USF Distribution
Bolingbrook, Illinois USA
October 23, 2001
By
Richard Armstrong

USF Distribution is the leading player in U.S. retail supply chain management. They have grown 30-40% a year for several years and now have 17 locations including Atlanta, Chicago, Dallas, Los Angeles, and New York. 95% of USFD’s business is retail. 55% is distribution to specialty retailers; 35% is origin/vendor consolidation; 10% involves crossdocking activity for warehouse formats.

All USFD facilities have some automation. Bar code batch scanning for inbound, outbound and store delivery is the standard package. Symbol 6100 scanners and Palm 1700’s are the standard scanning devices. USFD is beginning to migrate scanning operations to RF (radio frequency) devices.

USFD uses 475 independent contractor tractors and 750 owned trailers for delivery from its facilities primarily to shopping centers.

Growth has come primarily from new customers to produce current net revenues of $90 million a year since Tom Lilly joined the operation in 1997. Future growth will include expansion into 10 new locations providing for coverage of 75% of U.S. markets. Import-deconsolidation operations will be expanded in response to Asian retail sourcing. USFD already has three locations in the LA basin. Other expansion targets are retail store backroom services and expanded fleet activities.

Bolingbrook is USF’s most heavily automated crossdock facility. It has 92,000 square feet of warehouse space and cost over $10 million to build. (about twice as much as a conventional crossdock of the same size) This prototypical facility has 85 doors and 8,000 square feet of office space. There are 350 trailer parking slots.

The automated operations use about 2/3 of the total dock space. The other 1/3 is used for freight that does not flow through the conveyor system. This includes some large palletized pieces and 8-10% of cartons.

The automated system uses three receiving doors supplying 80 feet a minute of takeaway capacity. Barcodes are scanned omni-directionally and UCC-128 labels are in expanding use. The sorting system operates at 300 feet (150 cartons) a minute in a continuous loop with sliding shoe sorters. The software to run the system is proprietary.

The system is used most heavily between 8 PM and 2 AM with conveyor loading at 50 doors.

We visited USFD on the day that the decision to merge its management control with those of its sister companies USF Logistics and returns specialist USF Processors was announced. Tom Lilly, President of USFD will be the CEO of the new combined operations. Ken Landego, VP-Sales and Marketing will have the same position in the new operation. The new USF Logistics will be headquartered in Oak Brook, IL.

The new USFL will maintain 3 operating units, Distribution, Warehousing and Fleet Services-headed by existing USFD and USFL personnel. An umbrella transportation management services operation will report to Landego.

A major priority of Lilly and Landego is to get the i2 transportation management solutions redeployed and spread throughout fleet services and to USFL customers.

We view the consolidation of these units under Tom Lilly as a positive and necessary change. USF Logistics has floundered over the last year. It has been particularly slow in moving to get competitive on transportation management. Lilly and company should be caught up in 12-18 months.