BLOOMING PRAIRIE COOPERATIVE FOOD DISTRIBUTORS

Blooming Prairie was a 100+ million sales per year Natural Foods Cooperative
Distributor with warehouses in Iowa and Minnesota.  We helped them in the mid 1990s.

We got a recommendation to them from a co-op board member, formerly a National Cooperative bank officer, and now an investment banker related to food.  We spoke on the phone a few times and then we agreed to a visit.  We learned that they served three business segments: small health food chain and independent stores, consumer buying cooperatives that pool orders and take delivery in a parking lot and supermarkets having specialty health foods sections.

There were lots of non-mainstream people mostly dressed in Jeans.

The question on their minds was how much more warehouse space did they need in each location.  They were aware of the opportunity to split purchases between the locations and would consider other synergies to reduce costs.

A tour of the facility was sobering.  Space was very tight.  Some aisles were only for walking.  Inventory was every place.  Questioning brought forth the fact that they were in a growing part of the food industry with far fewer competitors and where efficiency was far less important than simply having the merchandise.  There were also many promotions where the supporting stock was clogging the warehouse.

A review of the systems to support buying, customer ordering and shipping revealed that their systems were at best very crude.  And when we asked about data availability we were told that we could have an item list with year to date movement,  dollar cost and case cube.  They could give us weekly sales, cases and cubic feet moved by department as well.

Such data was not enough to feed our usual analytical process.  Also, they were adamant about a modest, fixed cost project.  We obliged.

Our approach was to work with groups of items, in this case 25 sub-departments.  We made assumptions on sales, stock keeping units, case cube and case volume growth, and inventory turnover.  We assumed a small amount of inventory sharing between locations and so created a year by year projection of sales, skus case cube and case volume by sub department for 5 years. 

They were pleased and after challenging our assumptions in vain they paid the final bill from us and used the report for their planning.

Subsequently we had several 1 – 2 day assignments to evaluate proposed new locations in the Minneapolis area.  They correctly decided to replace the Minneapolis general manager and we helped them find an ex-Nash Finch manager to fill that role.

They were also captivated by the buying concepts of order points, economic order quantities and adding items to a supplier's order based on projected need date for the additional merchandise.  We had many discussions regarding a future assignment to do this.

The relationship ended somewhat abruptly when the CEO told me that they were being bought by a large distributor, United Natural Foods.  The CEO wistfully said that they were a very down to earth company, no doubt with similar problems to those of Blooming Prairie; that we would probably hear from them.

Probably the only solution to a company like Blooming Prairie was to be bought, as they were very far from being competitive in a mainstream distribution environment.  It appeared that they could not afford to pay for or have the mindset to adequately deal with a move to modern systems and business practices.

To their credit, they only wanted information from us that they thought they could deal with.