This current customer – one of the largest produce distributors and fresh-cut processors serving the Southwest region – relies on its equipment to get products where they need to be, when they need to be there. For the company's Chief Financial Officer (CFO), reliability is key. "We're dealing with a perishable commodity," he says. "I need my trucks to run 99.9% of the time."

He turned to Penske Truck Leasing to help him manage his fleet. "I look at Penske as a solution," he said. "The reliability and the consistency; that is the biggest value that I see."

At first, he was reluctant to lease, but quickly realized it allowed him to focus on the core aspects of the business. "I want my team focused on buying the right product and having the right inventory and not on maintaining trucks," he said. "Internal operations is our focus, and that is the value of having the lease take care of the transportation-related headaches. I'm not a trucking company, I'm a wholesale produce distributor. You want the crucial thinking in your business to be focused on what makes the company money."

Utilizing leases has helped the company reduce a number of risks and given the company's CFO increased flexibility.

Increase Equipment Uptime

The number one goal of operations is to fulfill the obligations to the customer, which means equipment uptime is crucial. "When a truck fails we irritate our customer. If I fail enough, I'm going to lose business and lose accounts," the company's CFO said, adding that regular maintenance increases the uptime, and if a truck needs a longer repair or fails in the field, Penske provides a replacement vehicle. "I just stress to whoever I'm talking to at Penske: I don't care how you get it done, just get it here and ready to run."

Spec the Right Equipment

The company's CFO said he finds value in the expertise of Penske to spec the right equipment to get the job done for his company. "I know that they know what I'm doing with the equipment and they're not going to go and spec 500 tractors that are completely wrong."

Remain Flexible

Several years ago the company's CFO realized he had the wrong truck for a new customer who was located at the top of a big hill. "If you have an underpowered truck, you're killing the truck trying to run it uphill. We got rid of the truck and replaced it," he said, adding that he has found it easy to work with Penske to get the exact equipment he needs.

Improve Agility

Leasing is a flexible alternative for the company's CFO. "If your needs change, [Penske] will work with you to try and have the right equipment. It's a phone call." That agility allows the company to pursue new opportunities without being bound by equipment.

Reduce Litigation Liability

Not maintaining equipment properly increases the amount of risk a company is exposed to, the company's CFO said. "In this day of everyone wanting to sue everyone for everything, if you don't have a full-service maintenance operation on your equipment, you're exposing yourself to huge litigation liabilities." With Penske Truck Leasing's full-service maintenance program, the company's CFO now has a record of when certain items were serviced or replaced. "When you have a third party doing it and it is documented, you have something to fall back on."

Reduce In-House Liability

Having a third party manage maintenance also reduces the liability an on-site maintenance facility carries with it. "My alternative is to build a shop and hire the guys; that is a lot of additional liability, particularly with the Environmental Protection Agency (EPA) issues you have to deal with if you're conducting your own maintenance on your property."

Retain Drivers

New, well-maintained equipment helps the company attract and retain quality drivers. "The right people value driving a relatively new unit that is in good shape and that they know is maintained," the company's CFO said. "When my transportation manager interviews guys and when they have their initial onboarding and training, they are impressed. The wrong guys don't care."

Support the Brand

The chefs and restaurants the company serves expect top-quality products that are handled carefully and safely. The company's CFO emphasized, "If you are going to be a top provider of high-quality food, then everything has to go along with it and the equipment is part of that."

QUICK FIGURES

• Employees: 300
• Annual Revenue: $21 Million
• Penske Leasing Customer Since 1995
• About the Company: This fresh produce delivery company operates a modern distribution fleet of 45 fully refrigerated trailers and bobtail trucks, which are all fueled on-site. Each unit is equipped with two-way communication dispatch systems, GPS tracking and a sophisticated logistics system to ensure their customers' product is delivered safely, with the care and efficiency expected. Real-time tracking software allows the company to plan delivery routes, schedule and track deliveries in real time and receive alerts of plan deviations. The detailed reports and analytics of the GreenMile tracking system improve productivity, reduce costs and increase customer satisfaction.

