When chains seek to increase business with limited-time offers, the potential for problems behind the scenes is high. Forecasting the correct volume of products to use in the promotions is extremely challenging, especially when there are a number of units with regional taste differences.
The difficulty of forecasting accurately puts pressure on distributors and manufacturers. A chain doesn’t want too much inventory, which can result in waste, or worse, too little inventory, which can result in disgruntled customers. The need to satisfy manufacturer or distributor minimum orders may cause the former, and underestimating demand can cause the latter. In other words, chaos can ensue.
Enter Dot Foods. Dot is a redistributor based in Mount Sterling, Ill. Owned and operated by the Tracy family, it has eight additional distribution centers across the United States.
A redistributor is able to purchase large quantities from manufacturers and, through consolidation, send smaller amounts of products in less-than-trailerloads, or LTLs, to distributors who might not satisfy the manufacturer’s minimum order. The company’s key value proposition is, “We have weekly frequency to virtually all distributors with no supplier minimums.”
Redistribution has grown exponentially in foodservice over the last decade, and Dot is the largest, with 2010 revenues of $3.6 billion. The company has access to more than 100,000 products from 700 manufacturers.
One area that has thrived for Dot is LTO planning, management and implementation. A reactive approach to LTO demand can create unnecessary obstacles. If it spikes, requiring rapid replenishment, costs can rise significantly. If demand is sluggish, products can spoil or go out of code, creating waste. Dot believes in being proactive to mitigate risk. The national account team works with all parties in the supply chain to forecast initial supply and ongoing replenishment. Instead of a distributor having to stock four to six weeks of inventory, Dot can deliver LTLs weekly.
Bill Wilfong of Pita Pit, which has units across the United States, Canada and other countries, explained how the Dot process works for him. Wilfong, whose self-described title is “special support,” is based at Pita Pit’s headquarters in Coeur d’Alene, Idaho.
Wilfong said having Dot supply its LTOs helps Pita Pit compete against larger chains.
“Our distributor is Sysco, and Dot has access to all the Sysco operating companies. They are able to supply the product needed even if it’s in a region that only has one or two stores,” he said, adding, most of the additions or replacements on their menu start as LTOs. “If it takes off, we’ll keep it on.”
Wilfong said Dot is involved from the start of LTO planning.
“They have hundreds of products available. If they don’t have it in their portfolio, you probably don’t want it,” he said. “I don’t know how we’d do an LTO without Dot.”
Cullen Andrews, Dot’s director of national accounts, said Dot makes it “easier to get new products through the system.”
As far as Dot’s taking the problems out of the LTO supply process, Andrews said, “It’s still somewhat chaotic, but we definitely are able to mitigate the risk.”
