Cirelli Foods

Source: Food and Drink Digital

Date :6/1/2007 8:32:43 AM

A company relocation and major expansion puts a lot of pressure on warehouse management systems. Cirelli Foods found that pain relief comes from proper planning and a bit of outside help.

By David Weldon

Too much of a good thing can quickly turn bad. That is especially true in business, when a company tries to grow too quickly, or with too little planning.

Cirelli Foods, Inc. took those lessons close to heart when the Middleborough, Mass., company decided to uproot itself three years ago from a much smaller facility in nearby Brockton.

The greatest concern for the 60-year-old, family-owned company at the time wasn’t managing the increased food distribution space it would soon have, but the impact that the move would have on day-to-day operations, and ensuring that new warehouse management systems were designed to handle future needs. Cirelli Foods was in the midst of a healthy growth period — necessitating the move in the first place — and management wanted that trend to continue.

To help head off any problems, company officials took two important steps: first, they brought in a consulting firm to help them design a new facility to best meet immediate and long-term needs. Secondly, they paid a visit to a similar size and designed food distribution plant in Illinois to get a first hand look at what to expect with the finished product.

In the process of the site visit, Cirelli Foods President and CEO Jay Cirelli says he learned an invaluable lesson.

Speaking of his counterpart at the Illinois plant, Cirelli says “he slowed down growth, and put the brakes to new sales while the new facility was being built.” As a result of this move, the Illinois company “lost its sales momentum.”

Basically, Cirelli says, the Illinois company executive decided that new clients and increased sales would only add to existing pressures during the disruption period while a new facility was being built. It was a major mistake, from Cirelli’s point of view. “It took him eight to ten months to pick up that momentum again.”

The Illinois example highlights the challenges to a business when relocating at the same time it is trying to grow, and offers lessons on how to plan a management warehouse system that can immediately meet increased demand upon completion.

In the case of Cirelli Foods, the new demands were in being able to handle a dramatic increase in the volume of food that could be stored and moved, as well as new large-scale refrigeration units.

“Our old facility had only four docks. We now have 22 docks — 12 dry and 10 refrigerated,” Cirelli says.

Increased business in frozen foods was a major reason why Cirelli Foods needed a new home. The company had been in Brockton since its founding in 1946. But, of course, back then, the company was a far cry from what it is now, and — as many business success stories start — saw its humble beginnings in a small apartment in Greater Boston.

“The company was founded as a family operation, with four brothers as partners,” Cirelli says. “It started as a door-to-door sales operation, selling Italian and specialty foods to tenants in multi-family buildings.”

The first big break for the fledgling company came when the Cirelli brothers were able to land the contract to distribute Red Pack tomatoes. “That then gave us the opportunity to go into the Italian restaurants,” Cirelli says.

Business grew steadily from there, until the company could move into a new 75,000 square foot facility in Brockton in 1967, enabling it to add several new food lines to its distribution business, including produce, meats, seafood, dairy products and frozen foods.

A few years later, to better compete against larger national food distributors, Cirelli Foods was one of several independent operations that joined the National Independent Food Distributors Association (now UNIPRO) in the 1970s, giving the individual members large-scale buying power. Cirelli Foods is one of 300 food distributors nationwide that now belong to the association, which bring a combined clout of $30 billion to the market.

This strength in numbers is a key factor in success and growth in the distribution industry, but it also puts greater pressure on a company to have its warehouse management systems in top form.

Through the national association, bulk purchasing is often done as a collective, and stock is then initially distributed to the appropriate members. This results in more food inventory coming and going in rapid fashion, and the need to accurately track, store, price, invoice, and reship it all.

A positive lesson that Cirelli learned from his Illinois site visit was the advantage of building the new company warehouse in an L-shaped design, with one wing designed for dry storage and the other for frozen food storage. New systems were designed with this inventory process in place. With an eye toward its past history as well, the company designed the new facility to accommodate expansion needs for several years into the future.

Another critical issue the company addressed with the new plant was energy conservation. This is a high-cost item on the operational chart for any food storage and distribution company, especially with the new frozen food units.

“Today, with the price of energy, you need to spend a lot more time and investments on the energy systems you install, in order to be more efficient and save you money in the long-term,” Cirelli says.

To avoid the need to slow down sales during the construction process, Cirelli Foods also created a new department for new business development, using carefully selected existing staff. These staff members had a long-term company background, strong industry knowledge, lots of sales experience, and had worked together closely. They were assigned to seek out new accounts, especially in targeted markets, and given the resources necessary to help lure and manage new clients during an otherwise hectic period.

“Timing is everything,” is an often over-used term, but Cirelli says it really applied to the company move.

“Our busiest season is summer. We moved in mid-February,” Cirelli says. “We moved at a time when we could move all operations at the same time, could train the people and get the new systems in place, and continue to service our customers as they need to be serviced.” This let the company keep new sales efforts in place, and be fully prepared to start the summer season with the move impact behind it.

Thanks to the combined help of consultants and contracts, proper planning, insights gained from the Illinois site visit, and wisdom gleaned from the company’s own growth, Cirelli says the move went very smooth.

“We never really had any major problems with the move, or with getting operations up,” Cerilli says.

For executives facing a similar move or expansion of their business, Cirelli says the most important step to success is finding a good consultant to help you plan it right.

“We’re not in the building business,” Cirelli says of food distributors, so distributors “should go out and get a consult who will design the flow and integration of the building and all processes properly.”

Such a consultant also acts as a project manger, Cirelli says. “They will be the interface between the distributor and the contractor. They will look out for your interests in all phases and steps in the process.”

Finally, Cirelli advises his peers that — like any project — an expansion of your facility or operations will be filled with unplanned items. Expect the unexpected, he says.

“There will always be a lot of unforeseen and unexpected costs. Plan for them, to make sure that overruns don’t become huge overruns.”