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T E A M M E M B E R S : R E G O P U D U K A D A N , K E I T H
S M I T H , M I K E M E H A N , A N D S E B A S T I A N N A S K A R I S
OPTIMIZING LOCAL FOOD SUPPLY CHAIN
NETWORKS FOR LARGE-SCALE SUPERMARKETS
AND LOCAL FOOD HUBS IN NORTH CAROLINA
Local-to-Local
AGENDA
• Briefly describe our project
• Highlight our findings
• Share feedback from Key stakeholders
PROJECT OBJECTIVE
• To identify the optimal distribution strategy
to connect large-scale, locally owned food
retailers with small and mid-scale local food
producers while mitigating the costs
associated with sourcing from a larger
number of small to mid-scale producers.
APPROACH
• Field Research
• Literature Review
• Visualize the Current Supply Chain Using
Process Flow Maps
• Perform Quantitative Analysis Using Cost-to-
Serve Model
THEORY
• Local food supply chains could be re-
designed to increase supply chain value by
cutting inventory related costs for food
retails and transportation costs for local food
hubs.
CURRENT PROCESS VISUALIZATION
Primary Picking Process
CURRENT PROCESS VISUALIZATION
Cross-Dock Picking Process
COST-TO-SERVE MODEL
Pilot Mountain-MDI Retail Store Map
PMP Location MDI Location Retail Store
COST-TO-SERVE MODEL
• The model is based on a hypothetical connection between three
actual entities: Pilot Mountain Pride (PMP), local Lowes retail
grocery destinations, and Merchant Distributors Inc (MDI).
• The model estimates cost per case to deliver produce using four
different distribution networks:
• Pilot Mountain Pride uses their own truck to deliver direct to
stores using “milk runs”
• Pilot Mountain Pride uses contract carrier to deliver direct to
stores using “milk runs”
• Pilot Mountain Pride uses contract carrier to deliver to
distribution center using a cross-dock
• MDI backhauls orders from PMP to the distribution center
using a cross-dock
COST-TO-SERVE MODEL
• ESTIMATED VOLUMES: based on actual Lowes retail grocery
destination demand, the team assumed 2 cases (low
demand), 5 cases (medium demand), and 12 cases (high
demand)
• TRANSPORTATION COSTS: 3rd party carrier rates based on
actual rate of a NC based trucking company. Backhaul rates
are based off of MDI’s backhauling price policy, which
competitively prices its backhaul rate against similar 3rd party
LTL carriers using a discounted unloading allowance.
Integrated transportation costs estimated at $3.50 based on
industry feedback.
FINDINGS
$0.00
$20.00
$40.00
$60.00
$80.00
Three Store Model
3rd Party Direct toStore
3rd Party to Cross Dock
Back Haul to CrossDock
Direct to Store
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Nine Store Model
3rd Party Direct toStore
3rd Party to CrossDock
Back Haul to CrossDock
Direct to Store
$0.00
$10.00
$20.00
$30.00
$40.00
Six Store Model
3rd Party Direct toStore
3rd Party to CrossDock
Back Haul to CrossDock
Direct to Store
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Twelve Store Model
3rd Party Direct toStore
3rd Party to CrossDock
Back Haul to CrossDock
Direct to Store
FINDINGS
• For between 1 – 6 retail grocery destinations, the
optimal distribution strategy is for a food hub to
use its own truck and deliver direct to store using
“milk runs”
• For 6 – 12 retail grocery destinations, the optimal
distribution strategy is the distribution center to
back haul orders from the food hub to the
distribution center using a cross-dock
FEEDBACK FROM STAKEHOLDERS
• Lowes Foods, Director of Produce and Floral
• MDI, Director of Produce and Floral
• Food Hub Managers