Category Archives: Food products suppliers

Bar-code scanning: bringing order to random weights

Foodservice distribution industry members are realizing the benefits that can be obtained from adopting bar-code scanning into their operations. Bar-code scanning can significantly increase the production process of distributors. Prominent companies such as Gordon Food Service and Atlantic Food Service are already using scanning technology in their operations. For distributors to get acquainted with bar-code scanning, they are advised to use the devices first on random-weight item handling.

Bar-code scanning will no doubt become widespread in the food-service distribution industry someday. The only question remaining is when.

While distributors and manufacturers continue wrangling over who is to blame for slow progress, a few distributors are quietly moving ahead and doing something about it. One is Atlantic Food Services, Manassas, Va., recipient of an ID Innovator Merit Award for its new automated warehouse system.

Another is Gordon Food Service, Grand Rapids, Mich., which pioneered bar-code scanning in the industry when it installed its first conveyorized pick system 15 years ago.

With the opening of its new Grand Rapids distribution center which began trial shipments in February, GFS is initiating a comprehensive bar-code-scanning program. The company is taking a gradual approach, but eventually scanning will expedite every phase of its warehouse operations from receiving and put-away to replenishment, order picking, and returns.

The first step in its new warehouse project focuses strictly on random-weight products. This strategy, operations/special projects manager Kirk Mortenson believes, could make sense for other distributors, too. If a company is looking for a pilot project to get its feet wet in scanning, random weights are a good place to start for several reasons, he says.

“Random-weight items represent a limited amount of product, compared with all of the other product categories, making them a manageable place to start.” At Gordon, for example, catch-weights account for fewer than 300 items and about 5 percent of the company’s total case volume.


Despite their small numbers, however, Mortenson points out, “They are an area where a distributor is likely to see immediate results.”

That is because selecting random weights is typically one of the most labor-intensive, time-consuming activities in the warehouse, and replete with opportunities for error.

Gordon’s present system for handling catchweights probably resembles the way most distributors work. The selector writes the weight of the item on a piece of paper or duplicate pick label which must be collected and given to a clerk. The clerk then keys in the information at a computer terminal so it can be incorporated for invoicing. This series of steps disrupts the selector and requires work to transfer bits of paper around, plus labor to enter data. Each time the selector writes a weight and the clerk then reads and keys it is also an opportunity for error.

Bar-code scanning with radio-frequency-based scanners eliminates the whole procedure. It requires placing a bar-coded weight symbol on each product. The selector then uses a portable laser-equipped terminal to scan the bar-coded weight. This immediately sends the information to the computer, enabling it to produce a correct, extended invoice without further labor.

An alternative for handling random weights is to place a unique, bar-coded ID number on each catchweight and create a computer record for that item that includes the weight. Later, when the selector scans the ID, the computer identifies the item and matches its correct weight for invoicing. This is how Atlantic’s system will probably work.


Rather than take a piecemeal approach to the problem, Mortenson notes, Gordon extensively researched the current state of bar coding by foodservice manufacturers and evaluated alternatives before settling on an approach. Finally, it decided to utilize and require vendors to use the UCC-128 Shipping Container Code with Application Identifiers. It is the newest, most complete format developed by the Uniform Code Council, Dayton, Ohio, for handling information beyond that contained in the UPC Shipping Container Code. It was endorsed by a multi-industry Distribution Efficiency Task Force including the National-American Wholesale Grocers Association, Falls Church, Va., in 1990.

Gordon chose it not only because it would supply all the information it needed, Mortenson stresses, but also because it provides numerous internal benefits to manufacturers.

The company found few vendors already using alternatives and the few in place were internal systems that varied from one company to another. Therefore, Gordon came to the conclusion that initiating the implementation of this most comprehensive system would help foster adoption of a workable standard throughout the industry.

UCC-128 is a further development of the Universal Product Code (UPC) system, that incorporates, in addition to item and shipping container codes, methods for bar-coding additional information such as weight, production date, expiration date, lot number, and serialized unit IDs. The ability to easily track these kinds of data through scanning in their own operations holds significant benefits for manufacturers, Mortenson points out. This was a key to its strategy for gaining compliance by vendors in supplying the codes.

Gordon worked closely with vendors through a painstaking process that included distributing its own Bar-Code Requirements handbook spelling out its labeling requirements. It also has strategies in place for dealing with non-compliant product, Mortenson adds, but its first strategy is making clear to vendors that labeling is their responsibility and a normal part of doing business with Gordon.

Other distributors with less clout than the $825-million-a-year leader stand to gain by taking advantage of Gordon’s work by installing systems that use the same standard.

There are alternatives, such as the unit ID approach Atlantic plans, or applying one’s own bar-coded weight labels in-house as product is received. In fact, the former Holleb & Co., Bensenville, Ill. (now Kraft Foodservice, Chicago), installed such a system roughly five years ago. Then vice president, distribution, Neil Holleb said at the time that the system provided huge benefits in speed and accuracy in handling random-weight products.

Joey Pierce of North American Systems, Richmond, Va., which designed Atlantic’s system, notes its approach can also use UCC-128 when vendor codes are in place.


Scanning was still novel when Holleb launched its program. There have since been tremendous improvements in the availability, range, and pricing of equipment needed, which puts scanning truly within reach of many distributors.

A basic starter system might require a few hand-held scanner terminals and a radio-frequency base station for communications between the scanners and host computer. If vendors do not supply bar codes and in-house weight labeling is required, another needed component would be a scale with bar-code capability.

One can also use means other than RF to transfer data from scanners to the host computer, such as wired links. This could reduce start-up costs but eliminates the advantage of instantaneous communications.

One key point, Mortenson notes, is that scanning does not have to be an all-or-nothing type of project. Random weights may be a good place to begin implementing and experimenting with such a project since present methods leave so much room for improvement in accuracy and efficiency.

Many manufacturers still seem unaware or unconvinced of the benefits scanning offers distributors as well as their own operations, and say they are still waiting for indications it really is something distributors will use. A few well-placed pilot projects might convince them.

Sheltered income: the battle continues

Foodservice distributors and manufacturers recognize the role played by sheltered income. Sheltered income contributes 100 to 300% of a distributor’s tax profit, therefore spelling the difference between a distributor’s survival and shutdown. Manufacturers have come to accept the necessity of shelter and view it as the cost of getting involved in the distribution game. Although many believe that sheltered income is here to stay, methods can still be employed to make them more manageable.