For Cold Front Distribution, a direct-store delivery supplier of frozen products, temperature is crucial. And it isn't always easy to find rental units that can maintain temperatures of 20 below zero. So when Kevin Hocum, chief financial officer for the Denver-based company, needed multiple high-quality reefers on short notice, he reached out to Penske Truck Leasing for help.

"They jumped on it," Hocum says. "Within two days they had units and delivered them to our site in West Texas. That was our first experience with ºÚÁÏÉç"

Those units performed well. "Historically the rental units we get don't keep ice cream at a cold enough temperature," Hocum says. "The Penske units are much better maintained, better quality reefers. They have always been very clean and ready to go. From a safety standpoint, that is a big deal."

Based on that experience, Hocum and his team chose to rely on Penske for future leases. "Penske had no skin in the game," Hocum says. "But they came in and said they wanted to earn our business, and they did."

Cold Front Distribution currently uses a mix of full-service leases and finance leases, but Hocum says he will only use full-service leases going forward. "We don't have the bandwidth to have a group of people only managing the trucking. Time is money," Hocum says. "We've decided the only way to go is full service."

Ensuring Uptime

Having reliable trucks is crucial for Cold Front Distribution's operations. "Without the trucks, we wouldn't be able to run our routes. If we can't run routes, we lose revenue, and we all know lost revenue can't be made up. It is gone forever." According to Hocum, "If we have breakdowns and can't get rental units, it affects our top and bottom line."

Missed deliveries also damage the company's relationships with its customers. "We distribute for all of the major frozen food manufacturers. It doesn't make them happy when we can't make our customers happy," says Hocum. "If the customers are out of ice cream and frozen pizza, it creates a lot of problems for us, not just lost revenue."

Cold Front Distribution ensures uptime through the maintenance program included within its full-service lease, and through a contract maintenance program with Penske on its finance leased vehicles.

For Hocum, utilizing full-service leases makes more sense than adding maintenance riders to a finance lease. "It is more cost-effective, and the headache is taken out of our hands," Hocum says. "I've decided we are never going to use another finance lease. It will be a full-service lease, no questions asked."

Minimizing Residual Risk

Using a full-service lease helps Cold Front Distribution minimize residual value risk. "I'm not a used truck salesman, and I don't want to be in the used truck business," Hocum says. "The full-service lease is a far better way for us to go."

Streamlining Back-Office Operations

Hocum values the records maintained by Penske, which streamline Cold Front Distribution's operations. "You have the information and keep the data. In case of an audit, you have everything you need to get with the auditors," he says. "To have that additional support from your organization is a really big deal to us."

The back-office paperwork also reduces the administrative workload for Cold Front Distribution. "The invoicing is absolutely bar none the easiest to understand, whether it is a rental or a lease invoice," Hocum says. In addition, a full-service lease minimizes the time and effort the company invests in DOT licensing, all of which is handled by ºÚÁÏÉç

Benefit the Bottom Line

While he doesn't have an exact return-on-investment figure from leasing, Hocum sees the advantages. "Some of it is hard to get your arms around as far as putting a dollar value to it," he says, "but suffice it to say, I know it absolutely adds to the top and bottom line."

QUICK FIGURES

• Company Sales: Nearly $100 million
• Employees: Just Under 300
• Total Fleet Size: Over 100 Vehicles
• Penske Leasing Customer Since 2005
• About Cold Front Distribution: Cold Front Distribution receives premium frozen food items from major manufacturers and delivers them directly from its fleet of trucks to grocery stores, convenience stores and food service accounts throughout its service areas in Colorado, New Mexico, South Dakota, Texas, Wyoming, Iowa, Minnesota, Wisconsin and Nebraska.

Poultry producers, navigate a complex array of supply and delivery challenges to ensure their food arrives fresh, wholesome, and on-time. When transporting poultry products, drivers must adhere strictly to the Food Safety Modernization Act (FSMA). Drivers must be highly trained in food safety and compliance with expertise in material handling and storage. Further, the proper refrigerated trailer or refrigerated truck temperature must be maintained and monitored throughout the trip.

