Marjack In The Middle
June 1, 2006
Marjack In The Middle
Move it, Move it Might be the Mantra for This Fast-growing Specialty Market Distributor Whose Daily Juggling act of Procurement, Shipping and Servicing Clients is Helping to Expand Candy’s Presence Beyond the Boundaries of Traditional Retail Channels.
Life as a middleman — aka specialty market distributor — aka alternate-channel wholesaler — can be downright exhausting. There are thousands of products to pick, pack and ship to locations nationwide, inventory levels to maintain, vendor relationships to manage, and customers clamoring for just-in-time delivery. And if there are problems, well, nobody wants to hear about that.
“At the end of the day, the only thing the customer wants to know is: ‘Did you get the product there when I needed it?’” says Neil Cooper, vice president of sales and marketing for Marjack Co., a Landover, Md.-based distributor of candy, snacks and more. Marjack’s client roster includes nearly 20,000 theaters, video rental stores and alternate-channel retailers such as Office Depot, Dick’s Sporting Goods, Michaels and FedEx Kinko’s.
For clients such as these, it is Marjack’s job to procure and ship products so that the merchandise arrives — on time but not too soon — at each retail location.
“There are no back-room stocks in a lot of the special markets that we service,” says Warren Coopersmith, Marjack’s president/chief executive officer. “Whatever comes in goes on the shelf.”
To keep merchandise flowing smoothly to its retail clients, Marjack must also maintain relationships with hundreds of manufacturers, many of whom view distributors as “a necessary evil,” says Coopersmith. “The manufacturer looks at wholesalers (distributors) as adding cost,” he explains.
Coopersmith and Cooper have attempted to improve relationships with vendors by educating them about the value of the services the company provides. One of their key messages is that Marjack can be a helpful ally to manufacturers seeking to sell alternate-channel retailers on the benefits of the candy category.
A case in point: FedEx Kinko’s, a chain of 1,300 business centers located throughout the United States. The company began testing a small candy set in a handful of stores this fall and is now in the process of introducing it system-wide. “The fact that we’re rolling it out says it’s going very well,” reports Jeff Heyman, vice president of retail for FedEx Kinko’s. “We try a lot of things, and the best ones get rolled out.”
Marjack identified FedEx Kinko’s as a potential hot prospect for retailing candy a couple of years ago and set to work attempting to persuade that company’s management of the wisdom of such a venture.
“At the same time we were trying to get them into the candy business for two and a half years, so was Masterfoods and Hershey and Nestlé,” says Cooper. “It’s a really good partnership between the distribution community and the manufacturing community to make these things happen at retail.”
“We’ve pulled a lot of manufacturers into this facility [for tours and presentations],” Coopersmith adds, “and they’re starting to understand that if we can affect the programs that they’re trying to put into the special markets in a positive way, it will result in more sales for everybody.”
Marjack’s role is to simplify the process of purchasing and managing the candy category for buyers in the chains it services, because few — if any — of them can dedicate all of their time to that pursuit. “They’re also buying books or clothing or other items,” says Coopersmith. “So they’re looking for a relationship that will support their needs.”
How Marjack makes it work
Marjack operates from 12 climate-controlled distribution centers scattered throughout the country. The distributor has its own fleet of tractor trailer trucks and smaller carriers and also ships product via UPS and FedEx.
Beyond the trucks and state-of-the art-facilities, “I think one of our most undervalued services is a non-technical thing,” says Coopersmith. “It’s that we’re in stock, day in and day out.”
Making sure that happens can be tricky. The process starts in the purchasing department, explains Chris Hoy, senior director, purchasing. Hoy and his team of six buyers ask customers to forecast their candy and snack inventory requirements. They take that information, as well as additional relevant data, and plug it into Marjack’s custom-built, predictive purchasing models.
“With predictive purchasing,” says Coopersmith, “we always have a purchasing staffer who calls these manufacturers constantly [asking], ‘Where’s our product? Where’s our product?’ You have to pull it in,” he emphasizes, “because if they [the vendors] are out of stock, our customers don’t care.”
“We make sure that [inventory] level is available and communicate it back to the customer,” says Hoy.
Marjack recently implemented a new software system that makes it easier for buyers to identify potential roadblocks within the supply chain. “They [the buyers] can pull up a screen and see if there is an issue with a vendor or an item,” says Robert Mayn, Marjack chief operating officer. “It allows them to react in real time.”
Stocked for the seasons
Members of Marjack’s purchasing team take pride in their expertise with seasonal and promotional buys — key parts of the candy business and areas that appear to be growing in importance for alternate-channel retailers.
“Whether it’s back-to-school or [holiday] seasonality or just an in and out … those things are just over and above and require pulling a lot of new manufacturers for just one time…[manufacturers] that you don’t have a lot of history with,” Coopersmith explains.
“More and more customers are coming to us for promotional buys,” adds Cooper. “In many cases, like on seasonal product, there’s an allocation, i.e. there’s only a certain amount of product available. So it’s up to Marjack to get it shipped here on time and to get it shipped to the store so there are no empty shelves.”
Coopersmith explains: “That’s where you can really fall down as a distributor because it’s so visible — all of a sudden a slot’s not filled or an item’s not there for a [retailer’s] promotion or to fill the display space.” This is where the purchasing team ramps up its efforts, staying in close communication with vendors to ensure that demand is met.
Marjack typically has several hundred seasonal/promotional items within its system at any given time, says Coopersmith. That’s out of a total assortment numbering about 4,000.
For customers that want the service, Marjack is equipped to provide candy and snack category management — to make recommendations about what products to stock and how best to merchandise them. Services include developing plan-o-grams, procuring fixtures and offering tips for maximizing product turn and profits.