Only three statements can be made with certainty about sheltered income. First, it is the single most abrasive component in the food-service distributor-manufacturer relationship. Second, it is a topic of such exquisite sensitivity that, however passionate the commentator, whether distributor or manufacturer, all observations are off the record. Finally, all agree that sheltered income has become a tiger so big that, as one distributor notes, “it is impossible to put a rope around it.”

Even definitions vary. Some manufacturers consider promotional funds allocated to distributors a component of shelter. Others have separate promotional funds. Cash discounts can be considered a form of shelter. So can manufacturer growth programs with distributor customers.

But, there are a seemingly infinite number of other forms of shelter for which distributors reach out to their vendors. They include fees for access to their sales forces, charges for participating in sales meetings, trade shows, and slotting allowances, to name but a few.

Whatever its form, though, shelter has become an all but indispensable component of distributor margins. In many, if not most cases, it is the lifeline to survival. If it were not for the existence of shelter, foodservice distribution would be decimated.

Knowledgeable observers of the scene estimate that sheltered income contributes from 100 to 300 percent of a typical distributor’s pretax profit, with the average contribution falling in the middle of this range.

No distributor questioned on this estimate disagrees. Translated into the simplest language, this means that if it weren’t for the availability of shelter, the average distributor would, at best, break even. Many would sink.

One real-life example points up the reality. Although, for obvious reasons, dollars-and-cents figures cannot be revealed, the story can be told in terms of percentages. At the beginning of his most recent fiscal, a Top-50 distributor projected his company’s pretax profits for the year. Shelter comprised approximately 120 percent of this bottom-line projection.

Year-end came. The bottom line ended up 50 percent under plan, this despite the fact that shelter dollars ended up 125 percent over those that had been projected.

Thus, contrary to what many vendors contend, what may seem like increasingly strident demands for sheltered income are stimulated by much more than an attempt to fatten bottom lines. Like it or not, it has become fact that for the average independent distributor, shelter is the bottom line. It spells survival.


At this point, when so much emotion is connected with the issue, it is difficult to pinpoint exactly when the distributor battle for shelter first began to roil the waters in relationships with vendors. In retrospect, it was probably the early to mid-1980s, when the giant corporate distributors began to exert their purchasing clout and fearful independents sought avenues to match it.

However, this is, at best, a simplification, for there are other factors as well. While the whole subject of shelter is customarily thought of as a manufacturer-distributor issue, it is at least as much a distributor-operator issue.

Put most simply, operators–particularly those in the multiunit sector–have their own margin pressures. With their eyes focused on price and in their quest for the lowest conceivable cost-plus deals, they have put the squeeze on distributors. Distributors, in turn, have inevitably moved this margin pressure one rung further up the ladder to the manufacturer.

In the 1970s, when cost-plus business first began to loom high in the broadline-distributor customer mix, cost plus 12 was a generally accepted standard. True, even then, there were some who were quoting cost plus 10, but this was considered dangerously low unless there were alleviating factors. Today, cost plus eight is common and even cost-plus-seven deals abound.

Such arrangements can be profitable to systems distributors whose total operations have been geared to service operator chains. Customarily, they deliver to a limited number of customers through carefully controlled programs, are not burdened with an excessive number of line items, and can achieve high inventory and money turnover rates. Low cost-plus arrangements make sense for them. For a typical broadliner, they do not.

How, then, does the latter manage to ring up a bottom line with cost-plus-eight or even cost-plus seven programs? The answer is simple. He rarely does. Not really.

As one distributor puts it, “We are not using numbers reflecting our actual margins. Any distributor knows that he needs a 17-percent margin to realize any sort of bottom line. The only conceivable way a distributor could execute cost-plus-seven chain programs and achieve this essential 17 percent would be to realize 27 percent with street customers. We know this isn’t the case.”

What is happening too often takes on the appearance of a game played with smoke and mirrors. It is shelter, which is not generally included as part of “cost,” that makes up the missing margin component. In short, “cost” has lost any meaning it might once have had.

However, while there is undoubtedly much legerdemain involved in defining cost, this largely results from the fact that any distributor who reveals his true costs will find himself wedged between the proverbial rock and hard place. Imagine, for example, this far-from-hypothetical situation.

Distributor A goes to a prospective chain, reveals his true costs, and offers a cost-plus-12 program. His competitor, distributor B, is less candid and says that he can do the job as cost plus seven or eight. Almost inevitably, the contract will go to distributor B, although actual dollar costs to the chain could be less on the plus-12 program where costs are accurately defined.

Nonetheless, operator pressure on margins is far from the only stimulus for the onward march of the shelter concept. It is noteworthy that many of the vendors whose cries about sheltered income are the loudest are frequently the very ones who offer ever-broader financial incentives in their eagerness to obtain additional distribution for their lines.

As one astute observer of the distributor scene notes, “The majority of the responsibility lies on manufacturer shoulders. They look for ways to endear themselves to foodservice distributors. They have aligned themselves with distributors through shelter rather than through systems and marketing goals.

“On new products, for example, they will offer so many dollars off per case even before a price point has been established. Naturally, as they come to the door with such new-product introductory offers, the distributors build them into their profit margins.

“Shelter is the easiest road for a manufacturer to take to capture a distributor’s share of mind.”


It is safe to say that most manufacturers, like it or not, have come to accept the necessity for shelter as a fact of life in working with distributors. It is the relentless pressure for more as well as how the funds are used that concerns them.

As one major manufacturer puts it, “We consider sheltered income as green fees, the cost of getting in and playing the game. What bothers us is the magnitude of the fee we have to pay. If a competitor offers $1.00, do we have to pay $1.50 to play?

“Cash discounts are fine with us,” he continues. “They speed our cash flow, and, not incidentally, also serve as credit checks on customers. We will give rebates on a pay-as-you-go basis, but won’t pay up front. And we will participate in growth programs.”

However, another vendor, who looks at shelters as “insurance programs,” contends that “the industry is in a self-destruct mode. Manufacturers are expected to make up lacking margins resulting from operators putting the squeeze on distributors. Too often, manufacturer-distributor partnerships are relationships where we end up bleeding together.”

Whatever the degree of acceptance of the distributor need for shelter, manufacturer animosity centers on what they see as strong-arming and the mounting demand for what the distributors term unique programs, but the vendors consider run-of-the-mill approaches that fail to expand the market.

