C&S Wholesale Grocers by Sustainable Business Magazine

C&S WHOLESALE GROCERS

DRIVING PERFORMANCE

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C&S WHOLESALE GROCERS

TODAY, C&S OWNS AND OPERATES A FLEET OF APPROXIMATELY 1,000 TRACTOR UNITS, WITH ANOTHER 1,000 OWNED AND OPERATED BY THIRD PARTIES.

DRIVING

PERFORMANCE Sustainable Business Magazine speaks to Christopher Trajkovski, Vice President of Transportation and Fleet Maintenance at C&S Wholesale Grocers, about a new approach to asset replacement, embracing new technologies, and close relationships with partners and customers.

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C&S WHOLESALE GROCERS

C&S HAVE BEEN ABLE TO BRING INNOVATIONS INTO THEIR FLEET QUICKLY, RESULTING IN A SAFER, MORE EFFICIENT, MORE COMPETITIVE TRANSPORTATION NETWORK.

C&S Wholesale Grocers is the largest wholesale grocery supplier and distributor in the United States, as well as America’s tenth-largest privately-held company. Headquartered in Keene, New Hampshire, C&S Wholesale Grocers was founded in 1918 by Israel Cohen and Abraham Siegel as a small brick warehouse in Worcester, Massachusetts, delivering groceries to local stores. In the subsequent century, C&S have grown to span the Northeastern United States, the 4 | URECON / LOGSTOR

Mid-Atlantic states, the Southeast, Texas, and California, supplying products from their twenty-six distribution centers to over 14,000 supermarkets and chain stores, from the smallest independents to large regional chains like Stop & Shop, Safeway, Target, and Winn-Dixie. The last decade has seen rapid expansion at C&S Wholesale Grocers, as a result of a series of acquisitions. “In the last couple of years, we’ve gone from being a ware-

house-centric, procurement-centric organization, to transportation becoming much more critical in the equation as we deliver solutions for our independent- and chain-level customers,” explains Christopher Trajkovski, Vice President of Transportation and Fleet Maintenance at C&S Wholesale Grocers. “Some of our recent acquisitions came with fleets, which meant our overall fleet grew enormously, sometimes literally overnight. This meant we needed to quickly gain the

experience to bring efficiencies, productivity, and asset utilization to the equation.” OUTSIZE IMPACT Today, C&S owns and operates a fleet of approximately 1,000 tractor units, with another 1,000 owned and operated by third parties. With such a large fleet, relatively small changes can have an outsize impact on costs, fuel consumption, and overall productivity. “We had a patchwork of several

different fleets that were brought into our network,” says Mr. Trajkovski. “As we started bringing in productivity initiatives and driving efficiencies, that helped us understand the urgency of operating in the top quartile in terms of our metrics, whether it’s asset utilization or fuel economy ratings.” Back in 2015, a visitor to one of C&S’s vehicle storage facilities might have seen a row of older tractor-trailers. “These would have been low-technology assets, not con-

nected to any tracking,” says Mr. Trajkovski. “The unit is safe from the standpoint that it’s legal to be on the road, but it isn’t as safe as it could be. It’s somewhat blackish, dirty, and aged.” Today, a visitor would get a very different picture: A row of newly-purchased tractor and trailer units, with new safety and fuel economy features incorporated, like engine control units to improve performance, low-rolling tires, the Halo tire URECON / LOGSTOR

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C&S WHOLESALE GROCERS

inflation system for tractors and the Meritor system for trailers, and Transtex’s EDGE skirts installed for aerodynamic optimization. “Also, instead of a 53-foot trailer, my fleet has been right-sized for what actually goes out, so it may only be a 50-foot trailer, which means I can save additional weight on each one of those trailers,” says Mr. Trajkovski. “It’s a radically different picture. The transportation component has now become a key deliverable, to the point where it is a competitive advantage for us.” REPLACEMENT CYCLE So what effected this radical transformation of C&S’s fleet in such a short space of time? In large part, these changes are the result of C&S’s 2016 overhaul of their asset replace-

ment cycle. “We didn’t really have a formal replacement cycle or process at the time,” says Mr. Trajkovski. “There was no defined length of term for how long we should own a trailer, for example, or an over-the-road tractor. So at the end of 2015 and beginning of 2016, we built out what we felt our strategy should look like to allow us to gravitate from a perpetual maintenance cycle to a perpetual replacement cycle.” It took six months for C&S to build a new model for tracking the costs associated with an asset through its lifecycle. “It wasn’t simply acquisition cost, repair, maintenance, and disposal,” says Mr. Trajkovski. “We literally looked at every hand that touches that vehicle over the lifecycle. We incorporated hundreds of elements. For example, we tracked through the lifecycle to understand diesel exhaust fluid (DEF), because future engines will require an additional percentage of diesel-to-DEF ratio. We calculated how much labor it takes to maintain a tractor once it’s out of its warranty period. We incorporated the longer dwell time old equipment spends in the shop bay, which requires a higher quantity of assets to make up for that.”