That sort of expertise is important to FedEx Kinko’s, Heyman reports. “Not being a traditional retailer and not having the room to have a large assortment, we really rely on them to tell us what the hot products are,” he says. “We have a very small assortment [29 SKUs], so we can’t afford to make mistakes. I can’t have a position in the plan-o-gram that is not productive.”
At Cooper’s suggestion, the distributor has teamed with some of its clients to enhance the front-end set by incorporating some frequently purchased health and beauty aids including pain relievers, lip balm, hand sanitizer and moisturizing lotion, which have even higher margins than candy. “That way the buyer can say, ‘Just give me three feet up front, and by the way, I’m going to work the top 15 candy items in,’” says Cooper.
Tapping into technology
You can’t deliver the level of service that Marjack provides without investing heavily in technology. Marjack has invested more than a million dollars since Coopersmith made the decision to bring information technology in-house three years ago.
When IT director Jim Mischke joined the company at that time, Marjack used EDI (electronic data interchange) to communicate with only one of its customers. Today the distributor uses the computer-to-computer communication to handle orders and invoices for the vast majority of its vendors and retail clients.
Computerized warehouse management systems used at Marjack’s 12 distribution centers ensure order-fulfillment accuracy and error-free invoicing. When cartons are shipped they carry bar-coded labels that allow the recipient to easily scan them, eliminating the need for a manual check-in.
“What was special a year ago in the EDI world is becoming standard and absolutely required,” Coopersmith observes. Customers “want to move product seamlessly,” he continues. “They want to move it without paper. They want to move it without checking it in.”
Within the past year Majack began deploying its technological expertise to provide a handful of customers with a new service. “We recently created a virtual warehouse for a couple of our customers, where we’re selling some confectionery items third party,” says Coopersmith. “It’s like amazon.com. They [the shopper] will click on our customer’s Web site, order a bunch of stuff, and it will come through us. So we’ve just created a virtual warehouse to support our customers. The invoice arrives with our customer’s label and billing information. The [end] customer doesn’t even know we’re involved.”
Offering a sophisticated bundle of services is important in setting Marjack apart from the competition, and, as Coopersmith is quick to point out, there is plenty of competition. “We compete with everyone from the big guys such as McLane, which is a $24 billion company, to Vistar, which is mainly a foodservice and vending supplier, down to the candy and tobacco jobbers and the club stores [where a small retailer might purchase product for re-sale]. Our competition is everywhere.”
Raising the (candy) bar
Talking with Coopersmith, it’s easy to see the pride he takes in the advances his company has made in the past several years — everything from new systems and software to the way the distribution centers have been reorganized for maximum product-picking efficiency. As much as he believes that such measures help set his company apart from other distributors, however, he is also the first to point out that the steps Marjack took were not optional. Without the investments and upgrades, the company could not have kept pace with its current customers — and attracted new ones. What’s more, Coopersmith contends that unless other distributors opt for similar investments that allow candy to make its way seamlessly to the shelves of alternate-channel retail outlets, these retailers may not take the trouble to stock the sweet stuff.
“If the candy category does not have the support system in place for retailers to carry these products, they [alternate-channel retailers] are going to say, ‘It’s too costly, it’s too inefficient,’” he claims. “‘We’ll put something else on the front-end; we’re not going to deal with confections.’ We really believe that what we’ve put together is a requirement for this industry,” he concludes. n
The marjack story
A visit to Marjack’s corporate headquarters in Landover, Md., begins in an airy, two-story foyer decorated with oversize movie posters. The posters celebrate Marjack’s roots as a local distributor of concessions for movie theaters. In fact, the company still supplies popcorn, candy, paper products and cleaning supplies to a long list of entertainment industry clients including Regal Cinemas and the Hollywood Video chain.
Several years ago, however, it became apparent to Marjack President/CEO Warren Coopersmith that the company his father founded in 1946 had reached a do-or-die point in its history. Some of Marjack’s movie theater customers had financial challenges, and others were expanding and required distributors with broader geographic coverage and more sophisticated services.
"Our customers told us, ‘We’re growing, so either grow with us or stand aside, because we can't deal with mom-and-pop/small players,’’’ says Coopersmith.
Coopersmith opted for growth and began the process of staffing up. He also began eyeing potential opportunities servicing the fast-growing specialty retail sector. Robert Mayn, now Marjack’s executive vice president/chief operating officer, joined the company in 1998. Later additions to the team included sales and marketing vice president Neil Cooper; Pam Paladino, director of human resources; and Jim Mischke, director of information technology.
Many of the company’s managers have resumes that include positions with Fortune 500 corporations. Cooper, for example, held sales posts with General Foods, Clorox and Perrier. Director of operations Terry Scott joined Marjack a year ago after 24 years at General Motors, and logistics manager Sandy Hoffman came from Coca-Cola.
Whatever their backgrounds or current roles, members of the Marjack team share a goal-oriented, can-do mindset.
“You can spend as much time as you want here or at any branch,” says HR director Paladino, “and two things I promise you will never hear are, ‘That’s not my job’ and ‘That’s not how we do it here.’ Our culture is that we’re all on the same team, and we do all kinds of crazy things to service our customers, and we expect every one of our employees to jump in and help.”
Sweet Support for the Troops
One of Marjack’s proudest projects has nothing to do with supplying retailers, although candy certainly is involved.
About a year and a half ago, President/CEO Warren Coopersmith put the word out to vendors that he wanted to organize a benefit program for soldiers who had sustained injuries in the Iraq conflict and were undergoing treatment at the nearby Walter Reed hospital. The response was gratifying.
“The industry has been phenomenally supportive,” says Coopersmith. In addition to cases and cases of candy, contributions include movie passes and movie DVDs. Every month Warren and his wife, Kate, make a trip to Walter Reed to make sure that the returning soldiers have something to smile about.