“Pounding at the manufacturer doesn’t build volume,” one vendor notes. “A DSR goes to an operator and finds that a competitor is selling a product at $2 a case less. He goes back to his management and gets them to meet the price. This doesn’t build volume. Too many operators are working the distributor. Distributors have to take a stand. We do.”

Many manufacturers recognize the mutual benefits of growth programs. But, they say, distributors in increasing number are demanding guarantees. “They don’t recognize that I have growth objectives, too,” one says.

Still another manufacturer complains that “now instead of talking growth programs, distributors are asking for shelters that begin with case No. 1. During the recession, many of us restructured our growth programs so that the increments which formerly began at 100 percent of goal began to come in at 95 percent. Now it’s forget the 95 percent.”

And as manufacturers, particularly those with strong brands, point out, they have their margin pressures, too. They are locked in on prices. If they raise them, they will no longer be competitive with distributor private labels.


While at least a considerable number of distributors acknowledge that the crying need for shelter is hardly a symptom of industry health, it would be difficult to find any distributors who find the principle itself either illogical or unjustifiable.

One leading independent puts it this way: “As an industry, distributors market and channel the manufacturer’s product to operators. If we weren’t here to perform this function, the manufacturer would have to take on our distribution costs.

“Basically, the manufacturer pays us to market his goods. He does this through promotions, by participating in our food shows and, in cases where our volume is sufficient on his line, by keeping one of his people on our staff to work with our sales force. Basically, he is paying us to perform a marketing function for him.

“These are all forms of shelter which help us bolster our margins. In return, the vendor benefits by getting more business.”

Another distributor, one of the pioneers in developing shelter programs with vendors, says, “All our deals are based on growth programs. We put all our eggs in one basket, consolidating as much as possible with selected suppliers. If we grow, they will.”

“Shelter is not extortion,” says one distributor. “Manufacturers have been playing with the concept for 15 years or more. They have adjusted their prices. The margins of public companies haven’t shrunk.”

Such distributors, of course, endeavor to give vendors a bang for the bucks they provide in the way of shelter. There are others, though, who just take. But, it is pointed out, manufacturers bear at least some of the responsibility for this.

“Manufacturers no longer ask how many of the requests they get for shelter return value to them. They don’t ask themselves how the value they receive can be translated into dollars or who they can afford not to give shelter to,” one distributor observes.

Meanwhile, as they buttress their position, distributors point to the practice by at least some manufacturers of setting up contract pricing directly with operator chains. Such deviated prices put distributors in a squeeze position.

As a major distributor told manufacturers at an industry forum not long ago, “There are two kinds of customers, our customers and your customers, and for your customers, you set special pricing at less than we can buy for.”

Manufacturers are also accused of sharing distributor price lists with multiunit-operator customers. If that is the case, a question of ethics arises, distributors contend. After all, they maintain, they pay for the products and they own them.

Also promising to further intensify the distributor need for shelter is the fact that major multiunit operators are beginning to call for and get it themselves. When chains are beneficiaries of such deals, it is a rare instance when they allow their distributors to raise the “plus” percentage on their cost-plus programs.


It seems unlikely at this juncture that the beast can be tamed completely. Who started the ball rolling is no longer a question. Shelter has become part of the distributor-manufacturer operating cycle.

Also no longer of particular interest is whose fault it all is. Both parties–distributor and vendor–share responsibility. Distributors have abjectly failed to educate operators in the true costs of distribution, choosing to taking the seemingly easier approach of seeing if they can sell for less. Manufacturers, too, shoulder a percentage of the responsibility by offering shelter, sometimes helter-skelter, as an avenue to expanded distribution.

However, while it is doubtful that the tiger can be completely tamed, it could be made more manageable. There are signs of light at the end of the well-known tunnel which offer a glimmer of hope that, even if distributor demands for shelter continue to echo–as they most certainly will–manufacturers will get a better return on their investments.

Consolidation of vendors by both distributor marketing groups and individual companies has become a major trend in distribution. This provides the opportunity for both manufacturer and distributor to develop joint programs to increase market awareness, to provide at least sustained volume for existing products and growth for new ones.

What seems required above all is to call an end to the smoke-and-mirrors.

Distributors should level with their customers and explain to them that the costs of distribution extend beyond that of product.

Manufacturers should stop running scared and concentrate their programs with distributors who return value that can be expressed in dollars. As a former First Lady observed, “You can always say no.”

Positioning is everything

Foodservice distribution representatives should realize the importance of product positioning. A majority of operators are now acquiring food products on the basis of its versatility. To position products effectively, reps should provide customers with more ideas for using center-of-plate items. They should also learn how to reposition items currently in stock. For menu styles, an upscale, midscale and downscale product positioning strategy will work well.

When are flour tortillas not merely Mexican menu staples? When they’re wrapped around deli sandwich fillings…topped with grilled vegetables and shaved parmesan cheese as a gourmet pizza…sliced into strips and baked for a crispy salad topping…baked with layers of cheese, grilled vegetables, tomato sauce, and steamed spinach as a new-wave lasagna.

Versatility is demanded of foodservice products today, and manufacturers go to great lengths to portray their products as chameleons able to meet a variety of menu needs.

In most cases, however, it’s up to the DSR to act as interpreter. The ability to translate a single product into a multitude of menu possibilities is a skill that transports reps from order takers to business consultants. It also guarantees increased order size and maximum account penetration.

The name of the game is positioning. DSRs who hail from culinary or restaurant-operations backgrounds have an edge. They’ve been trained to think like operators and develop creative menu items while keeping inventory and food cost in check.

But, even nonculinary sales reps can become skilled at product positioning. All it takes is a dose of creativity applied with savvy selling techniques. Once you get the hang of it, you’ll find that it works for virtually any product category and extends to a multitude of cross-sales opportunities.


Effective product positioning is especially important with center-of-the-plate items. This category may also be the easiest to begin with because the range of COP is limited but the products are extremely versatile.

Typically the most expensive category of operator purchases, these items hold the most opportunity for success. Reps able to get the center-of-the-plate business often enjoy domino-effect sales in other product categories as well.

When focusing on COP positioning, it’s critical to remember that most operators today aren’t interested in solo products. That is, they’re in search of items that have multiple uses on their menus.

