After Snapping Up Snapple's Business, Ryder Aims Higher

Ryder System Inc.'s success at being one of Snapple Beverage Corp.'s lead logistics providers may win it a bigger prize: a contract to provide the same services for other U.S. business units of Cadbury Schweppes plc, the London company that bought Snapple in September. Cadbury Schweppes' business units in the States include Dr Pepper/Seven Up, Motts, and Cadbury Chocolates.

Snapple chose Ryder last year to manage inbound and outbound logistics operations, after deciding that it could no longer effectively manage the six carriers that transport raw materials to its 14 beverage plants, as well as millions of cases of Snapple, Mistic, and Stewart's brands of juice and tea products to its 350 distributors.

Ryder's technology and logistics expertise was a killer combo, according to Snapple. "They had the technology in place to do shipment optimization and come up with the most effective solution for us," says Neil Volkmar, Snapple's VP of supply chain. Since March, the beverage company has saved more than 5% in shipping costs on the runs Ryder manages, despite the fact that the cost of fuel has driven up the cost of transportation for most companies.

Rather than shipping materials with less-than-full truckloads, Ryder matches Snapple's freight to trucks that are carrying products for other companies. This reduces costs, because now Snapple can share the cost of freight with other parties. Ryder still gets raw materials to the plants on time, Volkmar says, a critical consideration because Snapple outsources much of its manufacturing to third-party bottlers. "We have arrangements with our manufacturers that specifies if we don't have the raw materials at their plants ready for production at the right time, we have to pay for their downtime," he says.

But Ryder's not working alone. Snapple split management of its logistics operation between Ryder and one of Snapple's existing logistics providers, Bett-A-Way Traffic Systems Inc. in South Plainfield, N.J. Volkmar says his company is happy with Bett-A-Way as well, and Cadbury is also considering the company for a bigger lead logistics role as it rethinks its logistics options.

As Cadbury Schweppes consolidates the operations of many of its U.S. operating companies, Volkmar is spending some time explaining to colleagues at other divisions the value of outsourcing logistics to a third party, despite the costs. Volkmar points out, for example, that Ryder's ability to leverage its clout in the market with hundreds of carriers, the company's logistics technology, and its ability to help Snapple manage its freight more than offset the management fee for the job. Says Volkmar, "We come out ahead."

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