Given the need for highly trained drivers, well-maintained refrigerated trucks and trailers, and continuous trailer temperature monitoring, some producers are shifting transportation of their products from an in-house model to an outsourced transportation model run by a third-party logistics provider like Penske Logistics to what is called dedicated contract carriage (DCC).

Penske Logistics works with a leading poultry producer and handles transportation to and from up to seven processing plants, as well as a wide number of plants who perform the cutting and trim processing. The supplier has a 24/7 operation to ensure their customers receive the freshest poultry products possible. The poultry producer needed a partner that was dependable, versatile, and able to handle time-sensitive deliveries, as well as adhere to food safety, quality and FSMA requirements.

As an experienced logistics and supply chain partner with decades of experience in the food industry, Penske is able to increase the productivity of the food supply chain using the latest technology to help better plan daily operations. With both shuttle and over-the-road trucking operations, an extensive range of vehicles, including tractors and reefer trailers, along with equipment maintenance tracking, Penske was able to get the poultry supplier up and running quickly once it elected to outsource the trucking operation. Overall, the poultry producer now experiences an 8% savings to their overall budget and a 15% reduction in driver turnover.

To meet the requirements, Penske established efficient truck routes and implemented more routine stops. Penske also provided an additional value-added service by allocating an extra driver once a month to follow through on new protocols designed to meet food integrity and freshness guidelines. The extra driver provides additional manpower to ensure trailer integrity and make certain it's food-service ready.

Understanding the Importance of Delivery Preparation

To prepare for deliveries, grocers need to schedule labor to ensure staffing to load and unload items from the truck and onto the store shelves. As a result, on-time deliveries are critical.

Penske helps grocers prepare to receive deliveries by utilizing innovative geo-fencing technology, whereby a truck's onboard computer sends an email alert to a store when a driver is within a certain range of the store. Follow up alerts are then sent allowing store personnel to get organized and ready for the delivery.

Penske also developed a mobile application to provide real-time visibility of ongoing shipments. With this app, the customer is able to:

• Receive updates on routes operated by Penske Dedicated Contract Carriage (DCC)
• Set up watch lists of routes they want to monitor closely
• View a map showing current locations of their vehicles

Preventive Maintenance Impacts Bottom Line

Preventive maintenance for trucks and trailers is at the core of a strong maintenance program and Penske ensures any kind of mechanical repairs are routinely completed. This is essential in maintaining trailer temperatures throughout the cold chain by keeping refrigerated equipment in top mechanical condition. Using both Penske and another vendor for its reefer vehicles, the chicken producer now enjoys a 20% reduction in its overall reefer maintenance and a 33% decrease in reefer fuel consumption due to proactive maintenance practices instilled through Penske's DCC trucking operations.

SOLUTION SNAPSHOT

Challenge

• High driver turnover
• Lack of rigorous controls
• High reefer trailer maintenance and fuel consumption
• Lack of communication between locations
• Poor yard management
• Last minute pop-up loads
• Truck loading time

We Provide

• 24/ 7 Safety Program
• Smart Drive Camera systems
• Shuttle and over-the-road operations
• Class A Professional Operators
• Professional Experience Management team
• Top of the line Equipment
• Single phase reefer trailers
• Yard management
• Equipment maintenance

Impact

• 8% savings to overall budget
• 15% reduction in driver turnover
• 20% reduction in reefer maintenance
• 33% reduction in reefer fuel consumption
• Improved management processes and technology increase communication and yard control
• Improved grocer satisfaction with quality products delivered on-time

This global quick-service restaurant (QSR) is intently focused on how customers experience their retail stores and their products, which must be consistent and engaging each and every time. They seek logistics partners who share their high-performance standards—a 3PL who is flexible and willing to take a journey with them. Penske Logistics provides delivery of fresh goods, baked goods, dairy, frozen, and merchandise to restaurants throughout North America.

Since the relationship began, senior leadership from the QSR and Penske focused on aligning supply chain departments to uncover opportunities. Penske Logistics started with in-store delivery services in a single market. It has expanded to include transportation elements and the operation of cold chain storage and ambient distribution centers.