“There’s been a big change in how operators look at product positioning over the past four or five years,” notes Ron Garrett, corporate chef for Thoms Proestler Co., Davenport, Iowa. “They’re no longer interested in bringing on a multitude of new items to expand their menus. The costs are just too high.

“They still need menu-expanding ideas,” Garrett adds. “But, they have to get more mileage out of fewer products. DSRs need to be aware of that and gear their sales efforts accordingly.”

Garrett, who regularly works with reps and customers to develop new menu items, suggests that DSRs carefully analyze customers’ menus before introducing center-of-the-plate products. The more ideas for how to use a particular item that the rep can go in with, the better his or her chances of success.

“We have to be able to suggest COP products that can be used as regular dinner entrees, specials, luncheon entrees, salads, and/or sandwiches. Show the operator creative ideas for extending the use of a product and you’re much more likely to make the sale,” Garrett says.

Ed LeBlanc, corporate chef at Doerle Food Services, New Iberia, La., agrees, adding, that evaluating products from a cross-market standpoint is also effective.

“For instance, we carry a low-end marinated-steak product that we sold primarily to family-style steakhouses. We decided to position the same product for nursing homes, a big segment for us, and have had great success.

“Nursing homes are, of necessity, extremely cost-conscious. We’d never expect to be able to sell a steak product there,” LeBlanc adds. “But because this is a value-priced product, and is pre-marinated to make it especially tender, we introduced it to these operators. They’re always looking for new items to feature as specials, and this fit their cost parameters. Because of effective positioning, we now sell more of this steak product to nursing homes than to steakhouses.”

Conversely, LeBlanc notes that the light-and-healthy boom generates strong opportunities to position what have traditionally been healthcare products to other industry segments.

“Dovetailing on ComSource’s Lite Source program, we’ve been able to market products like oil-free roux, water-packed fruits, and low-sodium/low-fat items outside of the healthcare segment,” he says. “Even white-tablecloth and family-style operators are demanding lighter, more healthful ingredients.”

Another example of successful cross-market product positioning at Doerle involves catfish. Although it is traditionally a low-end product–served fried in family-style restaurants throughout the south–Doerle reps position the product to white-tablecloth customers.

“Competition and general economic conditions have put a tremendous squeeze on these operators,” LeBlanc says. “More than ever, they’re looking for quality products that are low-cost and high-profit. We introduced a frozen catfish fillet and suggested ways to prepare it for upscale presentation. Many of these customers now offer it grilled or sauteed with light signature sauces. And they don’t have to worry about the tremendous fluctuations in quality and pricing on fresh seafood. It’s consistent, easy to prepare, and very profitable.”


New-product introductions aren’t the only time that DSRs should be applying positioning-focused sales techniques. Careful study should also be made of products currently featured on customers’ menus. If sauteed chicken breast appears as an entree option, for example, suggest more ways that the operator can use the same product to expand and enhance the menu.

Grilled and topped with greens, sliced tomato, and condiments, it becomes a lunch or light-dinner sandwich option. Sliced and fanned atop salad greens and fresh-cut vegetables, it becomes an attractive entree salad. Baked with fresh herbs and roasted vegetables, it’s yet another entree selection. Cubed and skewered with vegetables, it becomes a light-and-healthful shish kebab.

Positioning products–COP or otherwise–as such versatile players has benefits beyond menu expansion. By using fewer products in more applications, the operator is able to reduce inventory needs, ordering, receiving, and prep, and turn inventory quicker. The end result is lower labor cost and higher food quality because quicker turns means fresher product.

When considering a specific product, DSRs should make a written or mental list of a number of things that it can be used for, as well as the market segments for which these uses are appropriate.

They also should consider various preparation methods that can be used to prepare the item. Many products, for instance, can be roasted, grilled, braised, sauteed, stir-fried, or broiled. By varying the preparation style and accompanying items, the operator expands the menu while still limiting items stocked.

The dishes made with red potatoes pictured here illustrate how different preparation styles applied to the same product can yield varied results.

Boiled, cubed, and blended with salad dressing, chopped parsley, and onion, red potatoes become a side salad that jazzes up simple sandwiches. Quartered, deep fried, and served with dipping sauces such as sour cream and salsa, they’re a great casual, mid-market finger food. Roasted with garlic and herbs, red potatoes are an attractive and delicious side with meat, poultry, or seafood suitable for white-tablecloth menus.


In developing product-positioning strategies, apply “U.M.D.”–upscale, midscale, downscale–thinking. The average full-line DSR’s account base spans each of these levels, and many products can be targeted to all three.

Truly effective positioning may require breaking habits and changing assumptions about the suitability of various products for various menu styles. It also requires creative brainstorming.

Take shrimp. Often considered an upscale item, shrimp can actually be marketed to a variety of menu styles. Because prices can fluctuate significantly, reasonably priced product is often available.

The photos above illustrate how a single shrimp product (IQF 16/20) can be positioned for three menu styles–as a casual shrimp-salad sandwich, a mid-scale entree with fettuccini and vegetables in Alfredo sauce, and an upscale special with shiitake mushrooms, steamed asparagus, and rice pilaf.

By positioning a COP item such as shrimp–or catfish, steaks, chicken fillets, pork medallions, etc.–to more varied operators, DSRs can increase average order size and boost profitability.

The example of flour tortillas can also be used to illustrate creative positioning. Typically considered simply a Mexican menu item, flour tortillas have far more versatile menu applications and can be positioned to operators outside the Mexican niche.

The photos above show three varied applications suitable for a range of menu styles, from a downscale Mexican quesadilla appetizer, to a deli roll-up sandwich, to an upscale grilled vegetable pizza using the tortilla as a crust.

Each dish offers low food cost, easy preparation, and a number of cross-sales opportunities–cheese, salsa, guacamole, sour cream, black olives, black bean or other prepared side salad, jicama, deli meats, lettuce, grilling vegetables.

Coming up with ideas to present to customers based on creative positioning becomes easier with practice. Once DSRs develop a positioning mindset, product-usage possibilities begin to flow and opportunities can be recognized.

“More and more, DSRs have to make creative positioning part of their sales effort or they’ll be left behind,” notes Doerle’s LeBlanc, formerly a DSR as well as an operator. “Just going in and taking a customer’s order without offering ideas and solutions isn’t what their job is about anymore. Reps have to be able to sell services and demonstrate that they understand customers’ needs and concerns. Inventory control, food cost, and menu development are all key areas that can be impacted through skillful positioning.”

