Challenges such as truck congestion, slow unloading processes, cold chain disruption and safety issues are some of the daily situations experienced by food retailers in Latin America. The difficulties in temperature-controlled food logistics in the region are even greater for retailers due to the complex nature of the industry.
Unlike hyperstores and large supermarkets that dominate this type of commerce in the United States, the Latin American scenario is mainly characterized by many small markets scattered throughout neighborhoods. This unique regional characteristic imposes a different logistical challenge on retailers.
In order for retailers to be able to focus on sales, relying on specialized partners for the logistics and temperature-controlled food storage, is essential. Check out our top tips for making this important process more efficient and cost-effective.
1. Increase stock visibility
By relying on the solutions of a specialized partner, it is possible for suppliers to allow retailers virtual access to stock, since they will be stored in the same warehouse, increasing visibility and predictability.
The systems provide real-time visibility of stock, allowing retailers to make decisions based on accurate data.
Companies specializing in 3PL usually offer integration between the WMS (warehouse management system) and the customer’s ERP or WMS through EDI (electronic data interchange), providing real-time data and increasing stock visibility.
2. Improve stock control
Retailers can take advantage of centralization capabilities to efficiently manage and transfer stock from multiple suppliers to a single, well-organized hub.
Companies specializing in 3PL, such as Emergent Cold LatAm, invest in the latest technologies to better control inventory, order selection, and other value-added services often required by retailers.
Centralized storage facilities guarantee precise stock control and monitoring, reducing the risk of product shortages or surplus.
3. Reduce delivery time
Strategically located facilities minimize delivery distances, ensuring fast and reliable deliveries.
Well-designed distribution centers will lead to a faster and more reliable unloading process, reducing delivery times.
With multiple doors and large loading docks, 3PL companies offer 24-hour operations and services such as cross-docking for perishable products, increasing the shelf life of products.
4. Prepare for seasonality
3PL providers can enable retailers to flexibly adjust stock levels without the burden of large-scale, long-term infrastructure investments.
Specialized companies can accommodate the seasonality of different customers. At Emergent Cold LatAm, we have different types of commodities. For example, the high-volume season for certain types of fish runs from May to August, but the retail season is usually from September to December. Therefore, warehouses can navigate the seasonality of different customers and commodities.
5. Reduce costs
Suppliers can maximize the efficiency of their transport resources with an optimized logistics approach, resulting in cost savings. It is common for retailers to charge their suppliers a fee, covering storage and delivery costs.
Centralized logistics operations lead to lower transport costs, benefiting retailers and suppliers.
Another advantage is the decrease in waiting times in stores. Generally, stores don’t have the ideal infrastructure to accommodate multiple simultaneously unloading processes. Distribution centers are designed for this purpose, with more extensive and refrigerated loading docks with multiple doors to accommodate different types of trucks.
6. Optimize cash flow
Effective stock management is fundamental in business, as stock is a type of asset and directly impacts cash flow. Companies are always looking to avoid excess, but also shortages. It is common practice to keep surplus stock as a way of protecting against uncertainty or to take advantage of opportunities.
Having better visibility of stock levels will positively impact the cash flow of retailers and suppliers. Retailers can benefit even more from centralization, since suppliers bear the stock-related costs until they are transferred to the retailer’s account.
How a supermarkets retail chain became a success story
One of the most important supermarkets retail chain in Panamá, with more than 60 stores in different formats, decided to transfer its operations to the Emergent Cold LatAm (formerly Galores Cold Storage) facilities in 2014.
Before the move, the retailer had a warehouse that was too small to accommodate local suppliers and imported products.
- Excess products had to be stored in small cold rooms and reefers connected to the stores.
- Congested loading docks at stores, since most local suppliers had to deliver to every point of sale on a weekly basis or, in some cases, several times during the week.
- High costs of "missing products" or "expired products" in its warehouse and point of sale, mainly due to inadequate storage and handling conditions, inadequate technology (WMS) and lack of SKU stock.
- Complaints from suppliers due to inefficient last mile, distribution problems due to uneven truck occupancy and high waiting times in stores.
After centralizing operations with Emergent Cold LatAm, the customer has improved process efficiency, reduced costs and increased sales in its stores.
- The retailer centralized its operations at the Emergent Cold LatAm facility, initially only for imported products.
- The creation of an EDI (electronic data interchange) to communicate with its ERP (enterprise resource planning), so that the customer had full visibility of its stock.
- After a few months, a centralization project was started for local suppliers, charging a fee (% of sales).
- Chilled: mainly cross-docking.
- Frozen: enough stock to supply stores during the week.
- The customer decided to centralize the local suppliers of frozen products in the Emergent cold LatAm warehouse. As a result, suppliers began delivering products in larger trucks or containers directly to the warehouse.
- Suppliers have decided to become customers of Emergent Cold LatAm and store directly, reducing their transportation costs and transferring products when necessary.
- Centralization of fresh products, but mainly for cross-docking, increasing control and product shelf life.
- Reduced congestion at points of sale.
- Increased control, visibility and reduction of stock shortages.
- Increased sales in stores.
Did you find these tips interesting, or would you like to learn more about the details of the operation created for the retailer in Panamá? Please, contact our team.
