GRAND RAPIDS, Mich. -- Why is a 77-year-old, $2.1 billion wholesaler like Spartan Stores here so worried about the fledgling third-party distributor Non-Stop Logistics?
To hear Spartan President and Chief Executive Officer Patrick Quinn tell it, a company like San Francisco-based Non-Stop could threaten the wholesaler's very survival.
"They clearly are looking at a system that will enable them to move product from manufacturer to retailer," Quinn began. "While they see us in it, they really see a lot of us disappearing. They'll say they can do this better than the wholesaler can." Three-year-old Non-Stop denies that its intention is to eclipse wholesalers. Instead, the company, which has yet to execute a major test of its program, has made efforts to involve wholesalers in its plans, said Homer Dunn, president and CEO of Non-Stop. Nevertheless, the third-party distributor has created concern in the wholesaler community. Non-Stop is in the early stages of a program that takes a page out of the Federal Express-United Parcel Service operations book. It would establish a network of 40 sort-and-load centers for the cross-docking of products between manufacturers and supermarkets. Its first big test of a facility is expected to take place in the South this summer.
The company would feed manufacturers with predictions of retailer needs by area, using a sophisticated order-forecasting system. It would handle transportation from the manufacturer through the cross-docking facility to the stores. Manufacturers would own the productuntil it reaches the back door of the store.
Non-Stop officials claim the national program would achieve big economies of scale and cost savings. The company stresses that it plans to work with wholesalers, not compete with them.
Despite apprehensions at Spartan, the wholesaler has not ruled out some type of business relationship with a company like Non-Stop.
Some observers don't think third-party distributors will be much of a force and wonder what all the controversy is about.
"I'm not sure that they'll have a long-term life if suppliers, retailers and wholesalers get their acts together," said James Horton, national director of retail for Kurt Salmon Associates, Atlanta. "There will be less room for middlemen like third-party distributors under ECR, so they'll be interim players only."