Supply Chain and Logistics Tools

With more than 500,000 deliveries a year for this QSR, having the right software and technology in place is critical for success.

According to Andy Moses, senior vice president of sales and solutions, Penske Logistics, a proprietary system helps design the most efficient routes with a route algorithm. Dedicated staff constantly redesign this QSR's routes for absolute optimization.

"We also invested in an entirely new fleet—new trailers with multi-temp units—and we rebuilt every single one of our distribution centers with larger coolers and freezers to support this restaurant's expansion.

"True to Penske's approach of providing customized solutions for each customer, we started by asking the customer what their requirements were and built a custom solution from there," said Moses.

"We look at their network, delivery frequency, hours of delivery, which activities our drivers will perform, and then build a network around those requirements."

Truck Driver Training

The deliveries to the QSR are sometimes made during operating hours as well as after-hours, which requires highly skilled drivers.

"For us, it starts with people," Moses explains. "We need the driver to be trustworthy and customer-service-oriented because about one-third of the stores are still open when a driver arrives."

Before new drivers are assigned a route, they undergo a training regimen that lasts two to three weeks. The training encompasses an orientation to Penske and the customer, along with a rigorous safety course. Following that is one-on-one training; then, shadowing an experienced driver on the route.

Complying with the FDA's Food Safety Modernization Act (FSMA) is another aspect of training for Penske drivers, which covers proper temperature monitoring, safe handling of food and food storage, and deploying the right equipment to do the job.

"Training is one of the most expensive things we do," said Moses. "People say it's expensive to train, but it's even more expensive not to train."

Warehousing Solutions

As the relationship between the QSR and Penske matured, Penske Logistics took on additional warehousing responsibility, including the opening of a large regional distribution center.

Penske manages warehousing and delivery and management of fresh and baked goods, dairy and frozen products. Additionally, Penske manages receiving, warehousing and picking of complementing merchandise for company-operated and licensed stores as well as all items needed to support QSR openings and renovations.

Supply Chain Collaboration

"Communication between Penske and the restaurant is frequent and occurs across multiple channels and throughout the organizations," said Moses.

"There's a senior leadership channel, a mid-level channel and operational channels. We have weekly calls related to operations, finance and inventory. The best way to sum it up is that there's never a surprise in this network.

The constant communication helps the QSR view Penske Logistics as a true partner. We work on network design and investment decisions together because we have established a relationship based on communication. They know they could not be successful in their business without us."

SOLUTION SNAPSHOT

Challenge

Manage product distribution for multiple channels through a single facility.

• Company owned-and-operated stores
• Licensed stores
• Consumer packaged goods

Manage flow of seasonal products to company owned-and-operated locations.

We Provide

Warehousing and delivery of fresh and fresh-baked goods, dairy, frozen and complementing merchandise to company-operated and licensed stores with 24/7/365 coverage.

• Multiple voice directed pick locations
• 125+ tractors and approximately 150 multi-temperature refrigerated trailers
• 300+ drivers, 250+ warehouses
• 2,200+ stores supported
• 550K deliveries/year, 70% unattended

Receiving, warehousing, picking and shipping to company-operated stores and customers.

Management of all products supporting store openings and renovations (U.S.).

Impact

Electric Prechill: While in prechill/loading, trucks are connected to the building's electric grid saving fuel costs, reducing emissions and optimizing temperature for transit.

Meeting Metric Goals: On-time, accurate, damage free and cold chain compliant.

Custom Dispatch Tools: Customized metrics, reporting, and comprehensive driver activity management.

Global Food Safety Initiative (GFSI): Earned IFS certification (International Feature Standard) at all food handling operations.

Engineering Support for Analysis/Re-design: Facility layout, product flow and cube calculation tool.

Productivity Improvements: Implemented voice-pick technology at seven of the operations and achieved 10% to 20% gains.

Activity-Based Pay and Productivity Incentives: Implemented and providing financial benefits.

Design, Implementation and Operation of a 580,000+ square foot facility supporting:

• 900+ licensed stores
• 80+ consumer packaged goods
• 1,300+ company-owned-and-operated stores