There has been a powerful shift in the food marketplace over the last ten years. Empowered food consumers have an increased awareness of the journey that their food takes to get to their plate, which has sparked a new emphasis on buying local, selling local and eating local.However, many food companies have found that it is best to purchase particular specialty items on a national scale, in direct opposition to the widespread focus on “local”. These businesses are discovering that by buying nationally, they can provide the most competitive prices, receive the most efficient shipping and still demonstrate their social commitment to reducing their impact on the environment.
The prevailing factor that provides efficiencies in this model is “how direct from the original source” each company is buying their palletized ingredients.
For example, consider a natural foods market in the southeast that is attempting to source a guaranteed authentic Extra Virgin Olive Oil in one gallon containers for their retail customers. Their purchaser may have a number of places where he can begin his search: a wholesale food distributor located within a few states, a local food service company located nearby, or a Wholesale and Bulk Supplier located across the nation in Seattle.
Upon first glance, the purchaser (and most customers) may assume that either of the closest locations would be most efficient. As the distribution centers are nearby, shipping costs should be lower and any carbon footprint from the delivery trucks should be trivial. However, this viewpoint avoids the most important question: how many hands has this product passed through before it reached me?
Typically with most food distribution companies, products pass through many hands before they reach their final retail destination. For example, let us follow the path of the Extra Virgin Olive Oil example from above. An importer would bring olive oil into the US in large bulk containers and sell it to a packager. The packager would dispense the olive oil into 1 gallon containers, and pass the product along to a sales company. The sales company would market the olive oil to a food service or distribution company, who would then sell it to a local grocery market.
The important thing to remember is that for every hand that the product passes through, the final price of the olive oil increases as each company takes their cut. Meanwhile, the olive oil is criss-crossing the country traveling to each step along the way and adding the cost of multiple freight trips into to the already increased price. Not to mention a sizable carbon footprint as well!
Contrary to first instinct, it is in fact the Bulk Supplier across the US that is most efficient. If they are, in fact, a Bulk Supplier that offers multiple services under one roof (importing, packaging, distribution, service, etc.) they will be able to provide the most competitive rates and greatest efficiencies. In this model, the olive oil passes through minimal hands, and therefore the end consumer receives a lower price. And because each pallet travels directly from the importing/packing site to the end retailer, there is only one efficient transportation trip; this results in a lower transportation rate and a reduced total environmental impact.
As an example, Centra Foods uses this model working as a direct importer, packaging company, and account management team. This allows them to work directly with companies nationwide from the smaller natural grocery market to the larger food service distributor and provide significant efficiencies at all levels. Think of the variety of industries of specialty food ingredients-- each will have a bulk supplier that will be able to provide cost savings in a similar manner.
So next time you get your specialty ingredients, consider the question, “how many hands has this passed through?” Doing so will always ensure that you always get the most competitive rates that you can pass along to your own customers. It will be well-worth the research!
Topics: Shipping & Logistics, Suppliers
