Logistics Best Practices: Papa John's QC Quest
Taking a measured approach, the pizza purveyor automated its transportation processes and created a holistic solution to achieve load visibility—and in turn has cut freight spend by 15 percent and turned up the heat on quality control.
By Patrick Burnson, Executive Editor -- Logistics Management, 6/1/2009
More than merely a foodstuff, pizza enjoys a special place in the pantheon of global cuisine and culinary culture. That's certainly the way the supply chain professionals at Papa John's International, Inc. feel about their product—only more so.
Because pizza is a highly perishable commodity, brand confidence is critical. "Everyone who works here shares the same passion for pizza," says Eric Hartman, Papa John's senior director of logistics who runs his operation out of the company's headquarters in Louisville, Ky. "We pretty much regard it as the perfect food."
And while a statement like that will generate little argument, there's no question that speed to market is crucial. It was also a major part of the challenge for Hartman dating back to 2007. "Our pizza and other foods move under temperature-controlled conditions, making the supply chain rather complex," he says. "Over the past two years, we've been trying to streamline that process. But we didn't rush into this."
Hartman realized that he needed new solutions for planning and procurement, along with carrier and fleet management to make this streamlining a reality. He was also searching for vendor integration among solutions—replenishment, warehouse management, transportation, and performance management.
"A DC would place an order over the phone rather than place it electronically, increasing the potential for error either on our side or on the vendor side," Hartman recalls. "The vendor then selected a carrier, freight was prepaid, and we often wouldn't know which specific carrier was coming. If we had concerns regarding the load, product quality, or the temperature during transit, we had to go back to the vendor, who had to go back to the carrier, to get that information."
Another major challenge during this 24-month period, says Hartman, was inventory tracking and accuracy. Back in 2007, Papa John's lacked the carrier relationships necessary to gain visibility and to ensure the highest level of quality control.
Taking a measured approach, Hartman and his team invited three software vendors to come up with a holistic plan to address their needs and the needs of PJ Food Service, Papa John's parent company. PJ Food Service provides one-stop shopping for virtually all the ingredients and supplies used in Papa John's restaurants through its 10 quality control centers, making the challenge even greater—but the solution has earned Hartman this year's Silver Medal.
Gaining Vision
In addition to achieving visibility, Papa John's goal was to reduce manual processes and increase efficiencies to better control costs and increase shareholder value. The process of choosing such a partner to achieve this aim required considerable diligence, but Hartman says that Manhattan Associates delivered on its promise to provide an adequate off-the-shelf solution.
"Our decision was based on the provider's background in planning and procurement," says Hartman. "Its carrier and fleet management offerings were also attractive to us." But that doesn't mean there won't be other hard decisions down the road. At this point, says Hartman, the strategic piece of the puzzle has been put in place. That leaves the tactical details—and more metrics.
"We did an initial freight bid last year," he says. "Our goal was to establish a foundation first with truckload, and we'll bid out additional freight this year for LTL and intermodal. Selecting the 12 carriers and the contract preparation process was fairly seamless."
Using the current solution to select carriers based on rating tables from the procurement process, Hartman and his team are still learning how to use the tools to broker effective shipper/carrier relationships and network alignment. "Just getting through the procurement process to establish transportation planning and execution functionality was tough," recalls Hartman. "But it's being done."
As a consequence, Papa John's has established a solid foundation in its vendor and carrier relationships, providing better visibility and enabling carriers to schedule appointments. And soon, EDI will be tied in to further reduce the administrative workload on both vendors and carriers.
"We started with no inbound transportation capability—it simply didn't exist," says Hartman. "The fact that we completed the project within a year speaks volumes about the talent here at Papa John's—and speaks just as loudly about the capabilities and the ease of use of our newly-purchased solutions. Having the replenishment and transportation software in place gives us a solid foundation to now pursue the more tactical projects—distribution and audit and payment."
Papa John's new direct relationships with carriers also enables it to capture essential data on shipments—such as temperature during transit—often in real time. Once EDI is fully implemented, this can only improve.
One of the primary goals for Papa John's in automating transportation procurement was to deliver reduced costs. According to Hartman, they were able to reduce freight spend after just six months of live runtime on the system, achieving its goal of a 10 percent to 15 percent reduction.
But perhaps the biggest benefit, says Hartman, is overall piece of mind. "From a food security standpoint, the visibility to our product and to our carriers is a huge factor," says Hartman. "Our restaurants are known for serving meals with fresh ingredients, so anything that puts that image in jeopardy is unacceptable."
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