Buy more. Spend less!

No, it’s not some late-night QVC sales pitch. Buy more, spend less is often the financial reality of sourcing products via redistribution. While the price you pay for product via direct sourcing and redistribution might be the same, often what you spend to source via redistribution is much less than sourcing direct.

Consider this: in May, the average Dot Foods customer purchased 5,050 cases from 76 different product lines. If we assume distributors could meet each manufacturer’s minimum every four weeks and buy that same quantity direct, that means 76 POs are cut. That means 76 checks to write, too. And 76 trucks backing up to drop a pallet or two off. Let’s assume the total General & Administrative/put-away expense per PO is $50.

If we do the math, 76 POs X $50/PO = $3,800 per month in buying activity spend. Apply the $3,800 to the 5,050 cases purchased, and we have to add an additional $0.75/case to the invoice price to get a total landed cost per case.

You still incur buying activity cost when sourcing products via redistribution. But even if you assume a much higher cost per PO via redistribution (let’s say, double), the savings of PO/delivery consolidation still pile up in your favor. Since Dot’s weekly POs allow you to add items from hundreds of manufacturers, every new item you source through Dot reduces your spend per case. You really can buy more and spend less.

I hope this helped illustrate that there’s more than price to the daily transactions we all make in our businesses. That “more” adds up for all of us. If you have questions about measuring and minimizing how much you spend on what you buy, contact your Dot Foods Sales Representative.

Impact of Lead-Times

Does lead-time influence how much inventory you maintain? What about order frequency? Safety stock? The reality is the relationship between lead-time, order frequency, and safety stock is different for every distributor.
What isn’t different, however, is the fact that higher-frequency orders and shorter lead-times positively influence how much total inventory and safety stock you need to carry, which, in turn, positively impacts your cash flow. So what are the real effects of reduced lead-times and how will they benefit you? Read more.

In most cases, Dot’s lead-time from order date to delivery date is significantly less than what you would experience when ordering direct from a manufacturer. (We talked about manufacturer minimums last time.) Shorter lead-times benefit you in the following ways:

  • Inventory turns – With shorter lead-times a company doesn’t have to carry as much selling inventory. This decreases costs and improves inventory turns.
  • Safety stock – Most procurement systems factor in lead-time when calculating how much safety stock a company must maintain. Less lead-time means a reduction in inventory needed for safety stock.
  • Service level – There will be times when a buyer has more demand than available inventory. Shorter lead-times allow the distributor/wholesaler to quickly recover from inventory deficits, improving their service level to customers.
  • Operators’ satisfaction – With shorter lead-times, a company is more easily and efficiently able to fulfill customers’ special requests, boosting overall customer satisfaction.

To take a closer look at how reduced lead-times can positively impact your business, contact your Dot Foods rep today for more information.

By Kevin Baum, Dot Foods Customer Marketing Manager

Benefits Behind Minimums

Minimums. Everyone has them. Manufacturers have them. You have them. We have them. Minimums aren’t a bad thing. Companies use them to do different things: control costs, drive customer behavior, increase sales or decrease sales.

I’m sure you’ve thought about how minimums affect your business. I’ve been thinking about ours a bit recently.

I wondered what ours meant for a typical customer: one that buys weekly and whose order averages just north of 10,000 pounds per order from Dot. They buy roughly 150 different manufacturers through Dot.

How much would that same customer have to buy if they were to buy direct from each manufacturer? The number is astronomical, nearly 60,000 cases and 800,000 pounds. And that’s just one order from each manufacturer. It’s an operational and cash-flow nightmare.

For decades, Dot has worked to provide customers with easy access to our products. As long as your order meets our 5,000-pound consolidated minimum (comprised of at least 1,000 pounds of each temperature ordered), you have a one-case minimum for nearly 40,000 items.

We think it provides our customers with two specific benefits:

Cost management through improved cash-flow and reduced need for physical warehouse space.
Increased sales through a cost-effective means to answer your customers’ requests with “yes, I can get that,” instead of “sorry, I can’t get that.”
If you have questions about the impact of Dot minimums on your business or the Dot Trip Program, contact your Dot sales rep today for more information.

By Kevin Baum, Dot Foods Customer Marketing Manager