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Transparent logistic services help dairy processor overcome traditional marketing barriers.

Because of the inherently short shelf life of milk and dairy products, dairy processors have traditionally been limited in their reach of geographic markets. Those companies that have achieved a national brand presence have done so by establishing or acquiring regional processing facilities, a trend evident in the 38% reduction in the number of dairy processors within the last decade.

While this move toward larger scale processing has resulted in significant improvements in production and marketing, the channels of distribution have changed very little. At both ends of the product cycle, processors and retailers are reaching maximum efficiencies--yet the downward pressure on pricing, with increasing pressure on service, continues to force change. Driven by information technology and sophisticated consumers' demand for fresher products, innovative dairy distribution professionals are finding new says to "flatten the channel," gaining greater market share with improved margins.

Dean Foods, Franklin Park, Illinois and The TLC Group, Zeeland, Michigan have formed a logistic partnership that allows the $2 billion food company to provide daily direct store delivery of a wide variety of dairy products to a chain of Midwest hyperstores and convenience centers. This strategic partnership, now in its fifth year, centers around a shared philosophy of customer service, and involves a formula of several new and some not so new concepts in Total Logistic Control:

* Contract dedicated carriage

* Scheduled direct store door delivery

* Transparent customer service

* Contract warehousing

* Cross-Docking & order mixing

* Electronic Data Interchange (EDI)

Aside from the financial benefits of off balance sheet financing, dedicated carriage gives the Dean Foods image greater visibility within the marketplace. This is especially true at the time of delivery, which helps underscore the company's commitment to high-quality service and product. TLC's fleet of tractors and 48' trailers are painted in the bright blue Dean Foods logo on a white background.

The TLC/Dean Food/Retailer partnership is a successful interim step toward achieving true Quick Response for temperature sensitive dairy products. As many authorities in the industry are quick to point out, the biggest hurdles in Quick Response are not just the technical aspects, but the cultural barriers of retailers sharing information with key vendors.

This case clearly demonstrates that the majority of these hurdles have been overcome: purchase orders are generated from the point-of-sale using POS information, albeit entered manually.

From a technology standpoint, purchase orders generated from POS scanning will eliminate the need for manual order entry. This is expected to be in place within two years. All other elements of information transfer are already implemented.

Dedicated carriage and a third-party refrigerated/deep-frozen distribution center have allowed Dean Foods to enter the market quickly, with minimal, off balance sheet financing, yet with a very high visibility and service level. Equally important, product shipping, temporary warehousing, and two-thirds of the information processing are outside of the retailer's replenishment system--a benefit normally limited to a local, route sales type of delivery. It is also outside of Dean Foods distribution system. In this case, TLC provides a system that serves both as the retailer's supply system and the manufacturer's distribution system.

Dean Foods also benefits from full-pallet, truckload delivery to a point nearer final distribution.

The TLC Group operates a strategic network of dry and refrigerated distribution centers throughout the U.S. supported by a company-owned truck fleet and proprietary information system. TLC also operates a dry and refrigerated Foreign Trade Zone in West Michigan and offers worldwide Total Logistic Control through TLC International.

For further information call Keith Klingenberg (800) 333-5599 or (616) 772-9009.
COPYRIGHT 1992 Frozen Food Digest, Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Dean Foods Co.
Publication:Frozen Food Digest
Date:Oct 1, 1992
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