Cold storage and more

Dairy Foods,  Dec, 1991  by Jeff Reiter

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Public warehouses are attracting dairy clients with more than just space

Over the years, dairies have had a tendency to view cold storage warehouses as a "necessary evil" - an expensive, last resort holding tank for excess product inventory. But as the dairy industry continues to consolidate, and the need to ship products longer distances increases, more processors are now finding public warehouses to be a cost-effective distribution tool. In a word, some public warehouse facilities now available far more than just a place to park extra pallets.

One such facility is Pioneer Freezers & Cold Storage Inc., Syracuse, N.Y., Completed in January for $12 million, Pioneer has since attracted a wide range of dairy clients with a blend of customized storage and distribution services. And while Pioneer currently has about 80 different dock pick-up programs with major supermarket chains, grocery wholesalers and foodservice distributors, the company is uniquely positioned as a state-of-the-art "redistribution" facility - it not only receives and stores refrigerated and frozen products, it ships them, too.

Computerized control

Pioneer's overall capacity is 4 million cubic feet, divided evenly between refrigerated (40 [Degree] F) and frozen (-20 [Degree] F). Total square footage is 110,000. The warehouse consists of all single-deep pallet racking, 48-feet high, with aisles just 6 feet wide - a configuration designed to maximize productivity. The company opted against drive-in racking to facilitate product rotation and to keep the complete inventory visible at all times, says Ron Shuster, Pioneer's sales and marketing manager.

Inventory is further controlled by the latest computer software. Aided by an in-house bar coding system, Pioneer knows the exact position and product count of each pallet. When new shipments arrive, the computer selects the most efficient available spaces based on product type and pallet size. The pallets are then delivered to their assigned locations via wire-guided forklifts featuring heated cabs for maximum man-hour efficiency.

Perhaps what distinguishes Pioneer most from other public warehouses, however, is the company's distribution expertise. Using a pooled freight system, Pioneer is able, in most cases, to ship product more economically than its customers could on their own. Fox example, White Dairy Ice Cream Co. routinely ships full truckloads of ice cream and frozen novelties to Pioneer from its home base in Fort Smith, Ark. Pioneer then combines White's product with the frozen products of other manufacturers bound for shipment (via common carrier) to a foodservice warehouse in Maine.

White is therefore able to make less than truckload (LTL) deliveries to its customer in Maine at advantageous full-truckload freight rates. After factoring in Pioneer's storage and handling fees, the dairy still comes out ahead, says James Brooks, assistant to the president at White.

A partnership with Hood

Pioneer's relationship with H.P Hood Inc. illustrates how redistribution works on a daily basis. Hood operates a full-line UHT fluid processing plant in Oneida, N.Y. (30 miles from Syracuse), that ships about 90 percent of its output directly to the Pioneer warehouse - usually 18 or 20 trucks per day. "They have no storage, so whenever Hood is producing, we're open," Shuster explains.

Each day before noon, Hood faxes its load sheets to Pioneer for entry into the computerized inventory system. Pioneer then picks the orders and arranges for shipment to Hood's customers, primarily other dairies, grocery warehouses and foodservice houses. Hood pays Pioneer a set fee for each pallet handled.

For Hood, letting Pioneer handle the customer service side of its business has proven economical, "The alternative was to build a new warehouse, so it saved us capital that we've been able to put to work in other ways," says Carroll Graves, operations manager. Further, adds Graves, the new system freed up badly needed space at the Oneida plant for dry storage.

Hood and Pioneer now communicate a great deal by phone and fax. Soon, however, the two parties will be linked by computer, allowing Hood to be "on-line" with the inventory 24 hours a day. (Currently, Pioneer send Hood a cooler inventory report each morning). Hood and other Pioneer clients already have computerized access to temperature reading reports for the cooler and freezer.

More warehouse programs ahead?

The arrangement between Hood and Pioneer is unique, to be sure, but outside warehousing is certainly not a foreign concept to the dairy industry, especially on the frozen side. However, cold storage companies claim more efficiencies are within reach.

Kevin Margeson, sales manager at United Refrigerated Services Inc., Atlanta, senses a reluctance by some dairies to trust their products in the hands of third parties. In addition, it seems many ice cream manufacturers are also sensitive to having their own products shipped on the same truck with competing products. "We're working to build a consolidated shipping program for ice cream and novelties but it's a tough, tough sell," Margeson says.