Managing one of the biggest risks in food distribution
When it comes to the food distribution industry, it’s not the missing link that matters – it’s the middle link.
Food distributors are the middle link in the food supply chain. They buy food and food products in very large quantities from manufacturers or processors at a discounted price, and then they sell smaller quantities at a higher price. This solves the problem of getting food from the people who make it to the people who sell it. Food distributors can get products out to a much broader outlet than the manufacturer or processor could handle.
Food distributors are the middle link.
We pay a lot of attention to food distribution at my company. Distributors of all kinds face many concerns and hazards surrounding the delivery of product. With food, there are some unique exposures such as spoilage.
But one of the largest exposures faced by a food distributor is the auto operations.
First, you have the hazards faced by the drivers. This is an industry that relies on human beings to make split second decisions at key moments on the road to ensure safe delivery. Some drivers might be inexperienced and most drivers are likely distracted at some point. Heavy traffic, poor road conditions and inclement weather add to the crazy mix of potential risks of the road.
Then, you have the vehicles themselves. How many automobiles does the distributor have? Are they semis, box trucks, or sedans? The age and type of the vehicle makes a difference, as we've seen in our experience insuring food distributors of all types.
On top of all this, you have the product itself - presenting some tricky circumstances for food distributors. You're managing hazards of the drivers and vehicles while making sure a perishable product is delivered properly.
Distributing food is a time sensitive operation. The food might be fresh and need to get to the point of sale quickly and in good condition. It could be frozen with the need to stay that way in transit. And, the customer waiting to receive the product might be completely dependent on this delivery to conduct their business. All of this puts additional pressures and obligations on the distributor.
Managing these risks means asking the right questions, then putting the right programs and procedures in place based on the answers. For example, an insurance agent and underwriter might ask, are the deliveries to repeat customers and locations where the routes are routine and familiar? As you might imagine, a distributor with drivers who are traveling on familiar routes and delivering to repeat customers has less risk of confusion than a driver traveling in unfamiliar territory.
Other risk management questions could be, what type of radius of operation does the distributor travel? Will the distributor handle the pick-up of the product as well as making deliveries?
With the answers to these and other questions in hand, you can then create a plan to address the specific hazards faced by the operation. For drivers, this is going to include a formal fleet management program of some sort - even if there are only two drivers in the fleet.
If you're interested in more on fleet safety programs, let me know. I can point you in the right direction. The bottom line is - when it comes to the middle link in food distribution, safety and risk management are critical.