Mission statements: the whys and the hows

Foodservice distributors should realize the importance of establishing corporate mission statements. Such statements echo the company’s values and beliefs and serve as a moral guideline for its management and employees. To ensure the efficient implementation of mission statements, management should meet with officials and employees and explain the significance of the statements. Documents should also be created, recognizing the existence of the statements.

Foodservice distributors who have written mission statements have firmly riveted their corporate cultures in position. Furthermore, they have seized an excellent opportunity for a high-yield investment.

In almost all business situations, the notion of a fair return on an investment holds true. But, what exactly is a fair return? Five percent? Ten percent? Twenty?

If all of the expenditures involved in planning, creating, and implementing a dynamic mission statement were recounted, than it would be clear that it is “fair” to expect a return. And, that return is there. In practical terms, the increase in human productivity alone can be extraordinary.

True, many distributors feel that mission statements are simply the latest version of “snake oil” and are content to skip getting involved in what they regard as a passing fad. However, looking back over the results obtained by distributors who have drawn up mission statements, it appears that they are here to stay. The fad has become the rule.

Every day, distributors send out messages to their workforce, as well as to their customers and other members of the business community. Some of these messages are inadvertently of the wrong kind.

In one instance, DSRs were told, “We buy the best canned corn in the country.”

“But,” one rep responded, “even though it grades Fancy, it only scores 91.”

Is there a difference between “best” and “fancy?”

Or take the case of a day-shift warehouse supervisor who reported receiving three extra cases of drinking cups on an order for 50 cases. “If the vendor made a mistake, that’s his problem,” the warehouse manager said. “We can make a few extra bucks to take care of our shipping mistakes.”

Is this really the kind of message a company’s management wants to send out to its warehouse personnel?

Or take the case of a distributor owner who told a staff meeting that the company had to be more responsive to customer needs. Gently, almost fearfully, a customer-service rep asked, “Then why do we cut off the phones at 4 p.m.?”

These seeming inconsistencies, or misinterpretations based on language, are frequently sources of disruption, chagrin, and loss of profit.


It doesn’t have to be this way. You have the opportunity to make sure that your message is clear, that your particular set of beliefs and values is understood and utilized throughout your organization.

This is the first benefit of mission statements. They are a clear communication of what you believe. It is the owner, president, or top manager saying, “I hold these truths dear and these are conditions of working here.”

However, a second, more compelling benefit emerges as a natural outgrowth of writing a mission statement. All employees become focused since their company is forced to define its market, its individualized niche.

This happens because there is an immediate need to prepare a strategic plan, a course of action which will lead the company forward. Done properly, this means the involvement and empowerment of executives, managers, supervisors, and workers. Everybody in the company begins to move in the same direction.


Six major steps insure a successful journey to understanding and implementation of a mission statement:

  1. Schedule an hour-long meeting for company executives to talk about a mission statement. Have one person lead the discussion. This leader should have a flip chart available and record the answers to these two questions:

First, “What are the values and beliefs of this company?” As the words describing the company flow, they should be noted on the chart.

The second, equally important question is, “What else?”

A sample of words that might come forth as descriptions includes honest, fair, profit-oriented, dedicated to customer service, growth-oriented, customer-driven, value of employees, treat people fairly, strive for perfection, and technology leaders.

The potential list goes on and on. The leader should not limit discussion, but encourage it. Don’t let anything interfere with this all-important step in giving voice to your company’s mission. Just let it roll out.

  1. Similar meetings should be held with groups of sales reps, office people, drivers, and warehouse employees. These groups can be mixed or matched. It doesn’t matter at this point. The important thing is to get these employees talking. There’s no need for the leader to question “Why?” People say what they say. It is only important to make sure that the words you put on the chart are what the person really means.
  2. Surprise, surprise. When you compare the two sets of words or phrases, the similarities will be remarkable. So, when the executives reconvene for a one- or two-hour session, the next task is to group the words in units. For example, “honesty” and “truth” might be considered the same. “Customer-driven” and “service-driven” might be similarly linked.

During this meeting, the team should take the words and state them in simple sentences. This might turn out to be be the most difficult part of the exercise. A sure-fire method to make this step work is to try to limit each sentence to no more than 15 words. By forcing yourself and those on your team to be concise, you will set the stage for understanding.

Several weeks later, there should be still another meeting to re-examine the statements and gain consensus. Letting some time pass before holding this meeting allows those involved an opportunity to get away from the project and return with a fresh perspective. Everyone should agree on the language.

  1. Now it is time for the owner, president, or chief executive to think about these statements. After a two-week gestation period, this person should offer additional comments and/or an agreement that this is what the company stands for. It is always wise for the entire executive team to meet with this person during this process. In fact, the president should sit in on all meetings.
  2. Now that the document exists, preferably on one typed page, it is time to bring it back to the rest of the company. This can be done through a series of meetings, each attended by about 20 people from different departments, until the entire organization has met and discussed the mission statement. Since the statement will have been circulated beforehand, employees will be familiar with it, so these meetings might last just about an hour.
  3. The final series of meetings is scheduled to present the finalized mission statement at department meetings: sales, warehouse, delivery, office, etc. At least two members of the management team should be present at each of these.

The question to pose at this final meeting is, “How do we intend to carry out our mission statement?” It should be repeated over and over so everyone in the company commits to a form of work behavior that is consistent with the beliefs and direction of the company.

It is possible to complete this entire mission-statement process in about two months. There is no rush. After all, the company has probably been around for quite a while. It is in the area of implementation that time is needed.


There are a number of methods to breathe life into your mission statement. For example, copies should be sent to suppliers, customers, community leaders, bankers, and newspapers.

One customer called the president of a company who had just publicized a mission statement and asked, “You really believe this stuff?” Even over the phone, the president’s smile came through, “Believe it? I live it every day of my life.”

Every entrance to the building should have a sizable plaque reproduction of the mission statement. Other plaques should be posted at crucial places around the building.

Business-card-size reproductions of the mission statement should be in the wallet of every employee. A now-classic story tells of a warehouse worker who challenged a manager by whipping out his mission statement and saying, “What you want me to do is not following our mission.”

When a significant number of new employees have been hired, they should attend a meeting to discuss the mission statement. Naturally, it should also be presented in your employee manual and during job interviews.