One key element, however, was excluded from C&S’s economic model. “We kept the pricing of fuel completely out of this scenario,” says Mr. Trajkovski. “I can’t stress enough the importance of this decision. We can’t control geopolitical conditions, and market conditions, and catastrophic weather conditions. So we just detached that completely, and said: ‘Don’t worry about the unit price; focus only on consumption.’” This economic model was applied across C&S’s tractors, their refrigerated units, and their dry van trailers. “In addition to fuel economy and asset utilization, we also incorporated safety in all these elements,” says Mr. Trajkovski. “We’re talking about collision mitigation systems, lane departure systems, disc brakes on all axles including the trailing units. We believed this would drive performance, not only in accident frequency but also in dollar exposure to risk. The whole model meant the organization could really understand that we needed a formal replacement cycle and process. That was the key foundational block for us. You can’t build the structure unless you have that solid base.”

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EMBRACING INNOVATION By emphasizing the rapid replacement of units, and by utilizing a sophisticated economic model to accurately project the effect of new technologies, C&S have been able to bring innovations into their fleet quickly, resulting in a safer, more efficient, more competitive transportation network. “We no longer have to wait for new technologies,” says Mr. Trajkovski. “The strategy has allowed us to incorporate items like aerodynamics, lightweighting, air pressure monitoring systems on tires, fuel economy tires, all these kinds of things.” Simultaneously, C&S have invested in telematics and satellite tracking, to get more detailed data on their asset use. “We’ve been able to understand we don’t necessarily need to have enough assets for the whole year,” says Mr. Trajkovski. “We need enough for the eightieth percentile, and then we can leverage rentals when we need to. The technology today has helped us get there. In the past, it was anecdotal; today, it’s much more fact- and data-based.” In conjunction with embracing this new approach to lifecycle management, C&S has built up a whole supporting transportation

infrastructure. “We have an asset team now and we have a fleet reliability center,” says Mr. Trajkovski. “That meant we had to add headcount support, but everyone understands that there has been a return on every one of those investments. We’re fortunate that the organization had the willingness and the appetite to understand what the future would look like. Though we try not to think about fuel prices, fuel prices have actually gone up at the same time as our average fuel efficiency has gone up, so it has helped up offset some of those negative trends.” TRANSPARENT RELATIONSHIPS A pivotal component of C&S’s new approach to asset replacement is maintain-

ing strong lines of communication with technology partners, backed up by data. “With our suppliers, our original equipment manufacturers, and our dealers, we have a reliability touchpoint every quarter where we hold each other accountable,” says Mr. Trajkovski. “It becomes more of a partnership in building each other’s enterprises. It also helps educate our suppliers to understand what our appetite is for future technologies. Our principle is: We want to learn early, we want to learn fast, and if we fail, we want to fail as early as possible. When you build those relationships and that rapport, they understand what the uptake is going to be for those new technologies. They understand our ethos and

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C&S WHOLESALE GROCERS

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our longer-term agenda, so they know when a technology or an idea is a good fit to bring to us. Then we are transparent with them, and when we collect data, we share it with them. We don’t view that as being proprietary; we want to help them be stronger.” BENEFITS OF CHANGE Embracing cutting-edge technology allows C&S not only to reduce costs but also to serve customers better. “We’re only two and a half years into this process, but as it becomes part of our normal course of business, it’s becoming more and more a competitive advantage for us,” say Mr. Trajkovski. “For example, on-time delivery is critical today. If we’re not making a delivery window, it wastes labor resources at the end location. We’re currently doing a remarkable job in educating the customer-facing jobs in our organization to leverage what we’re doing in terms of efficiency. That’s something which is definitely going to differentiate us in this sector.” Of course, these investments in reducing fuel consumption and improving efficiencies also affect environmental performance. “From an environmental standpoint, we look at these new assets holistically,” says Mr. Trajkovski. “We don’t just look at the acquisition or the fuel consumption. We look at acquisition, operation, maintenance, and the mode of disposal. Given the shortened lifecycle on our assets, we’re trying to optimize the first half million miles as much as possible, while also using warranties and performance measures to ensure our suppliers can be held accountable for the performance of these assets. Data, education, and change management are all critical to ensuring our performance is optimal. Every quarter, we circle back on our assumptions to ensure that our metrics

are being met, and if they aren’t, we look into what we need to do.” MEASURING SUCCESS Based on the first two-and-a-half years of the new asset replacement cycle, C&S have either met or exceeded their budget assumptions in almost all efficiency and uptime metrics. “Our fuel economy is actually better than we thought it’d be,” says Mr. Trajkovski. “Our reliability is better than we expected. We’ve actually been able to net assets out of the system with the same baseline of freight. It’s now about bringing all the different assets together – not just the tractor, but the dry van and the terminal tractor as well – so they’re all in sync, and they’re all delivering the efficiencies they’re supposed to.” Next, C&S plan to begin using renewable and alternative sources of energy. “We’re working with a couple of key suppliers on solar-powered supported refrigeration units,” says Mr. Trajkovski. “Since 2017, all our refrigeration units have come with electric standby. The electric unit is far quieter, and reduces noise pollution. Solar would mean the tops of the trailers are equipped with the latest-technology solar panels, which would allow us to collect energy as we make deliveries. We needed to get our arms wrapped around the basics, which was a replacement cycle which supported the longer-term vision and strategy for our fleet. We can now look at alternative energy, like incorporating electric, and perhaps compressed natural gas, perhaps hybrids, and other technologies. We are on our third generation of ownership, and our owner is often quoted saying: ‘What got us here isn’t going to get us there.’ That means we have to continually grow, we have to change, and we have to evolve to remain competitive and to keep bringing value to our customers.” c

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C&S Wholesale Grocers 6 Optical Ave. Keene, NH 03431 USA o: 603.354.6102 www.cswg.com

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