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Associated Cold Stores and Transport Logistics (ACS&T), the pioneering logistics supplier to the UK food sector, is asking companies to choose their logistics provider wisely, or risk being left with compromised, costly services. With companies now increasingly making their choices based on simple price-per-service information provided by suppliers via online spreadsheets, Malcolm Johnstone, Managing Director of ACS&T is warning companies of the inadequacies of this method in choosing the best service. He goes on to argue that choosing a supplier by examining individual practices, methods and additional services is the only way to guarantee a good value, suitable partner:

\”Recently, frozen food companies have moved towards choosing logistics suppliers entirely on price. With the recession, businesses are looking for ways to save money, and the logistics and operations managers who have been traditionally involved in the decision, have been removed from the process. Increasingly, this decision is now in the hands of procurement specialists, whose preferred method of measuring supplier response to tenders is with online, electronic spreadsheets.

It is understandable that, in the current economic climate, businesses are looking to reduce the cost of the supply chain. Procurement departments, who lack the experience in the intricacies of logistics and the associated costs, often make their choices solely based on price, with decisions made with the belief that logistics services can easily be broken down and priced against a simple set of requirements. In reality, this is simply not the case, and a price that seems very cheap can be misleading when the actual requirements of a company are taken into account!

For Logistics providers, procurement initiatives like this are regarded as a way of trying to breakdown their services and turning the tender process to a simple question of how low you can get your price. However, these tenders do not include enough meaningful information on specific variables such as blast freezing and tempering, de-stuffing, storage temperatures or palletisation, meaning that any price given by the supplier is, at best, a rough guess. Often, this price will have no correlation to actual working practices, leaving both parties dissatisfied with the final service agreement.

It can be argued that the idea of using of procurement specialists and online platforms is intrinsically flawed in itself, as the decision makers do not have to live with the consequences of picking an unsuitable logistics provider. With procurement teams, there is always the danger that the overall prize of reducing costs is valued much more than quality, value-added service. Whereas after the appointment of a supplier, procurement teams move on to their next job, the operations or logistics managers are left with the task of working with reduced budgets, rebuilding the quality of supply chains, and managing customers who are dissatisfied with the new programme.

ACS&T Logistics believe they have an alternative solution. ACS&T focus on building mutually beneficial relationships with all its clients, with an adaptive service that can accommodate the ever-changing individual demands of businesses. Procurement initiatives may be able to uncover companies who offer a storage rate at a slightly cheaper rate, but these savings are insignificant in the long term. ACS&T customers save thousands of pounds through its leading edge online stock management system, by minimising their stock inventory and reducing operational failures and unit costs through the consolidated supply of ingredients to the production line.

This year can be seen as a difficult time in selecting the right supplier for your frozen food logistics programme. Suppliers are facing a lot of challenges over the next twelve months, with expected increases in the cost of power and fuel, as well as the necessity of replacing all their R22 refrigeration systems. Already affected by the current economic climate, some providers may struggle to stay afloat, and procurement prices are only sustainable if these companies remain trading. Very few procurement specialists consider the potential cost of recovering stock from administrators when choosing a logistics partner!

To find out more, please visit the ACS&T website