There should be annual review meetings to make sure that all employees continue to understand and use the mission statement as a guideline for their behavior.


There are occasions in which mission statements can lead in strange directions. A customer-service rep complained to the sales manager one day that a customer was making sexual remarks over the phone. Thinking about it, the manager said, “That is not the way we treat people and it isn’t the way we expect to be treated. I will call this customer and explain that the behavior has to change or we will have to stop doing business together.”

When the sales manager told the story to the company president, the president said, “People who work here expect to be treated with dignity. Thank you for adhering to the mission statement.”

There is something cleansing about engaging in the process. It represents an opportunity to state once and for all exactly how you want the company to be run. It is a clear set of doctrines in which you believe.

Along the way, you transfer significant power and authority to all of the people in your company. This sets them running on the same track, striving to reach the same goals and objectives as management.

A mission statement is not a perfect device. People will still misconstrue and confuse language and meaning. But, it is a definite way to capture the energy and devotion of employees, and convert those precious resources into a high-yield asset.

Buyers can no longer go it alone

Foodservice distributors and suppliers are realizing that they cannot work independently. They understand that the adoption of a total marketing strategy can help boost their operations significantly. They also agree that the driving force in the distributor-supplier partnership is not one or the other but the operator. When customers’ needs are met, then profits begin to rise. A total marketing strategy is the optimal way to meet these needs.

Ask any foodservice distributor executive how important the buying function is to the company’s total marketing strategy and you will likely hear pretty much the same answer: “Very important.”

This is not surprising. Managing landed cost and supplier selection are two of the most critical responsibilities of the purchasing department.

With the price of merchandise arriving at a distributor’s warehouse running, on average, 84 to 86 percent of sales, it is obvious that landed cost is a very significant figure in determining a distributor’s profitability.

However, supplier selection is at least as crucial as cost. It is vital for a distributor to have strong, long-term business partners in the supplier community. I say long term deliberately because the internal and external costs associated with supplier changes are significant.

A scenario in which distributors and suppliers who share values and objectives are moving unitedly in the market is quickly becoming a fundamental element of success rather than merely something nice to chat about at conventions.

The old, battered, and boring argument between distributors and suppliers over “Who is the customer?” is out of date. Distributors need suppliers, and suppliers need distributors. It’s that simple.

Each partner in this relationship is a customer. The distributor is the manufacturer’s customer because he is paying for goods and services based on stated requirements. However, the manufacturer becomes the distributor’s customer when the distributor has to supply receiving information, packaging requirements, sales-training data, and any other information that the manufacturer must have in order to meet the distributor’s needs.

The distributor and manufacturer are now conceptually joined at the hip. Their joint objective is to meet the operator’s needs. This can be accomplished only if the distributor and supplier work together very closely.

At the distributor level, the formation and maintenance of such relationships is usually the responsibility of the procurement function. Thus, the purchasing function is a key element of a total marketing program.

At All Kitchens, we operate under the philosophy that money is made moving product out of the warehouse, not into it. Therefore, we direct most of our resources toward helping our distributor members do just that.

It’s not that we de-emphasize procurement, because that is not the case. However, there are other activities that are also part of a total-marketing approach. Among them are training programs, the reach for operational efficiencies, sound financial management, advertising and promotion, and incentive programs. Coupled with a strong procurement program, these provide distributors with a total marketing package.

Increasingly, operators are coming to understand that getting the lowest price doesn’t necessarily translate into the lowest cost. These operators are getting more sophisticated. They consider value-added programs and services as part of the total price and thus arrive at the best value. If this is the way operators are making purchasing decisions, then it becomes essential for the distributor to provide such value-added services.

Such programs have to be good for the supplier as well as for the distributor. At All Kitchens, we have developed a long-term strategy of market segmentation to provide compound annual growth to our distributors and suppliers alike. Foodservice distributors can not differentiate themselves from their competitors on products alone. They must also offer their customers unique services that will set them apart.

The All Kitchens market-segment program, initiated last year for the healthcare segment and now being expanded to family restaurants, is designed to give our distributors’ sales reps such an edge when they walk through a customer’s door. These programs are built around services distributors can provide to operators in each segment.

As our distributors’ business grows, so does the suppliers. We rely on the procurement managers to work with the suppliers which support our programs. In many instances, the manufacturer rep and the distributor buyer agree on well-defined goals and objectives, which are based on the supplier’s program participation.

This requires the buyer to assume a broader role. He or she is now responsible for the communication and implementation of the goals that have been agreed to with the vendor. The buyer is eager to do this because other negotiations with the supplier–price, packaging, terms, lead times, etc.–will go smoother if these goals and objectives can be met.

If the idea is to have a program that is good for distributors and suppliers alike, broad support from the manufacturer community is essential. Operators rely on their foodservice distributor to get the product how and when they want it. The supplier carries the burden of providing the product quality, consistency, and pricing which meets the requirements of distributor and operator alike.

There is no doubt that purchasing plays a major role in this process. However, finding a customer, selling a customer, delivering to a customer, collecting from a customer, and finally reselling the same customer simply takes more than intelligent procurement decisions. It takes a total marketing approach.

All operators have needs unique to their operations and expect their distributors to help them fulfill these needs. A good buyer will be aware of his or her customer’s specific requirements and keep them in mind when reviewing suppliers and negotiating with them.

For instance, operators demand consistent quality. Therefore, it becomes the responsibility of the distributor buyer to choose the supplier that can provide product consistency and meet other criteria. At All Kitchens, we help our distributors’ procurement managers in this selection process by significantly narrowing the field of choices to approved suppliers.

Operators are also interested in providing training for their staffs, new-product ideas, promotions that can help increase sales, and service that meets the unique requirements of a particular operation.

And, although it rarely comes up in a sales call, operators are also very interested in finding out about the financial well-being of the distributors which supply them.

In order to have satisfied customers, distributors need to perform well in every one of these areas, and buyers must actively attempt to match these needs with the suppliers they select.

This, in essence, is what total marketing is all about.

It goes without saying that foodservice distributors will continue to pay close attention to the buying function. However, they should now recognize the importance of the buying function as part of their companies’ total marketing strategy.

This philosophy of joining procurement to the other spokes of the marketing wheel is opening up a new age of thinking for distributor buyers. No longer can buyers rely only on price and availability alone when their goal is to make enlightened procurement decisions.

