Understanding Your Customers' Needs

In 2016, GCCA embarked on the execution of a new strategic plan focused on opportunities for GCCA to help members meet their business objectives. This led to an opportunity to position member companies as food safety experts and protectors of their customers’ brands. But first, they had to thoroughly understand what their customers needed from, and thought of, temperature-controlled logistics companies, what they do well, and where they can improve. GCCA embarked on a three-prong research strategy to learn about the perceptions that food companies have of the cold chain, and how cold chain providers can improve their services and relationships with these partners. The result was the GCCA Cold Chain Customer Research Report, which provides a holistic view of research conducted over 18 months, beginning with qualitative focus sessions involving 30 food processors and 12 retailers, and culminating with a quantitative survey of more than 200 food companies. The overarching feedback from food companies indicates they consider several factors when making decisions about the cold chain, but overall the research shows that customers have competing priorities and changing needs as the industry faces investment, innovation, and growth. For cold chain providers, customers’ priorities are growing and changing, and the need to be more responsive, agile and customer-centric is a demand the industry must face. Protecting the Brand Overall, cold chain providers’ conversations with their customers tend to be focused on pricing and Key Performance Indicators (KPIs). However, customers’ main priority points, when asked to consider all factors, were protecting the brand and good cus - tomer service. Providers must incorporate these topics into those conversations to close the gap between customer perceptions and provider realities. Cold chain providers must be able to understand, articulate, and react to their role in protecting the brand. “Our 3PL providers are stewards of our brand. That’s why foundational needs are so important,” notes Nicholas Najjar, Senior Manager, Transportation, Land O’Lakes, Inc. “One defect means massive loss of goodwill, not to mention the financial impact. That’s why we treat our cold chain providers as partners and discuss both long-term strategies with them, such as what our footprint looks like, and short-term, like how to tackle the upcoming year and inventory strategy.” “Protecting your brand is impacted by every stakeholder, from the 3PL to the end user, your customer and your customer’s customer,” con - tends Brian Rooney, Director of Supply Chain and Operations at Fresh Avenue. “And almost every aspect of your operation reflects on your brand, from how you pay suppliers, to the safety of product, to service after sale. Everyone is so well connected now, that if you perform poorly or don’t get a truck loaded on time, that information travels quickly through your stakeholder chain potentially creating a jaded perception about your company or brand.” 

Customer Service

Customer service is key, according to the study. When selecting vendors, food companies and retailers consider location, availability, and customer service. But when ending the relationship, the factor most often cited is customer service. Additionally, food companies and retailers define customer service broadly. Customer service primarily includes communica - tions, reliability, transparency, flexibility, and innovation. Upon this broader interpretation of customer service, and comparing that to survey results, it is clear that the issue cannot be ignored. It presents itself in every facet of the overall customer experience. “Metrics and KPIs drive customer collaboration, so we center 100 percent of ours around customer service,” Rooney notes. “Even if we’re not performing to the customer’s level of expectation, they will feel more comfortable if you demonstrate a commitment to getting to that expectation along with clear dialog as to why. Make no mistake, the pressure is still on to deliver.” Similarly, Najjar says they use KPIs at his company to measure service metrics. “Are we getting perfect order fulfillment and on-time delivery, are we getting at at every level of the chain starting with customer and moving on back? That’s the chief metric we measure to -- other things, like tracing, are ancillary and in support of that goal to the customer."


Quality and Accuracy

In many cases, cost is not the primary issue in decision-making. Research indicates that when KPIs are ranked in importance, shipping accuracy is first, on-time delivery/ on time shipment are ranked third while warehouse cost per unit comes in second. Quality and accuracy show up in many answers across the research, including why companies insource and outsource as well as looking ahead to future trends and impacts across the industry. “Quality and integrity equals food safety and from the cold chain perspective, that’s as important as it gets,” Najjar points out. “There is no tolerance for defects or errors because what is at stake is your product, your brand, and public safety. This is not a KPI, but a foundational requirement for any provider.” Rooney concurs. “There should always be zero tolerance for anything that would negatively impact food safety, so the bar is set very high, with no room for deviation.”



