Buy more. Spend less!
By Kevin Baum, Dot Foods Customer Marketing Manager
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.