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T E A M M E M B E R S : R E G O P U D U K A D A N , K E I T H
S M I T H , M I K E M E H A N , A N D S E B A S T I A N N A S K A R I S
OPTIMIZING LOCAL FOOD SUPPLY CHAIN
NETWORKS FOR LARGE-SCALE SUPERMARKETS
AND LOCAL FOOD HUBS IN NORTH CAROLINA
Local-to-Local
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AGENDA
• Briefly describe our project
• Highlight our findings
• Share feedback from Key stakeholders
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PROJECT OBJECTIVE
• To identify the optimal distribution strategy
to connect large-scale, locally owned food
retailers with small and mid-scale local food
producers while mitigating the costs
associated with sourcing from a larger
number of small to mid-scale producers.
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APPROACH
• Field Research
• Literature Review
• Visualize the Current Supply Chain Using
Process Flow Maps
• Perform Quantitative Analysis Using Cost-to-
Serve Model
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THEORY
• Local food supply chains could be re-
designed to increase supply chain value by
cutting inventory related costs for food
retails and transportation costs for local food
hubs.
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CURRENT PROCESS VISUALIZATION
Primary Picking Process
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CURRENT PROCESS VISUALIZATION
Cross-Dock Picking Process
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COST-TO-SERVE MODEL
Pilot Mountain-MDI Retail Store Map
PMP Location MDI Location Retail Store
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COST-TO-SERVE MODEL
• The model is based on a hypothetical connection between three
actual entities: Pilot Mountain Pride (PMP), local Lowes retail
grocery destinations, and Merchant Distributors Inc (MDI).
• The model estimates cost per case to deliver produce using four
different distribution networks:
• Pilot Mountain Pride uses their own truck to deliver direct to
stores using “milk runs”
• Pilot Mountain Pride uses contract carrier to deliver direct to
stores using “milk runs”
• Pilot Mountain Pride uses contract carrier to deliver to
distribution center using a cross-dock
• MDI backhauls orders from PMP to the distribution center
using a cross-dock
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COST-TO-SERVE MODEL
• ESTIMATED VOLUMES: based on actual Lowes retail grocery
destination demand, the team assumed 2 cases (low
demand), 5 cases (medium demand), and 12 cases (high
demand)
• TRANSPORTATION COSTS: 3rd party carrier rates based on
actual rate of a NC based trucking company. Backhaul rates
are based off of MDI’s backhauling price policy, which
competitively prices its backhaul rate against similar 3rd party
LTL carriers using a discounted unloading allowance.
Integrated transportation costs estimated at $3.50 based on
industry feedback.
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FINDINGS
$0.00
$20.00
$40.00
$60.00
$80.00
Three Store Model
3rd Party Direct toStore
3rd Party to Cross Dock
Back Haul to CrossDock
Direct to Store
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Nine Store Model
3rd Party Direct toStore
3rd Party to CrossDock
Back Haul to CrossDock
Direct to Store
$0.00
$10.00
$20.00
$30.00
$40.00
Six Store Model
3rd Party Direct toStore
3rd Party to CrossDock
Back Haul to CrossDock
Direct to Store
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Twelve Store Model
3rd Party Direct toStore
3rd Party to CrossDock
Back Haul to CrossDock
Direct to Store
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FINDINGS
• For between 1 – 6 retail grocery destinations, the
optimal distribution strategy is for a food hub to
use its own truck and deliver direct to store using
“milk runs”
• For 6 – 12 retail grocery destinations, the optimal
distribution strategy is the distribution center to
back haul orders from the food hub to the
distribution center using a cross-dock
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FEEDBACK FROM STAKEHOLDERS
• Lowes Foods, Director of Produce and Floral
• MDI, Director of Produce and Floral
• Food Hub Managers