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Organic Foods Distributor Tree of Life Gains Control of Supplier Base With DSC Logistics

Tree of Life is the one of the largest certified organic distributors in the U.S. Through its 12 distribution centers, the company supplies food retailers in Canada and the U.S. with more than 42,000 natural and specialty food products, ranging from pasta to peanut butter. Because of consumers' ever-increasing interest in living well, the food distributor has enjoyed double-digit growth in sales over its 35-year history.

The non-stop expansion of the natural and organic foods business is chronicled by growth of Tree of Life. The company began in the 1970s from a single retail store in St. Augustine, Fla., to its rise to become one of North America's  premier wholesale distributors and marketers of natural and organic foods. Tree of Life now distributes such national brands as Nestle, McCormick, and Organic Valley, as well as proprietary brands, including American Natural, Harmony Farms, Peanut Wonder and Soy Wonder to thousands of retailers across the U.S. and Canada.

Today's more adventurous, health-minded consumer has dramatically changed the natural products business to the point that these buyers now expect their favorite natural and organic products to be widely available in health food stores, gourmet shops, supermarkets, mass merchants, drugstores and elsewhere. That change has been a catalyst for Tree of Life. What hasn't changed is the need of each retailer to offer its customer exactly the assortment of products that they expect to be on the shelves, and Tree of Life has become a master at helping the retailer meet these expectations.

Excellence in buying, selling, logistics and order quality for the retailer has become the core strategy for Tree of Life, so its supply chain management has become a vital element in this strategy. The company's success is built upon understanding the needs of the shopper who buys the products it distributes, identifying the retail stores where consumers shop, and then developing the merchandising and product assortment plans tailored to the individual needs of that retail operator and retail environment.

Aligning this strategy with the company's complex supply chain requires Tree of Life to tightly control the inbound flow of product from its more than 3,000 suppliers. In the Northeast U.S., Tree of Life's supply chain is very much dependent on DSC Logistics, which operates a distribution center for the food distributor in Allentown, Pa.

"DSC is an integral part of our inbound supply chain for vendors who have warehouses located in the Northeastern quadrant of the U.S.," says Chris Sieburg, vice president of transportation for Tree of Life.

The company's supplier base is made up of a diverse collection of hundreds of small companies that's created a complex supply chain. Before Tree of Life began working with DSC, the large number of suppliers and the small orders, which are often in less than truckload quantities, made controlling inbound movements inefficient and costly. Tree of Life needed to gain control of its supplier base and bring discipline to the order process, so it decided to partner with DSC to outsource inbound consolidation and pool all supplier orders in one place.

DSC performs consolidation activities for Tree of Life for shipments originating out of the Northeast.  DSC picks up several hundred purchase orders in a given week, stages the product in shipping lanes, and then reloads the product so the trailer weight and cube capacity are fully utilized.

"We have saved more than one million dollars a year through our new partnership with DSC," says Sieburg.

Tree of Life's inbound process is driven by purchase orders, and DSC manages every aspect of it. DSC reports on what is happening-order not ready in time, not enough product on hand, order canceled, any sort of exception or problem-and why, so Tree of Life can better manage suppliers. Order management, supplier compliance and cost efficiency are all part of the services DSC provides for Tree of Life.

In DSC's individualized solution, all product is brought to DSC's logistics center in Allentown and shipped out to 11 Tree of Life centers for distribution. In an atypical arrangement for the Allentown Logistics Center, the freight never really goes into inventory. It is held in one section of the warehouse and then sent out from there, coming in and going out in the same form.

The DSC consolidation program is driven by a very robust transportation management application and web-enabled search tools. Tree of Life is able to capture data on vendor compliance and shipment availability, which it uses to drive efficiencies throughout the supply chain.

"Clearly, if we have planned to ship a specific  number of pounds to a given downstream facility and the vendor doesn't have the product available, we lose utilization of trailer capacity," says Sieburg. "DSC avoids these inefficiencies."

According to Sieburg, the DSC consolidation has not only resulted in significant freight cost savings, but it has also provided additional feedback and measurements that have enabled Tree of Life to resolve numerous operational and vendor compliance opportunities.

Tree of Life has more than 3,000 vendor relationships, and often an individual purchase order is not ready for pickup based upon the previously established order cycle.  In these situations, DSC will manipulate the consolidation center shipping deadlines to help the company improve utilization of truckload capacity.  "Because of their flexibility, we have achieved greater than expected savings," says Sieburg.

Consolidated outbound orders go via truckload to the 11 Tree of Life DCs. To manage the regional TL business, DSC leverages a fleet leased exclusively to it, and DSC's transportation center coordinates the partner carriers and manages the customer relationship. DSC's fleet delivers the inbound full truckloads throughout the week, and the outbound loads, handled by partner carriers, ship out on a pre-set weekly schedule. And since the trucks carrying the inbound loads for Tree of Life leave the logistics center loaded with outbound shipments for other customers, it's a highly efficient operation.

Tree of Life reviews a monthly performance scorecard based upon critical KPIs that were established at the commencement of the relationship.  Additionally, the weekly invoice detail allows Tree of Life to track freight costs compared to the initial baseline.

"Since Tree of Life selected DSC as our supply chain partner, DSC has been extremely innovative, flexible, and responsive," says Sieburg. "We have replicated the processes established by DSC at some of our own DCs where we have the additional capacity to operate our own consolidation center.

"DSC's consolidation program has helped Tree of Life manage its supply chain in the Northeast, so we can meet the expectations of retail customers," says Sieburg.


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