J.J. Taylor Distributing Florida Inc.
For beer distributors such as J.J. Taylor Distributing Florida Inc., the explosion in craft brewing has been a blessing as the popularity of major mega-brands has been contracting. But the blessing comes mixed with a few bitters by the challenge of handling the complexities of inventorying and delivering such a profusion of brands.
“When I joined J.J. Taylor in 1998 in Miami, we had a total of 250 SKUs we might deliver on a given day,” Corporate Vice President of Administration Jose Rivera recalls. “Now we might be moving 2,000 SKUs. It’s a different animal, a different environment and a different beer drinker. The main challenge is understanding that the market is changing and the profile of our beer drinker is different. You have to compensate for that. You have to be very prepared for the movements that are happening in the market.”
Rivera says he never thought six or seven years ago that he would be distributing so many varieties of beer. “You have to think about how you are going to warehouse that, how you are going to do your picking, how you are going to process and deliver the orders,” he emphasizes. “It affects everybody in the company one way or another.”
To meet these challenges, J.J. Taylor Distributing is more than tripling its distribution center in Fort Myers, Fla., from 74,000 square feet to 320,000 square feet. The new facility is due to start construction once the city of Fort Myers approves the site plan. It is scheduled for completion by November 2016. The current distribution center in Fort Myers handles cross-docking, houses offices and receives any products that are imported through the Port of Miami.
Rivera estimates that 99 percent of what J.J. Taylor distributes is beer, with the remainder being beverages such as water and iced tea. The company has its major distribution center in Tampa, Fla., which measures approximately 327,000 square feet, and a cross-docking site and offices in Fort Pierce, Fla., which measures approximately 25,000 square feet. The Tampa distribution center includes 42,000 square feet of cooler storage for keg and craft beer.
J.J. Taylor Distributing Florida delivers approximately 20.5 million cases of beer annually, of which 12.5 million are shipped from the Tampa distribution center, 6 million from Fort Myers and 2 million from Fort Pierce. The company has approximately 150 routes in Florida to which it delivers its beverages and more than 13,000 customers.
Deciding to Expand
The decision to expand the distribution center in Fort Myers started three years ago by doing an analysis of the existing facilities. The concept was how to serve J.J. Taylor’s customers in Florida and still deliver their beer orders within a 24-hour window.
“We found out we might have some problems with the throughput at our Tampa location – getting the order processed, picking the order and loading it in a truck within the time window,” Rivera recalls. “We found out we could do that, but the additional cost would not make any sense financially.”
So he began to investigate moving much of the Tampa distribution center to a new, expanded distribution center in Fort Myers. “That would leave Tampa with enough room to continue expansion as we grow,” Rivera notes. Preparing nightly shipments to Fort Pierce for cross-docking that location’s 12 to 14 routes would be moved to Fort Myers, as well as serving the southwest Florida market.
The Tampa distribution center uses the Vertique system to assemble orders. Employees pick the orders from high towers and place them on conveyors, which direct them to a palletizer. The system dictates the picking order to employees and directs the orders to the correct pallets. It then determines the order of loading the pallets in the truck. Each product and pallet is identified by a sequence and pallet number.
A pallet may be going to a single location or it may include several smaller orders that are linked geographically. The system also provides the most efficient routing to drivers through its GPS capabilities. “The whole process takes between 12 and 13 hours depending on the volume we have for that day,” Rivera says. “We have days that we only do 50,000 or 55,000 cases. We can do 120,000 cases, especially during the holidays. It’s always a challenge in terms of how much we can process during the day.”
The expanded distribution center in Fort Myers will employ material-handling equipment and a warehouse automation system from Cirrus Tech Inc. It will include an automated storage and retrieval system to pick some merchandise. Rivera says he can add employees to the Cirrus system to increase picking more easily than with the Vertique system.
Although the Cirrus system is automated at the beginning of the picking process, the Vertique system is more automated at the end, Rivera maintains. He also thinks the Cirrus system reduces human handling of the merchandise by 50 percent over the Vertique system, which decreases the possibility of breakage.
J.J. Taylor Distributing leases a fleet of 176 semi-tractor trailers or trucks and owns 189 trailers, of which approximately 53 are refrigerated. Its leases are for eight years, and the in-house service departments at each of the three locations perform maintenance and repairs on them that can be completed within 24 hours. If a maintenance operation or repair takes longer, it is sent to a shop.
The company retains its trailers for approximately 20 years, refurbishing them every six or seven years with any new parts and repainting that is required. The advantages of leasing are financial. “We don’t have to make a huge investment,” Rivera points out. “Buying 170 vehicles at $100,000 each is a lot of money to tie up in a given asset, especially one that depreciates fast the moment you buy it.” Another advantage is maintaining a regular schedule of vehicle replacement every eight years.
To reduce operating expenses and emissions, 96 of J.J. Taylor’s semi-tractors and trucks operate on compressed natural gas (CNG) at the Tampa and Fort Myers distribution centers. The company began investigating use of CNG approximately four years ago when diesel fuel prices topped $4 a gallon, Rivera remembers.
After the company obtained CNG semi-tractors about two-and-a-half years ago, Rivera says the payback on them at that time was approximately 27 months. The state of Florida started offering incentives for CNG vehicles approximately three years ago. “From a financial point of view, it was the right decision when we made it,” he maintains.
Now that the price of diesel fuel has dropped, J.J. Taylor Distributing is still experiencing benefits in decreased engine maintenance with CNG-fueled vehicles. New diesel emission regulations are causing increased maintenance and sometimes even engine overhauls for the company, but Rivera calculates that the CNG vehicles cost from 30 percent to 40 percent less to maintain than the equivalent diesel engine because of their reduced emissions. J.J. Taylor has hired a company to supply the vehicles with CNG at its distribution centers so they do not have to fuel up on the road.
Delivery, Not Driving
J.J. Taylor Distributing is experiencing the same difficulties hiring drivers that many companies are, but an additional factor is that the drivers also have to deliver the merchandise. “They really are a delivery person – 65 to 70 percent of their time is really delivery and 30 to 35 percent is driving the truck,” Rivera emphasizes. “So you need someone who knows how to handle a rig, but at the same time, knows how to do customer service, how to handle a case of beer and how to handle a jack and a keg.”
To recruit for the ranks of J.J. Taylor Distributing’s nearly160 drivers, the company offers incentives for employees in other departments of the company, such as the distribution centers, who meet the company’s criteria to train to be drivers. It also holds open houses to introduce potential drivers to the company and encourages its drivers to recommend recruits.
Drivers who are hired receive two to three weeks of training in the office and are assigned to ride with another driver to learn their jobs. All cabs are equipped with cell phone communication, GPS systems and onboard diagnostics for any mechanical difficulties.
Rivera attributes the company’s success to hiring the right people, training them correctly and retaining them as employees. He anticipates further growth in the craft beer segment.
“We have expanded our offering of beer,” he says. “We were one of the first companies that looked at the new variety of beers offered and the craft beer business, and we decided this is an area where we want to spend more, and it has been paying off for us.
“In the last three or four years, we have had excellent growth in the category,” Rivera continues. “For example, Cigar City Brewing in Tampa started selling 500 cases per month, and now our operation is selling more than 20,000 cases per month.”