"We are an extension of our suppliers so that we work with them in servicing the industry. That means keeping all of the partners in play so that they add value to the supply chain-the distributor, the supplier, the groups and the broker," observes John Tracy, president of Dot Foods, Mount Sterling, IL. "We think we do that better than others. We've got more technology and information systems devoted to allowing everybody in the process to drive value for everyone to be successful. Our mission statement is to positively and significantly contribute to the success of our business partners."
Dot Foods was founded in 1960 by their father, Robert, who immediately named the company after his wife, Dorothy - Dot Associated Diary Products. "We changed it to Dot Foods later but Dot has been part of it since day 1," says John Tracy.
Indeed, for the Tracys redistribution is not only a livelihood but it is a way of adding value and driving growth throughout the foodservice supply chain.
"The role of redistributor is to improve the supply chain, improve the efficiencies of the supply chain, remove waste and add value," says Pat Tracy, ceo of the 40-year-old family-owned business. "It helps move product, information and data and dollars through the supply chain quickly and efficiently. This refers particularly to the product which has the greatest cost burden associated with its movement through the supply chain. We provide improvement and value for all trading partners."
While there are many forms of business partnerships, Pat Tracy notes that Dot Foods' clear, formal relationship with its partners is how the redistributorship fulfills its role. Consequently, "purchasing a product from a redistributor like Dot is like purchasing it directly from a manufacturer" - but with many value-added benefits. No distributorship is too large or too small for its services and, they point out, virtually all of the ID Top 50 broadliners are among its customers.
Pat further points out that Dot Foods goes to market in conjunction with the manufacturer rather than independently of it. "We have two marketing plans. One marketing plan focuses on the benefits and features of purchasing products from redistributors, such as Dot Foods. We promote the benefits, communicate the features and help educate the distributor community. Furthermore each of our manufacturers has its own marketing program. We try to see to it that those marketing programs are executed in the marketplace in the same manner as if the distributor were buying directly from the manufacturer," he says.
When Pat Tracy joined the family business in 1973, annual sales were $6 million. He listed the following highlights of the company's growth since then:
1988-$100 million in sales
1990-establishment of Arctic Foods Distribution
1999-launch of its e-commerce initiative, "which has been very successful in generating value-added services to manufacturers and distributors."
2000-$1 billion in sales
2002-acquisition of The Drescher Corp., a redistributor in Liverpool, NY
"This year sales will be about $1.6 billion. Our customers have believed in our business and they've rewarded us with their business," he says.
While Dot foods is not predominantly a brand house, it does carry a wide assortment of national brands among its 20,000 skus, which constitutes a majority of its sales. The company also works closely with marketing groups, stocking their labels in its five locations across the country as well as some proprietary labels for chain accounts. However, both brothers note, beyond what the company has in its warehouse, Dot offers up 70,000 additional items. However, Pat Tracy notes, there are products that it does not carry, such as produce and fresh meat, and its disposable offerings is limited.
"That isn't a detraction because we try to provide our distributor a quality selection. While we don't offer them everything, our customers will find among our offerings what they need to satisfy their operator customers, regardless if they are white tablecloth restaurants, schools or a drive ins," Pat says. "Our distributor-customers are able to offer a larger array of products to their operator-customers and be more flexible in meeting their needs than they would if they had to stock items their customers wanted and meet manufacturers' order minimums."
According to brother John, Dot Foods' formula for success is based on creating a demand, educating your partners and selling your value proposition. "Then you educate the suppliers and establish a financial relationship with them so that you can become an extension of them. To make the loop complete, so that there is value, you make sure that the marketing groups are part of the equation and finally make sure that the broker has the information necessary to continue to sell more cases," he says.
John Tracy lists three basic benefits that form of the foundation of Dot Foods' value proposition for distributors: extending the their assets, extending the their cash and improving their cash flow.
"We help the distributor utilize space better in order to sell more products in less space, to do more business out of the same physical assets. Our motto is 'Build your business, not more buildings.'
"The second value proposition is to extend distributors' cash by improving inventory turns which allows them to better manage working capital so they can take that cash and invest it into other areas of business which will drive improvements.
"The third center piece of the value equation is to help distributors expand sales by allowing them to offer more products without increasing the number of buildings, without increasing their cash investment and do so in an environment in which they can do it one case at a time. A distributor that offers 10,000 items can overnight begin to offer 15,000 items. That allows them to expand their sales and expand their offerings so that they become more important to the operator. Because of our delivery frequency, we improve their service levels which allows them to make more promises to their operators, which expands their sales."
In order to help their distributor customers be successful, Dot Foods is enhancing its information technology. "Within our own business we are continually trying to utilize more technology and have been doing so successfully to reduce costs in our business such as in our inside sales arena. We have DOT Expressway, which is our product catalogue and overall sales support system on the Internet. We have 1,400 customers subscribed to DOT Expressway. By making our product listing and information about our company available to our customers on the Expressway, We're able to reduce the amount of time required by each customer for sales support of inside sales rep," says Pat, with his brother adding: "We are among the leaders in utilization of technology. One of the advantages is that we are the only redistributor that we're aware of that can protect three temperatures of product on an LTL basis 1,000 miles away. We've a very significant investment in three temperature trailers and it requires a lot of systems and processes to manage it."
The Tracy brothers believe that redistribution will continue to grow in popularity because the economic climate demands it. "Everyone has to do more with less and we believe that redistribution is the way to do that. We think redistribution helps distributors in terms of improving inventory turns, reducing overhead associated with purchasing functions, reducing costs of receiving, allowing them to do more volume out of a facility than they could in the past," says Pat Tracy. "Manufacturers are able to more effectively service a lot of different accounts throughout the country and they can reduce their inventory and costs by having a company like DOT service many of their customers."
While John notes that consolidation and the high cost of labor and fuel will continue to pose challenges for the industry, Dot Foods will not be daunted by them. "We continue to anticipate an expansion of products in our existing categories and new categories as we move forward in the next five to 10 years. We would assume that that would occur as it had in the past. First by adding those new categories, and the other option would be to acquire expertise," he says.
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