It has been said that an army marches on its stomach. When the force is as huge as the U.S. military, with millions of active and reserve servicemen and their families spread across hundreds of bases throughout the world, filling such a stomach becomes a monumental task Nash Finch Co. has carved out a significant role in handling this duty. Over the last 15 years, it's grown into the largest distributor of grocery products, by revenue, to commissaries operated by DeCA, the Defense Commissary Agency.
From its military food distribution division (MDV) headquartered in Norfolk, VA, and four other locations around the country, the wholesaler supplies approximately $1.3 billion worth of product annually to more than 350 U.S. military commissaries and exchanges in the United States and overseas in Europe, Puerto Rico, Iceland, the Azores and Honduras. The business accounts for about a quarter of company sales.
Supplying U.S. military commissaries is a lot like servicing the food retailers that make up the rest of Nash Finch's business, says Jeff Poore, senior vice president, military, for the wholesaler. But, he adds, there are key differences.
Among them are the size and scope of the commissaries themselves. "Stores average $20 million a year in sales, and that is measured at cost," Poore points out. "Applying normal retail margins, the average commissary equates to a supermarket with $25 million to $30 million in annual sales."
This figure excludes most of the general merchandise, such as greeting cards, beer and wine, toys and other items carriewd by other grocers today. The commissaries are congressionally mandated only to sell grocery food products, health and beauty items and a limited number of other goods, such as batteries and flashlights.
Another difference is in the way relationships are structured among the segments that comprise the military supply chain.
anufacturers contract directly with DeCA to supply product. The manufacturers, in turn, contract with Nash Finch to deliver their products to the commissaries. This difference in the relationship between manufacturer and distributor leads to some major distinctions for military business in both semantics and procedure.
"In the normal wholesale world, the manufacturer is the vendor. In our world, manufacturers are our customers. One reason we operate the military division as a separate business unit is to insure we keep this distinction clearly at the forefront at all times," Poore comments.
In reality, MDV serves a "three-legged" customer base, he adds, including the manufacturer community, food brokers that represent them, and DeCA and the military families it serves.
With so many separate customers involved in each transaction, it's not surprising that Poore characterizes military distribution as, above all, based and focused on customer service.
The definition of customer service for MDV ranges from providing access to aggregated sales and other data to manufacturers and brokers, to managing security clearances for all Nash Finch employees, to putting together special packages on short notice for direct airlift to overseas locations for holidays and other special events or celebrations.
Overseas distribution is another unique facet of military business for Nash Finch. The company does not deliver directly to military operations outside the continental United States (referred to as OCUNUS in military jargon.) Product for these sites flows through DCs operated directly by the Department of Defense.
Nash Finch's job is to assemble and ship container loads regularly to a number of these military DCs, including three primary European distribution points and other sites in Puerto Rico, Cuba, and Iceland. Typically, the military gives Nash Finch 21 days notice on orders for batches of container loads for shipping overseas.