Key Performance Indicators are important, yet survey respondents and focus group participants indicate a need for more universal standards in KPI reporting as well as a need to work to identify what metrics they need and want. This emphasizes that, in addition to the baseline of industry-wide KPIs, cold chain providers need to work with customers to understand what measurements are most helpful based on their reporting and analytics requirements. It is not one size fits all. The top four KPIs that respondents base their logistical operations evaluations on are: 1. Shipping accuracy with 75 percent of respondents favoring this metric 2. Warehouse cost per unit (68 percent) 3. On-time delivery (63 percent) 4. Inventory/cycle count accuracy (58 percent) “For our small to mid-size company, the perfect KPI would be cost per unit of activity, inventory shrinkage, and shipping accuracy (on-time delivery and shipment and truck turn times),” Rooney says. “Everybody should look for waste in their operation. Eliminating it is one of the fastest ways to improve performance. At the end of the day, isn’t that what we’re all worried about?” “It’s also important to establish and maintain dialog between your partners and stakeholders, so we work to establish common terminology and determine frequency, with the goal of driving continuous improvement,” Rooney notes. “Work with your partners and stakeholders to establish five or six key metrics and focus on the vital few. Start with a few of your own and mutually decide on one or two that really impact your business.” “We also look for ways to incentivize, rather than just assigning blame and penalizing,” acknowledges Rooney. “We do that by monetizing the process – putting dollars behind the figures. What is it really going to cost to get that extra one percent on the scorecard?” “Last, remember to evolve,” Rooney advises. “Select three to four consistent measurements, then rotate. The key is to have a manageable list on a consistent and accurate basis, because there are times where less is more.” Other Trends Other important trends and considerations emerged as part of GCCA’s research. Food companies are mostly satisfied with their primary cold chain partner. Respondents gave a good report card to their primary cold chain partner, as 74 percent of respondents indicate some level of satisfaction with their provider and only 18 percent indicating they are dissatisfied. “We are better than generally satisfied with out strategic partners. We have an appetite for transparency, and that is largely there,” Najjar says. “That’s what creates the level of trust needed for our cold chain partners to be part of our discussions around long-term planning. We need them to help us solve problems that have arisen, from technology trends to future distribution. We need them to help us understand the tipping point in economies of automation and how e-commerce might change the way we distribute or how the warehouse footprint might need to be different.” For larger companies, the customer research indicates compliance and standards, which one ruled industry conversations, have taken on less importance. For companies both large and small, sustainability (“going green”) has evolved into part of the business but is not seen as a major driver of impact, as it was a few years ago. “Today, sustainability is just like food safety, it is what everyone expects,” says Rooney. “Without question, you invest what is necessary to ensure best practices in sustainability.”



Conclusion While change is afoot across the industry, it is important to note that most respondents and participants of the survey and roundtables are generally satisfied with their primary cold chain provider. But providers cannot rest easy on this satisfaction, as the details covered in this customer research report indicate that satisfaction comes with demands for customer service first and cost controls close behind. If you’re a cold chain provider, three distinct realties are present in this research. First, even though 95 percent of conversations at the business table might be around costs, it is customer service that matters most. Second, nothing is more important to food manufacturers than ensuring the safety of their food. Cold chain providers must find opportunities to position themselves as an integral part of the customers’ food, safety, and brand initiatives. And third, as an industry, it is essential to build cohesiveness and consistency around standardized key performance metrics. After hearing from food companies across the global cold chain, and understanding what drives their businesses, keeps them up at night, and how they see third-party logistics providers adding value, the temperaturecontrolled industry will be able to move forward in being more than just partners to food companies. And as the temperature-controlled logistics industry continues to evolve from purely storage to an integral part of food companies’ brands and operations, IARW member companies must continue to grow as extensions of their customers’ core business.