FALLS CHURCH, Va. -- Food Distributors International here wants to continue to be proactive in helping its members ensure their own survival and that of their independent customers, said John Block, FDI chairman.
Interviewed just prior to the FDI annual Business Conference & Partners Program -- continuing through tomorrow in Dallas -- Block said the association believes it is going to have to allocate resources to fund more research studies like last year's "Strategies 2005: Vision for the Wholesale-Supplied System." The report by A.T. Kearney attempted to point the way for wholesalers to alter their business strategies for longterm survival.
"As our members face more competition from a variety of distribution channels and with all the industry consolidation taking place, we intend to spend more money on more research and more studies -- something we haven't done in the past," Block said.
Other concerns raised by Block in his interview with SN included the following:
To find ways for wholesalers and manufacturers to help retail customers and for the entire industry to work to please consumers.
To broaden the scope of the "2005" study to encompass how customer location will affect food distribution in the future.
To seek relief from estate taxes.
To avoid ergonomic changes proposed by the Occupational Safety and Health Administration and substitute more scientifically based proposals.
According to Block, one of the FDI's emerging roles resulting from the "2005" study "involves putting more emphasis on how we can help members improve their retail coverage and how we can help independent retailers get more attention and coverage from manufacturers -- all related to our belief that wholesalers and their independent customers are part of a team working together to compete against all channels of trade.
"The industry is changing rapidly, and it's not the same as it was 10 years ago, five years ago or even last year. It's a very dynamic industry, and if wholesalers don't keep an open mind or if they decide to block out what's going on around them, they're going to be left in the dust.
"And consumers are changing too, demanding more food that's quick to prepare and calling the tune all the way through the distribution process right down to the farm level by demanding leaner beef and pork. So consumers are a powerful force, and we as an industry must recognize that more than ever before."
Block said "Strategies 2005," which was previewed at last year's annual business conference and presented in full at last fall's FDI Midyear Executive Conference, has had "a powerful impact across a wide range of wholesalers and even some of their retail customers, and I couldn't be happier with the reception it's received.
"Our members are under a lot of pressure from competition, and they are looking for a plan or road map to follow so they can become more prosperous in the years ahead. And while the report didn't contain very much good news, the changes it suggests have evoked a much more positive reaction than Efficient Consumer Response did several years ago.
"ECR was met with a lot of skepticism and standoffishness, but wholesalers see this report as an accurate account of what's really going on. It delineates more clearly what needs to be done to make their operations work, stressing that old practices need to be eliminated and new ones need to be adopted."
A session scheduled for this morning's FDI business conference will review the "2005" report and offer a trio of panelists presenting their perspectives on how the report has challenged their companies and their longterm decision-making processes.
"It will be our attempt to continue to encourage wholesalers, retailers and manufacturers to follow this road map to prosperity," Block said.
Panelists will include Al Plamann, president and chief executive officer of Certified Grocers of California, Los Angeles; Ken Macey, president of Macey's Food & Drug, Sandy, Utah; and Greg Noll, vice president for ECR at Lipton, Englewood Cliffs, N.J.
At the FDI Midwinter Executive Conference in September in Coronado, Calif., the association plans to present a follow-up to the original report, Block said, "with more data on how the geographical location of customers will affect the distribution needs of the future.
"The original study said independents will continue to segment themselves on a regional basis, and this follow-up report will help wholesalers pinpoint where their customers are moving and how that might affect their distribution plans."
On the legislative front, the FDI's priorities include tax relief, also cited as last year's top priority, Block noted, and a new concern -- relief from proposed regulations by the OSHA.
Both are issues Block said he expects to be hot topics during next week's Public Affairs Conference in Washington, jointly sponsored by the FDI, the Food Marketing Institute, Washington, and the National Grocers Association, Reston, Va. "All three groups will bring their members to town and go up to the Hill to plead our cause and push for legislation we support," Block said.
He said relief from estate taxes -- what he calls "death taxes" -- is a high priority for the FDI, "because those taxes essentially confiscate a family's business.
"Industry consolidation heightens the issue even more because it is forcing a lot of businesses to consider selling rather than holding on, to avoid the fear that when the principal dies the government will tax the survivors to death."
Block said the OSHA proposals to add new regulations on workplace rules are not scientifically based and will add too much cost to distribution center operations.
"OSHA is seeking to impose new ergonomic standards, including proposals that people not be allowed to lift cases weighing more than a certain amount and that they not have to bend over to pick up a case, and all that will mean wholesalers will have to change their racking systems," Block said.
"OSHA has had these proposed regulations in its pocket for a long time but it hasn't had enough courage to bring them out because it knew they would create a firestorm, which it has.
"Now we're in a comment period, and if we can raise enough concerns, perhaps we can change the proposals. And we might even call for legislation to minimize the costs of these proposed regulations.
"We believe OSHA did not do enough research and that there's no scientific basis for these changes because they won't necessarily reduce the number of injuries. There's a study under way by the National Academy of Sciences, commissioned by Congress, designed to come up with scientifically based performance standards, and we say let's wait for that study's results before we establish new regulations."
