Bouma, John C.

Peck, Gerald E.

Runyan, Jack L.

English

Research Papers in Economics

FOOD DISTRIBUTION RESEARCH PRIORITIES TO ALLOW
MAJOR IMPROVEMENTS IN TOTAL SYSTEMS PRODUCTIVITY BY 1985
Food Wholesaling
Jack L. Runyan, John C. Bouma, and Gerald E. peck
Food Distribution Research Lab., Market Operations Research Lab.,
and National-American Wholesale Grocers’ Association, respectively
Food wholesaling occupies an
important place in the food distribution
system. Although the previous statement
is a “truism”, it helps focus our at-
tention on this critical area or sub-
system of the total distribution system
for food. Rather than bask in the glory
of wholesaling’s important position, it
is time we took a hard look at, ask
some difficult questions about, and set
research priorities for improving food
wholesaling
When we take our first look at
wholesaling, we see labor’s productivity
decreasing in some areas of wholesaling
and remaining constant in others.&/ We
also see labor’s wage and fringe cost in-
creasing. The question is: “How can the
productivity of labor be increased?”
Some food wholesalers have adopted highly
advanced equipment (for example, com-
puter controlled order selection) to
increase labor productivity. However,
the adoption of highly advanced equip-
ment raises both social and economic
questions. The social questions are:
(1) how will the people who are replaced
by equipment earn a living; and (2) how
long will it take for employees perform-
ing the routine tasks in highly mec-
hanized or automated warehouses to rebel
as they have in the auto industry? The
economic questions are: (1) given our
current operations, are we really
getting as much output for our dollar
input as possible; (2)are we really
justifying our multimillion dollars in-
vestment in mechanization/automation;
and (3)through mechanization/automation,
are we treating only the symptoms? The
answer to the question how to
increase labor productivity, over the
long-run, is not mechanization/auto-
mation. The answer is research in the
area of improvement in the quality of
supervision so that future supervisors
will be able to train, motivate, and
reward employees. How can we make our
employees more skilled, happier, and
more secure? This improvement in the
quality of supervision could lead to a
more creative approach to labor-manage-
ment relations as opposed to the present
wage and fringe benefits approach.
A second look at wholesaling reveals
that competitors are not fully utilizing
their available space. Why should two
or more food distribution firms in the
same city occupy warehouse facilities
that are usually only 75-80 percent
full? Why not consolidate warehouses?
why not have warehouses specifically
designed for slow-moving items and ware-
houses specifically designed for fast-
moving items? Consolidation would re-
duce economic waste caused by the dupli-
cation. However, diseconomies that
would limit consolidation to a certain
size or volume are possible. Research
should be conducted to determine the
feasibility of warehouse consolidation
and the most expedient methods of con-
solidating warehouses. For example,
some warehouses could be designed and
equipped to handle slow-moving items and
others to handle fast-moving items. Al-
though consolidated delivery will come
under the heading of “Transport”, it
should also be considered as an area of
particular importance for improving
Journal of Food Distribution Research July 75/page 11wholesale operations by: (1) increas-
ing the wholesale value per stop; (2)
providing better service to clientele;
and (3) utilizing delivery equipment
more efficiently.
A third look at wholesaling reveals
the need for better overall management
control or the adoption of physical
distribution management (PDM). The
functions of transportation (both in-
bound and outbound) , warehousing, in-
ventory control, materials handling,
plant location, packaging, customer
service, and market information come
under the area of PDM. By looking at
and organizing their operations in
terms of PDM, wholesalers could poten-
tially save hundreds or even thousands
of dollars annually. For example, the
scheduling of receipts, greater use of
containers, better control over in-
ventory, and the consolidation of
deliveries of specialty items to small
retail stores are areas of PDM that
offer potential for improvements in
wholesaling. Through research in this
area, we should determine the economic
potential in the adoption of a PDM
approach, as well as the specific way a
manager should set up his PDM program.
A fourth look at wholesaling shows
the need ~or increased unitization of
product shipments. Unitization refers
to the shipment of products on pallets
or slipsheets or by some other methods
that will provide for the handling of
products as a group rather than individ-
ually. For example, a forklift truck
could handle a pallet loaded with 40-50
cases of product at one time. Although
results from research have indicated
that product handling efficiency can be
increased and product damage reduced
through the use of unitized shipments,
widespread ~lseof unitization has not
been accomplished. Additional research
is required for a determination of the
economical benefits and of the
technological requirements necessary for
a complete unitized shipment program
between supplier and wholesalers and
between wholesalers and retailers.
A final look (although the final
look for this paper, the search must
continue) at wholesaling shows that con-
siderable research is required in the
area of loss and damage. At the third
Rutgers Conference on Maintaining
Quality of Perishable Foods in the Super-
market, Michael J. Cepenis of the U.S.
Department of Agriculture is reported
to have said that “one-half of all food
produced and available to be marketed
never reaches the consumer and is wasted
r12/ i.nits journey from field to table. -
Wholesaling need not take the entire
blame for this huge waste, but neither
should it shirk its responsibility. We
must conduct research to determine the
causes of product deterioration and
damage and to make recommendations for
their elimination at the wholesale level.
In summary, research priorities in
the area of food wholesaling should be
given to the improvement of employee
productivity through improvement in the
quality of supervision and of employees
rather than through a reduction in the
number of employees; to the consolidation
of facilities; to the development of
logistics management programs; to an in-
crease in the use of unitized shipments;
and to a reduction in waste or in prod-
uct loss and damage. No doubt other
areas of food wholesaling can be im-
proved through research, but we think
the areas specified need high priorities.
FOOTNOTES
~/ Bloom, Gord4n,F. Productivity in the
Food Industry. Cambridge: The MIT
Press , 1.972,pages 192 and 193.
~1 “One-Half of Produce Food Wasted, Says
N.J. Speaker.” The Packer, March 29,
July 75/page 12
1975, page 2A.
******
Journal of Food Distribution Research

FOOD DISTRIBUTION RESEARCH PRIORITIES TO ALLOW MAJOR IMPROVEMENTS IN TOTAL SYSTEMS PRODUCTIVITY BY 1985: FOOD WHOLESALING

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