Public refrigerated warehouses - expanding services to meet changing needs of the food industry.

First, let me begin by congratulating Saul Beck on this sixtieth anniversary of Frozen Food Digest. This publication and the International Association of Refrigerated Warehouses have long been partners in promoting the benefits of public refrigerated warehousing and distribution. Together, we

The early history of public refrigerated warehousing came to a close about two decades ago. It was then that we began to deal with caring for much larger numbers of temperature-sensitive products for extended periods of time. The dynamics of frozen and chilled food distribution in the 1980s and '90s changed radically as "storage" was replaced with "logistics" and technology made possible seamless, efficient, strategic alliances between frozen food processors/manufacturers and PRWs.

The object of these strategic alliances is not to shift costs from one party in the distribution chain to another party. Rather, it is to achieve a more efficient, cost-effective distribution system, in which the beneficiaries are the customers and the customer's customer. Achievement of this objective produces shared benefits for all participants in the logistics effort and ultimately for the consumer. Translated into practical performance, this means that a retailer's computer-generated data can initiate PRW actions, which in turn influence food processor decisions. Lower inventories can be achieved, DSD services can be stepped up and shorter lead times will benefit the retailer. Everyone gains when costs are lowered, and the ultimate consumer can boost his or her purchases.

The past two decades have produced the technology to accomplish model strategic alliances, and the public refrigerated warehouse and logistics industry has embraced the integration of this technology into its operations and assembled a well-trained workforce to apply it. Bar coding, radio-frequency applications, in-warehouse computers and EDI links with customers are all part of what it takes to make the PRW an extension of the customer's business.

Over the years, we have learned that several elements of customer-PRW alliances are critical for success. Mutual understanding of the objectives is one of the elements. Coordinated planning assures that what is wanted can be accomplished and what is accomplished can be measured. Open and ongoing communication is another essential factor, and it is rapidly becoming routine to assign a customer representative to participate in quality/operations meetings with the PRW staff, and vice-versa. Ongoing communications strengthen quality decision-making and make it easier to shift gears or institute fine-tuning when it is called for.

Another and rather obvious element of a successful alliance is commitment. The PRW is committed to a substantial initial investment in the technology, it is committed to continuously upgrade that technology, it is committed to developing a competent workforce to implement the technology, and it is committed to maintaining ongoing technology training. Short term agreements will typically not support investments of this kind. Customers' commitment to longer term agreements is what make the PRW commitment work successfully for all parties. The trend in strategic alliances is, therefore, away from the one and two year agreements and increasingly toward five-year and five- year-plus agreements.

The PRW also has to be willing to commit itself to fairly assessing activity costs for each customer. ABC systems are commonly being put in place to document appropriate cost values.

It is not likely that any two, of scores of customers, require precisely the same level of resources, and it would simply not be good business for some customers to subsidize resources used by other customers. The computer makes it possible to implement good ABC systems, and, once again, technology is working for the benefit of the partnership.

Looking toward the future, we see partnerships growing and strengthening, using more real-time data in meeting the demands of ECR and other initiatives. It has been observed that "the one frontier left for PRWs is to help their processor-partners with forecasting and inventory planning." History-to-come will tell whether this is really the "one frontier left." If the past two decades are a reliable indication, repositioning is anything but a one-time challenge.