Dive Brief:
- J&J Snack Foods is “exceeding” expectations and driving productivity improvements from its three new regional distribution centers, CEO Dan Fachner said in a Q2 earnings call.
- Eighty-five percent of the food maker’s orders are being shipped from the new distribution network, up from 26% a year ago. The company was also able to reduce length of haul — the average transit distance, in miles, from a J&J shipping point to customers’ docks — by 38%, VP of Supply Chain Jay Montgomery said in an email.
- “The regional distribution model places our RDCs in optimal geographic locations so that we are closer to our customers than ever before,” Montgomery said. “That enables higher fill rates, improved on-time performance and the ability to quickly service them when unexpected needs arise.”
Dive Insight:
J&J Snack Foods is reaping the benefits of recent efforts to simplify its supply chain network. On the Q2 earnings call, Fachner said that investments in manufacturing and distribution capabilities are resulting in improvements across several areas of its supply chain.
Last year, J&J Snack Foods announced it was opening the three self-owned cold storage distribution facilities in Texas, New Jersey and Arizona to cut down shipping from third-party logistics partners.
With these facilities, the company aimed to consolidate all of its stock instead of having it spread out across more than a dozen different buildings, Montgomery told Supply Chain Dive in an interview last year.
Since the announcement, the company has reduced its number of cold storage locations to 10, further driving efficiencies in how it ships products and decreasing transfers across its network by 9%, Fachner said.
The company also improved its on-time delivery versus “must arrive by date” to more than 82%, up from 73% last year, the CEO told analysts. Both metrics are for outsourced trucking, as the company outsources 100% of last-mile freight, according to Montgomery.
“The regional distribution centers are strategically located close to our customers, increasing our agility to service them,” Montgomery said.
J&J Snack Foods has also increased capacity by adding six new production lines that utilize automation in areas like mixing, processing and packaging. The new lines will help in the production of pretzels, pretzel dogs, churros and frozen novelties.
“The expanded capacity has created production efficiencies and higher output metrics through better automation, which improves product margins, decreases over time, and provides the flexibility to respond to new sales opportunities,” Fachner said.
“Most of all, these lines added capacity for our key segments, enabling growth,” he added.