Today’s environment demands that buyers factor in the operator’s requirements into their total-marketing-strategy equation.

That is why we are seeing the marketing function assume procurement responsibilities and the procurement function assume those of marketing. It is becoming clear that the two can no longer operate separately and still achieve the goal of satisfying a customer’s requirements.

Meeting customer needs calls for total marketing. Today’s best buyers are the ones who are making the total marketing commitment.

The three stages of a successful sales strategy

Food distributors planning to set up partnerships with their customers should follow three levels of sales strategy to ensure the success of the venture. These levels are product-oriented selling, buyer-relationship-oriented selling and partnership selling. Although there is no guaranteed sales strategy, distributors can achieve success by finding the right strategy mix. They should also remember that the three levels work are independent.

There are three levels of sales strategy that you as a DSR must develop when pursuing a productive partnership with your customers:

  1. Product-oriented selling.
  2. Buyer/relationship-oriented selling.
  3. Partnership selling.

These strategies must be developed in sequence and can serve as the core of a sales-development program for your organization.

There is no one right sales strategy. All strategies work to some degree, depending on which is right for your business and customer mix. However, your plan to achieve long-term success as a DSR should be geared towards the partnership level of sales excellence.

Not all customers are candidates for partnership. Eighty percent of your business comes from only 20 percent of your customers. It is that 20 percent that should be the target a partnership relationship.

However, the other 80 percent of your customers cannot be ignored because they are important for your personal income. You can sell them using a lower-level strategy, and then invest your quality time in penetrating and expanding your key accounts. Those are the accounts that pay off in long-term volume and profit.

Think of each strategy level as one of three rocket stages. You cannot reach orbit without good planning and by firing each stage in sequence until the partnership goal is attained.

Each stage builds on the preceding stage, is more complex, and requires more planning, practice, and experience to develop the skills necessary to sell at that higher level. As you understand and move through each stage, you gain the experience necessary to succeed in partnership.


Product selling is the foundation from which all selling begins. Unfortunately, it is a level that too many DSRs never move beyond. Typical product-oriented salespeople usually fit the negative sales stereotype. They’re always pushing the product.

The product-oriented sales call is typically made with a brochure and a price book. The DSR does lots of talking and not much listening. This type of sales call is also often characterized by pressure selling.

Product-oriented selling is not necessarily a bad strategy, however. You just need to know when it is the right strategy. And it should never be your only strategy.

DSRs use product-selling strategies most of the time. However, this doesn’t mean that they shouldn’t continue to strive toward a higher-level strategy.

If product selling is your only strategy, your margins will always be squeezed because price is your major competitive difference. The value of your product and service remains at or near a commodity and can easily be matched by your competitor.

All DSRs need experience in product selling. It is the starting point for all new salespeople. They need to know about their company and what it has to offer. They need to know the features and benefits of their products and services. Above all, they need to know the basic of product selling to move on to relationship and partnership selling.

Each level of selling requires knowledge of the basic sales process and the ability to ask for the order. If DSRs cannot operate at this basic level, they will never progress.


Buyer/relationship-oriented selling is built and depends on strong personal relationships between DSRs and customers. It requires a total commitment to serving the customer.

Relationships should be developed with all people who influence the buying decision. These relationships rely on strong support from the functions within your company. Operating in this strategy may require working in the customer’s operation during a unit opening or laying out a customer’s storeroom to be more efficient.

Sometimes the relationship can become more important than the product or service. This can lead to a dangerous situation. An individual or a relationship cannot become more important than the company. The person and the company are one. Your task is to sell the customer profitably, and the relationship is part of accomplishing that task.

Relationship selling is a very important part of the beginning of a partnership. You must have the ability to develop relationships with all of your partnership customers. Foodservice selling is a personal business and often requires a personal effort.

Relationship selling is based on a high degree of service to the customer. Relationships can be a very rewarding part of being in the foodservice business. The value of long-term relationships and continuity cannot be underestimated as an ingredient for success.


This is the highest level of professional selling and should be your goal. Operating at this level is a requirement for success in the ’90s. Partnership selling targets the customers that offer the most growth and profit potential. Having a partnership with key customers can make the difference in your performance as well as that of your company.

Partnership selling requires a commitment of time and energy. It is not a quick sale, but a lasting and profitable sale. Partnership selling has a long sales cycle. Partnership selling also hard work.

There are several requirements for implementing a partnership strategy.

* There is one focus for customer partnerships: improving the customer’s profitability. Partnerships are dedicated to profit improvement. Don’t forget that your profit improvement is a result of your customer’s profit improvement.

* Partnerships are not a bidding process. In a partnership, you work closely with the customer developing plans and proposals.

* Partnerships add value that is recognized by the customer. The value is the result of helping customers solve their operating problems and building their business. Your basis of competition is now value, not price.

* Partnership selling starts with a blank sheet of paper, asking questions, and listening to answers to understand the customer’s needs. From that process, you develop a plan and proposal that addresses the needs of customers and improves their bottom line.

* You must have a thorough understanding of your customers’ operating processes and that includes knowing how they serve their customers.

* You must have mastered the skills in stages I and II.

* You must understand the application of your products and services within the context of your customers’ operations to help them improve their operation. You must be creative and innovative in developing applications. You must be able to think on a perceptual and conceptual basis. Think as the customer would think.

* You must have the total support of all functions in your company. Your company must be committed to the partnership process. Providing the customer with the best your company has to offer is team effort.

Every DSR should evaluate the nature of his or her sales strategy. Then study what elements you need to modify in order to move toward partnerships with your key customers.

A Trend To Sell To: Pizza

Pizza, pizza everywhere. Is there any end to how much pizza Americans can eat? It is market approaching $25 billion. To put it mildly, the pizza business is no longer confined to the local pizzeria. Pizza Hut’s mission statement says that it wants to provide the highest quality pizza for every pizza occasion. We now see pizza in many non-traditional locations such as airports, campuses, business and industry, hospitals, and delis. We even see frozen pizza and pizza kits being sold in fundraising activities. You can sell pizza products in most every segment of the foodservice industry. Here are some tips:

* Talk to your customers about the importance of the pizza business and how it is changing. Pizza offers the operator superior margins.

* Sell the whole pizza, not just pizza sauce, crusts, and toppings. You will enhance your margins because you are selling the whole concept, not just the product.

