In 1930, Del Papa Distributing Co., Galveston, Texas, entered into a relationship with what remains to be its primary supplier, Anheuser-Busch. Through the years, Del Papa Distributing has grown to supply 17 counties in Southeastern Texas with a portfolio that now includes 95 percent Anheuser-Busch InBev products.
The wholesaler operates distribution centers in Beaumont, Galveston and Victoria that company-wide supplied 9.5 million cases of beer in 2010. Its three distribution centers are centrally located to serve the company’s 1,500 off-premise and 1,300 on-premise accounts. The area Del Papa Distributing covers is vast and the company’s distribution team drives approximately 2.5 million miles each year, says Peter Williamson, Del Papa Distributing’s vice president of performance systems.
To help the company better serve its customers, Del Papa Distributing announced an $18 million investment in a new Coastal Distribution Center to be built in Texas City. The new facility will include a new distribution center and offices and will replace the company’s Galveston facility, which is located on an island about 50 miles southeast of Houston.
“The island used to be where our business was, and it’s evolved over 100 years,” says Larry Del Papa, the company’s president. “Fortunately, we’ve grown and the outer territory has grown, and we’ve picked up territory. It’s going to be a big deal for our future.”
Advantages of forecasting
Customer service is a top priority for the wholesaler and shapes the way it goes to market, says Alex Guidroz, Del Papa Distributing’s executive vice president of sales and marketing.
“We take it one consumer at a time, one case at a time and one can or bottle of beer at a time,” Guidroz says. “We don’t really go out and make a huge sale. It’s a combination of a lot of little sales throughout the day, throughout the month, throughout the year that will make us or break us.”
In addition to sales, relationships also are forged by the distribution team, whose routes generally visit the same accounts weekly, says Eric Joseph, the company’s vice president of logistics.
Del Papa Distributing operates on a pre-sell system with more than half of its orders forecasted at least 48-hours in advance of delivery, Guidroz says. Merchandisers might visit accounts throughout the week, he says. The company delivers approximately 90 percent of its volume in bulk shipments, it says. Delivery is offered Monday through Saturday and during peak weeks the company is able to run deliveries twice a day.
Due to Del Papa Distributing’s location along the Gulf Coast, the market experiences an influx of tourists several months of the year. During these peak times, the company adds seasonal workers and also uses a layer picker for volume orders. The layer picker can move as much as 30 percent of its volume, Guidroz says. In addition, the pre-sell system helps the company to schedule its warehouse staff, Del Papa says.
“The 48-hour and 72-hour advance sales helps us schedule our workers so people aren’t standing around waiting for orders,” Del Papa says. “That’s what used to happen in the peak season; the orders would come in at the end of the day and people would have been waiting on orders. Now when they get here first thing in the morning, they’ve got orders from two days ago.”
The company maintains three controlled environment warehouses to serve its vast territory. The Beaumont warehouse spans 41,000 square feet with capacity for 275,000 cases. Its Victoria warehouse is 19,000 square feet and has space for 150,000 cases.
In Galveston, the company has a main warehouse that is 45,000 square feet and an annex warehouse located down the street from the main location with 8,650 square feet of space for extra products. The combined capacity of the two Galveston warehouses is 300,000 cases, the company says.
The recent economic downturn spurred the company to examine options for more efficient processes, says Bill Falkenhagen, Del Papa’s executive vice president and chief financial officer. In an effort to reduce the number of times employees handle products, Del Papa installed warehouse management systems in each of its three locations.
Its warehouse management system receives a forecasted order from an account manager, which is given to an order builder in the warehouse who is equipped with a head-set. The voice-directed warehouse management system leads the order picker to specific product locations in the warehouse, which are marked by overhead barcodes, and provides instructions on the amount of cases to pick. Completed orders are shrinkwrapped and placed in rows organized by route numbers. Before being loaded onto trucks, the orders are verified by an employee.
In 2010, the system helped Del Papa Distributing achieve 99.2 percent accuracy in its orders, Joseph says. With an aim of 100 percent accuracy, the company is investigating technology, such as weighing or scanning orders to streamline the verification process.
In addition to order accuracy, the warehouse management system offers more visibility into location and code dates of products in the warehouse as well as advance shipment notices from suppliers, including the Anheuser-Busch InBev brewery in Houston. It also monitors employee activity and in the fourth quarter, the company saw a nearly 19 percent increase in the number of cases moved each hour across its three facilities, Williamson says.
Del Papa Distributing’s fleet maintains 38 trucks across its three locations. In addition to 28 bulk delivery trucks, the company also uses 10 eight-bay trucks, which are smaller trucks with four bays on each side that deliver bulk orders to smaller accounts. The eight-bay trucks are smaller and easier to maneuver in high-traffic areas than a standard semi-truck, the company says.
“If we are pre-selling to the on-premise trade and the smaller accounts, the eight-bay truck can carry as much as we were selling off a 20-bay when we were pedal selling,” Del Papa says. “But the investment in the equipment is much less, and the efficiency in operating the equipment is better.”
The models do not require a driver who has a commercial driver’s license, which provides for an entry-level employment opportunity, Del Papa adds.
Planning for progress
The company’s current Galveston location tends to be the company’s hub and in four buildings houses 160 employees spanning the company’s sales, delivery, graphic design, human resources, fleet maintenance and financial services divisions, Del Papa says. The company’s plans for a new Coastal Distribution Center in Texas City will help centralize the divisions currently housed in Galveston.
“This is a 31-year-old campus,” Del Papa says. “It’s been expanded to the point of inefficiency. It’s a very nice facility and it works well, but if we’re looking at the next 25 to 30 years, it’s obvious that putting more investment in a location that’s not as efficient and properly located as it could be, is not wise.”
In its plans for the new facility, Del Papa Distributing is taking the best practices that are currently in use by the company, such as its warehouse management system, and combining them with state of the art features, such as video conferencing, on-site generators and environmentally friendly design features, Williamson says. In addition, the new Coastal Distribution Center will feature improvements on Galveston’s current design.
“From a campus that is 31 years of age, we are going to be able to be much more efficient in our product layout,” Williamson says. “The number of cases that we are able to stack in certain areas of our warehouse will not be a problem going forward. We will be much more efficient there.
“In our loading bays, it’s going to be like a cross-dock,” he continues. “We’re going to bring product in on one side of the building and it will go out on the other side. So the congestion that we have today with receiving and sometimes shipping products will be eliminated.”
The Texas City facility also will be the central location for the company’s lower volume products, Del Papa says.
“About 50 of our packages do about 90 percent of our business, yet we have all packages at all locations,” he says. “What we’re going to be able to do is isolate the majority of our packages in our Coastal Distribution Center and pull them out of our Northeast and South distribution centers. Thereby increasing the capacity of those operations long term, and also increasing the productivity of how we handle these small packages.”
The company envisions that when used in combination with its pre-sell forecasting system, smaller volume products can be picked at the Coastal Distribution Center and sent to Beaumont and Victoria to continue their journey with high volume products picked at the local warehouses, Del Papa says.BI
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