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Kapiti's innovative solution beats transport costs

Media statement October 18, 2005

Kapiti applies innovative solution to beat transport costs
- Win-win for Kapiti and its customers

New Zealand’s preeminent cheese-maker, Kapiti Fine Foods Limited, has introduced a new nationwide distribution system for cheese products to help beat the impact of rising fuel costs.

It is a system, which continues Kapiti’s tradition of innovation.

Working with national courier company Post Haste Ltd, Kapiti has researched and developed an Insulated Transfer Bag (ITB) capable of maintaining product temperature guidelines during all deliveries to retail and foodservice customers, and thus ensuring the quality of products.

As a result of the success of trialing the new system, Post Haste is fitting the bags in 400 courier vehicles. The bags are made in New Zealand of an imported Japanese thermal material, which has been shown to hold product temperature. (The material is made of foil and polyethylene.)

Cheese product placed in the ITBs maintains it temperature between Post Haste’s depot chillers and delivery to customers. Trials over an 18-hour period have shown no more than a 2 degree Celsius temperature change in the product after dispatch - from Paraparaumu to Invercargill.

Insulating customers from price increases

The CEO for Kapiti Fine Foods, Greig Shearer, says he believes his company’s initiative will revolutionise distribution of small and medium-sized product orders requiring cool chain control.

“This is the result of challenging ourselves to do better in terms of delivery costs and improvements in customer service. It allows us to hold product prices in the face of significant increases in transportation cost arising from fuel price increases.

“Transportation costs had risen faster than any other business item – up to 30% this year - threatening significant price increases and the viability of servicing some customers.

“This distribution solution is a win-win for all involved, including our customers, our cheese business and the courier company. It streamlines our business, improves stock control, and helps Kapiti maintain its reputation as an outstanding supplier.

“We can now commit to 99.5% of our deliveries being made the following morning, whereas some areas previously had to wait two days or more.”

The two other elements of Kapiti’s distribution agreement with Post Haste are use of two of Post Haste’s five aircraft for South Island deliveries – Palmerston North to Christchurch – as well as its chillers in 17 depots and 24 unmanned branches throughout New Zealand.

“Using Post Haste’s depot chillers and its extensive fleet fitted with the ITB bags, orders will be delivered efficiently.”

The new distribution agreement will shorten Kapiti’s distribution chain and improve the temperature integrity of its system.

Greig Shearer says it is tried and tested, but together with Post Haste Kapiti will continue to monitor the new delivery system to ensure it meets the company’s stringent requirements. The majority of orders placed before 1pm today will be delivered in central city areas prior to 10am tomorrow.

Well suited to customer needs

The system that Kapiti has developed is well suited to customers’ needs, characterized by more frequent deliveries. It is based on the just-in-time delivery model, which is under threat from significant increases in delivery costs, much of which is due to fuel prices increases.

“Our new system is designed to off-set increases in transport costs, and hence product prices increases,” Mr Shearer says.

“The benefits of these transportation savings are being passed on directly to customers. Without this delivery change, Kapiti would have been forced to increase product prices significantly.

“This initiative also helps maintain the price relativity between smaller stores and foodservice operators and the big chains. This is important for our business and for our customers.”

New avenue of business

National Sales and marketing Manager for Post Haste, Warwick Mitchell, says the agreement with Kapiti has opened up an avenue of business, which his company did not think existed.

“With this cost-efficient cool chain system we have a courier market not previously identified. Like Kapiti, we recognise that to achieve the objectives of the new system will require all parties working closely together.”

The cheese-maker is already working with Post Haste to develop a customer-friendly track and trace system based on the commonality of the invoice number and delivery number.

Carton Packing for Quality

In a further initiative aimed at improving the efficiency and quality of its distribution system, Kapiti has introduced set case sizes for all of its customer delivery. All products are carton packed.

Marketing Manager Brenda Galbraith says this is a pragmatic change that will ensure product quality while also helping to reduce distribution costs.

“We recognise this move will affect customers purchasing very small quantities of product, but they still have access to our quality cheese products through distributors and wholesalers.

“In some cases the point had been reached where the distribution costs had outstripped the value of product orders, which was in no one’s interest.”

ENDS

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