* Find the right crust for the customer’s operation. Some operators might want to prepare their pizza from scratch, but there are many alternatives such as complete mixes, frozen dough balls, par-baked crusts, and fully prepared and frozen pizzas.

* Help the operator develop promotions, such as double-cheese premiums and point-of-sale material.

* Also help operators select equipment, smallwares, and packaging.

* If you have an independent pizzeria customer, aid it in adding pasta to the menu. The independent operator is at risk as the big pizza chains get bigger and delivery becomes the major way that pizza is being consumed.

Cash and carries’ new generation

Food distributor cash and carries are beginning to expand their services. Besides the traditional customer-pick up operations, cash and carries are now offering credit and are setting up larger facilities. Major distributors such as Gordon Food Service Inc and K.B. Foods have recognized cash and carries’ potential and are moving into the market in an effort to complement distribution networks at points where delivery customers are present.

With fast-expanding warehouse clubs both acting as competition and pointing to the big market that’s out there, foodservice-distributor cash and carries are entering a new generation. In fact, the very name is becoming a misnomer. While they are still customer pick-up operations, an increasing number are offering credit.

Originally an extension of will-call departments in distributor warehouses, cash and carries were designed to service either operators who needed fill-in products or others who couldn’t meet drop-size minimums. This is fast changing. Increasingly, cash and carries are freestanding and seek to lure consumers as well as foodservice operators.

Two recent examples point up to this evolution.

Gordon Food Service, Grand Rapids, Mich., has opened an 18,000-square-foot store at its headquarters distribution center to replace what was essentially a will-call operation. Boasting greater display space for perishables, it stocks nearly 4,000 items.

Moving further away from the former warehouse image, Gordon has renamed the new cash and carry the GFS Marketplace. The name will also be used for the 23 other cash-and-carry outlets that the distributor operates. These units are “self-service retail outlets, not warehouses or sales offices,” explains Steve Plakmeyer, operations manager for the GFS Marketplaces.

Gordon operates the freestanding stores in high-traffic urban locations in three of the four states it services: 19 in Michigan, four in Indiana, and one in Ohio. There are none in Illinois. Almost all products are stocked out of Gordon’s two distribution centers.

The general strategy is “to complement our distribution network wherever we have delivery customers,” Plakmeyer notes. The stores, which allow charge as well as cash purchases, support the distributor’s local presence. They target operators too small for deliveries and offer backup services to larger customers.

Meanwhile, K.B. Foods, an Omaha, Nebr., broadline distributor with volume of $30 million, is poised to enter the cash-and-carry business with a 10,000-square-foot facility in downtown Omaha. It will be called the K.B. Foodservice Mart. Target volume is $1 million the first year, says vice president Jan Schneiderman.

“The first true foodservice cash and carry within a 150-mile radius,” according to Schneiderman, the store will be a vehicle for marketing K.B.’s broadline capability. “It will in effect be a year-round food show. When a customer comes in to pick up a fill-in item, he or she can browse through the entire store.”

K.B. will market the store through newspaper and radio ads.

Roadblocks slow progress on standardized databases

Food service providers and food products suppliers are complaining that the development of foodservice-product databases sponsored by the International Foodservice Distributors Assn. is moving at a slow pace. They attribute the unsatisfactory progress to the indifference given to the standards by many manufacturers. They also complained that most manufacturers did not understand the standard and were at a loss as to how to distribute the information once it is compiled.

Eighteen months after creation of a standard to facilitate development of foodservice-product databases, progress is still being impeded, according to distributors, marketing-group officials, and others.

“The project is moving along much too slowly from everyone’s standpoint,” Allen Ryan, president of North-Center Foodservice Corp., Augusta, Maine, and chairman of the International Foodservice Distributors Association committee that wrote the standard, complains.

Ryan and others blame several factors. One is lack of recognition by many manufacturers of the benefits computerized databases offer. Another is confusion over what the standard is and how manufacturers can get their information distributed once it has been compiled.

A persistent misconception is that the IFDA standard is itself a centralized database. It is actually just a format for organizing information that makes it easier for companies to exchange data.

Still at issue are what vehicles would best serve the industry for maintaining and distributing data, and who should bear the cost. While such distributors as Gordon Food Service, Grand Rapids, Mich., are creating their own databases, the most widely used is one marketed by Sales Partner Systems, Daytona Beach, Fla. This system now includes 12,000 products representing 180 manufacturers. SPS’ XPD product is linked to sales of its proprietary software, however, which has led to questions of access for distributors that are not SPS customers.

SPS charges manufacturers a fee to list their products and distributes the data both as part of software packages sold to distributors for use by DSRs and operators, and in a stand-alone application called ShowCase. It also sells the entire database in IFDA format.

Participating manufacturers also receive copies of their information back from SPS in two forms: ShowCase and IFDA Standard Product Data Exchange Format. Manufacturers own this information and are free to distribute it however they wish, says SPS vice president-sales and marketing Marty Weil. As an added service, SPS distributes a vendor’s data to customers on written request, database director Melissa McKee says.

Despite development of the IFDA standard, confusion has persisted over the different formats. A number of distributors have reported receiving product information in ShowCase rather than IFDA Standard. The former, being a stand-alone application, cannot be incorporated in other programs. On the other hand, SPS president Larry Frank explains, IFDA Standard is simply raw data that cannot be viewed or used without additional programming.

Some in the industry have asserted that SPS at times deliberately avoids or tries to block release of product information to noncustomers in IFDA standard. SPS denies this and points out that, since last spring, it has tried to dispel any confusion that exists over formats with mailings that clarify the difference between ShowCase and the IFDA standard and spell out the rights and means of access vendors have to their data.

Other avenues exist for putting data into IFDA standard beside SPS. Source Data Management, Chicago, a spin-off of Access International, offers an “editor” program that allows anyone to compile product data in IFDA format to populate their own database. National sales manager John Knoebel notes that a number of Access customers and other organizations use this tool. He also stresses that any manufacturer that has product data in the IFDA standard can provide them in that form for use by distributors with Access’ laptop and other sales systems.

A company can also obtain a copy of the format from IFDA and then develop its own software for compiling data. In addition, McKee says that SPS will sell its editor to anyone who wishes to assemble data themselves.

This still leaves unanswered questions concerning distribution of data, which Ryan says will be taken up at a meeting of the IFDA Standard Product Data Exchange Committee next month.