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Shop the gourmet or all-natural food aisles in most U.S. grocery stores and you will find such brand names as Sacla Italia, Kitchens of India, Knorr, Finn Crisp and Ka-me. These, and many other international and specialty foods are imported and marketed in the U.S. by Liberty Richter, Saddle Brook, N.J.
Founded in 1926, Liberty Richter was acquired in 1999 by Tree of Life Inc., Jacksonville, Fla., which is a subsidiary of Netherlands-based Wessanen, one of the world's largest food companies. Liberty Richter retained its identity through this change in ownership and continues to operate essentially as a small business-albeit one with a global and complex supply chain. "We are a small company-only about 50 employees," says John McLennan, vice president and controller of the company. "But we import products from all over the world, primarily from Asia and Europe but also from South America." Imports represent about 65 percent of Liberty Richter's products, McLennan says, with the remaining 35 percent being manufactured in the U.S. Domestically, the company sources product from Texas, California and Illinois.
As a small company, Liberty Richter outsources many services, including information technology and logistics. The company's primary distribution center in New Jersey is run by Advanced Warehouse Systems, a division of Regency Warehousing and Distribution, Franklin, Mass. Smaller amounts of stock are positioned at 10 public warehouses around the country, while transportation and customs clearances are handled by freight forwarders and customs brokers. These include ETS Transport and Logistics, Bremen, Germany; General Noli, Modena, Italy; Jagro, Irvington, N.J., and Coppersmith, El Segundo, Calif.
The company's primary sales channel is through some 200 distributors that, in turn, service grocery and other food stores. It also has an online sales channel through mybrandsinc.com, which sells specialty and hard-to-find brands over the Web. In addition to importing and distributing foods, Liberty Richter helps clients market and grow their brands. "Since a lot of the brands we carry are made by foreign companies, we become their eyes and ears in the U.S. market," McLennan says.
One of the perils of this model is that the company sometimes works itself out of a job. "It probably averages about once a year that we lose a brand because it either becomes attractive to a bigger company that acquires it and blends it into their infrastructure, or it becomes big enough to want to bring its marketing and distribution in-house," says McLennan. That was the case for Wasa, which Liberty Richter lost last year, he says. "It's part of the risk of our business model, and we accept that. We actually enjoy these success stories," he says. And there is no dearth of foreign food companies looking to introduce their brands to the U.S. market. Liberty Richter quickly replaced Wasa with a similar product from Finn Crisp, for example. "We are approached by hundreds of companies at the various food shows," McLennan says. "That is usually where we first make contact with new clients."
Because of vendor interest and growing consumer demands for specialty and natural foods, Liberty Richter's business blossomed and began to outpace the capability of its old operating software. "The old software was a heavily modified package that was more geared toward manufacturing," McLennan says. Because it had been so heavily modified, he says, reports often contained inconsistent and conflicting data. "You could run a report and get one sales or inventory number, then run a different report and that same data element would show up as something else," he says. "That was extremely frustrating and unproductive because we would then spend a lot of time arguing about which number was correct." The root cause, he says, "was because the system had been so modified and we had used so many different software companies and different methodologies. A lot of good people worked on it, but it had just become impossible to manage. Basically, we had spaghetti code."
The company also suffered from poor communications and integration between its operations and finance departments. "In the old system, the purchase orders were done outside the system, often just using word processing software, and then they were tracked in spreadsheets," says McLennan. "From a foreign currency planning standpoint, that did not serve us well at all." Nor did it help inventory management, leading to poor inventory accuracy, fewer inventory turns and a much longer cash cycle than the company wanted.
In addition to these internal issues, Liberty Richter also needed to improve communications with customers and suppliers. "At that time we did absolutely no EDI, so we were interested in acquiring that capability," McLennan says.
To address these problems, Liberty Richter hired IBM to help it identify potential software solutions that would be a good fit. Together, the companies developed an extensive request for proposal (RFP). "IBM provided great insight on software that was available in the market at the time," McLennan says. "We ended up looking at about a dozen packages, but by using a check list that IBM had helped us prepare, we quickly whittled that down to about five packages that we wanted to look at more in depth."
The company took four or five field trips to see demonstrations of existing installations of solutions on its short list. "In the end, we selected 3rdWave from Blinco Systems," McLennan says. One of the key attributes in Blinco's favor was the integration of its various functionalities, he says. "Obviously, all of the software packages that we examined had foreign currency capabilities-that was one of our absolute must-haves since we do business internationally. But in some of the packages, this capability seemed to be a bolt-on and was not as seamlessly integrated as it was in 3rdWave," McLennan says.
|"If the bottom of that saw-tooth never comes close to zero or if that spread is big, we know we have too much safety stock."|
- John McLennan of Liberty Richter
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