distribution. In fact, Northern Illinois, which includes
Chicagoland, was named Number One U.S. Distribution Locations by
Christopher Steele in areadevelopment.com’s Top Ten U.S.
Distribution Logistics Locations. The strategic placement of our
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 11
warehouses and distribution center allows us access to large and
rapidly-growing consumer and customer bases across the country.
Close proximity of the Port of Chicago, O’Hare International Airport,
and the many interstates and expressways branching from the city of
Chicago allow us to provide same day and next day delivery in many
instances.
Conclusion
To successfully outsource to a food contracting company, make sure
you follow these guidelines: outsourcing requirements, operational
excellence, food safety, technology integration, specialization,
packaging, and location.
Through proper planning, a flow of communication, and top -notch
organization, the success of your shipment is now in your hands!
About The Company
Founded in 1997 as a freight forwarder, Dynamic 3PL has evolved
into a single source logistics provider offering contract packaging,
warehousing fulfillment, and transportation management services
including LTL optimization and Walmart consolidation. We pride
ourselves on our ability to provide operational excellence to all of
our customers and on the cohesion of our three integral divisions.
Transportation
Since our inception, we have grown rapidly to serve our customers.
To gain access to their billion -dollar yearly freight spend, Dynamic
3PL has become part of the Echo Global Logistics family. Our Echo
partnership enables us to offer huge discounts across all modes of
transportation from and to any location worldwide. In addition to the
Echo capabilities, we have a solid team of veterans who will become
an extension of your supply cha in group.
Warehousing
Dynamic 3PL has a full service warehousing division that provides a
comprehensive set of solutions for our customers. Whether you’re a
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 12
B2B veteran or a B2C startup, food shipper or non -food, require
ambient or Air Conditioned space we have the perfect customized
fulfillment solution for all your logistics needs, Dynamic 3PL
delivers.
Contract Packaging
Companies trust their contract packaging needs to Dynamic 3PL for a
variety of reasons. Among the advantages of outsourcing your
secondary packaging to Dynamic 3PL are the following: eliminate or
greatly reduce internal headcount and investment, leverage our
packaging expertise and utilize our Safe Quality Food (SQF) certified
facility.
Dynamic3pl-llc.com
© Copyright protected, 2017
Page 13