Leveraging & Harnessing Existing Systems and Enabling

Technology

Deborah WhiteSVP & CLO

Food Marketing InstituteDecember 9-10, 2009

dwhite@fmi.org

Food Safety Priorities

• Prevention– Preventing adulteration at point of production

should be highest priority– Only safe food should enter the food supply

• Response– Retail and distribution sectors utilize effective

systems to remove adulterated food from the distribution system quickly once the food has been identified

Tracking Food• Recent prolonged outbreak investigations highlight need

to identify and find adulterated food that has entered the food chain more quickly

• Retail and food distribution industry complies with Bioterrorism Act “one up/one down” requirements

• New programs:– Maximize existing information– Pilot projects first– Interoperable– Consider all options for better identifying adulterated food in the

supply chain, not just new recordkeeping requirements – Improve public health

Today’s Distribution System• Today’s distribution center (DC) is highly efficient*

– Hundreds of suppliers send millions of cases that are repackaged into thousands of shipments to hundreds of stores

• Median DC size: 583,655 ft2– Range: 60,000 ft2 5,800,000 ft2

• Avg Deliveries to DC: 500 per week– Range: 248 874

• Median # cases received by DC: 510,000 per week– Range: 176,731 975,000

• Median # cases shipped from DC store: 2,200,000 per 4 weeks– Range: 120,000 13,804,000

• Median # deliveries from DC store: 1,972 per 4 weeks– Range: 54 12,783

• Median pounds of food shipped: 47,500,000 lbs per 4 weeks

*FMI, “Distribution Center Benchmarks,” 2007

Today’s Distribution System

• Simple Process: In-Bound (Records)– Wholesaler orders from vendor (Purchase

Order)– Vendor ships order to DC (Shipping docs,

manifest)• Vendor bills DC (Invoice)

– DC receives pallet from vendor (“License Plate”)

Today’s Distribution System

• Simple Process: Outbound (Records)– Store places order with warehouse (store order)– Selectors travel thru warehouse to pick individual

cases to complete order• 65% of DC’s use voice-directed order selection systems

– Store order of hundreds of cases palletized– Order shipped to store (store invoice)– Order received by store

• Median: 42 cases stocked on shelf per hour

Today’s Distribution System• Performance

– Avg Cost To Handle Each Case• Median: $0.39 per case (inbound + outbound)

– Time To Handle Each Case• 20.57 seconds per case (outbound)

• Additional distribution mechanisms– Cross-docking

• 94% of warehouses cross-dock product– Brokers

• Combined orders for lower volume items– Direct store delivery

• 30% of retail sales

Today’s Consumer• Recession and economic woes are REAL• Price of food is critical

– Recession has impacted grocery shopping (70%)• Shoppers “trading down,” substituting and eliminating to save

money on groceries (Trends, 2009)– Low price is the single most important factor to consumers

selecting a primary store (Trends, 2009)– 36M Americans receiving federal food assistance (NYT,

11/29/09)• 20,000 people added per day

• Consumers still time-starved (Trends, 2009)• Nutrition important (Trends, 2009)

– 89% of consumers very/somewhat concerned about nutrition– 92% of consumers believe home-cooked meals more nutritious

Important To Get It Right• Increased distribution efficiencies have kept food

prices low and supply abundant– Reducing efficiency increases cost and reduces

abundance– Food retail/distribution system profits: $0.01 per dollar

• No choice but to pass costs through the chain• Consumers are struggling – do not increase costs unless

clear benefit to public health

• Any changes that will impact distribution system must improve public health and reduce burden of foodborne illness

Therefore…

• FMI supports improved ability to identify and locate contaminated food– Maximize existing information– Any new systems must be fully interoperable– Start with pilot projects involving all

stakeholders– Look at all options

• Private sector/government collaboration & transparency is essential