5 Last Mile Considerations for Growing Your Food Distribution Business

There’s no magic bullet when it comes to growing a business. It takes a mix of hard work and luck, and it involves a special set of risks and challenges—especially when it comes to something like food distribution. Margins are always narrow even in the best of times, which means you need to make sure that you can take on new business in a way that ensures profitability. With all the moving parts that come with effective distribution, this is much easier said than done.

Ultimately, a huge amount of your ability to scale your business comes down to the last mile. The efficiency of your last mile planning and execution determines whether you can take on new customers without risking late deliveries to your existing clientele. It determines whether you can keep ensuring profitability along each route and across each stop. And it’s a huge factor in your ability to adapt to changing market conditions. 

This means that when you have the right last mile capabilities, you have a foundation for growing your business in a sustainable way. But how do you know if you’re positioning yourself to take on more business and potentially grow your fleet? Here are a few considerations for figuring that out. 

1. How Often Are You Rerouting?

For many food distributors, routing and rerouting are significant pain points. Because much of the software that exists that’s aimed at this use case is difficult to use and prone to siloization, there are a lot of distributors out there who can’t update their routes without a complex and time-consuming project, often involving outside help.

As a result, distributors tend to reroute once or twice a year at most. For business as usual, this isn’t necessarily the end of the world—but when you’re looking to add new business or expand into new geographies, this can create issues. 

Simply put, your routes need to reflect your current business and market conditions as closely as possible if you want to stay efficient. This means rerouting as often as you need to based on changes in your network. If you’re able to update your routes and generate new ones from scratch multiple times per year without creating chaos, then you’re in a good position to take on new business.

2. How Are You Measuring Cost-to-Serve?

One of the biggest challenges in growing a business is figuring out which new accounts you can take on while remaining profitable. If you have distribution centers across Florida and you see a potential expansion opportunity in Georgia, it’s pretty likely that you’ll need to open up a new distribution center and shell out for new trucks—and you can compare those expected costs to your expected revenue from the new accounts you may have lined up. 

Even if you’re not looking at the potential for new distribution centers, you need to make the same kinds of calculations, i.e. will it make economic sense to deliver to this new customer. That means you have to have an important tool in your toolbelt: accurate delivery costing. 

Why is this challenging? There are two main reasons:

• Visibility: If you don’t have good data on your delivery and service runs, you might struggle to come up with an accurate number for how much you spent on fuel, labor, etc. etc. 
• Cross-functional costs: Cost-to-serve encompasses a lot more than just delivering the right orders to the right place—it can also include follow-up visits from sales, to say nothing of merchandiser visits and even shuttle driver time. Accounting for all of these can be difficult with connected systems that are shared between functions. 

If you’re in a position to measure cost-to-serve easily and accurately—and you can project planned costs for future delivery runs—then you’re in a good position to make accurate cost-benefit calculations as you grow your business. 

3. How Do You Roll out Technology to New Locations?

On some level, growth is always going to mean finding a way to scale your current process and technology usage. The easier it is to do that, the easier it will be to minimize disruptions as you grow your business. 

Ask yourself: “How hard was it to implement my current technology in the branches where it’s operating?” “Was it easy to train new users on routing, planning, and other technology tools and get them up and running?” “Does my delivery technology play nicely with my ERP, WMS, etc.?” The answers to these questions will tell you a lot about how easily you can expand your geographic footprint. 

This same logic applies when it comes to acquisitions. The easier it is to get newly acquired businesses up and running on your delivery planning and execution systems, the more quickly and cost-efficiently you can work them into your network.  

4. How Are Your Last Mile Planning and Execution Connected?

Silos are an issue everywhere, but they’re especially problematic when they crop up between delivery planning and delivery execution—and they can have a big impact on your ability to grow your business. 

Here, the best practice is to combine planning and execution within a single solution. This helps improve your growth posture on a number of fronts:

• It prevents the kind of disruptions that can arise when plans don’t account for real-world conditions. 
• It can make you more flexible in how you manage your deliveries across your network—e.g. you can update plans more easily as new situations arise.
• You have fewer solutions to implement and train new users on. This simplifies other data integrations as well. 
• You can more effectively make new and existing customers happy with consistent on-time delivery performance.  

If you examine your current operations and find that planning and execution are synced up well and not prone to silos, then you’re in a good position to offer great customer service even as you expand your business. 

5. How Are You Planning Territories?

Like we talked about with route planning above, territory planning for food distributors can be a slow, painful, and time-consuming process—with the result that most businesses are reluctant to do it more than once or twice a year at most. 

There’s no secret about why that’s the status quo. Creating balanced sales territories that have roughly even revenue potential for sales, ensure continuity of service for customers, and translate into efficient routes can be incredibly complex. At the same time, the tools that have historically been used for this process haven’t empowered distributors to make changes quickly or easily. Too often, we see businesses utilizing territory planning software that requires a team of experts to wield effectively and has no connectivity with routing and delivery planning solutions. 

Luckily, the status quo is not the only option. Modern, AI-powered territory planning solutions can significantly speed up the process—enough that you can adjust your territories as needed without causing chaos and without a herculean effort on the part of your planners. When you’re able to make this a reality and consistently ensure that your territories match your current market conditions, you can position yourself to take on new business, grow through acquisitions, or expand your geographic footprint in an agile, cost-effective way.