Dollars in Distribution

In class this past week we discussed how the impact of the distribution channel can impact the grocery store industry.  It was interesting to learn that a majority of the groceries that are placed in stores and restaurants in the area carry food supplied by Sysco, the food distribution company.  Sysco is huge and despite their size, their power comes from their ability to distribute food in mass quantities to their customers.  They are powerful because they manage the distribution channel and can determine the prices they set to customers based on supply and demand requirements.  Giant Eagle is not one of Sysco's clients because they manage and operate their own distributor which orders from Sysco's competitor's and other local food producers.  

Prior to this class, I would not know the significance of owning a distribution channel.  However, shortly after class, I read in the news that Sheetz is debuting a $50 million manufacturing facility located directly next to their distribution center.  The manufacturing facility will produce baked goods, test kitchen, and quality control area among other things.  The purpose of this expansion is to perfect the prepared food sold in their stores.  Furthermore, by creating the goods right next to its distribution center, they will be able to cut out the producer in their supply chain, thus eliminating the extra cost to each product.  Similar to Giant Eagle, Sheetz has realized that the more control the company can have over its supply chain, the more profit will arise.  

Its intriguing to see a dynamic company like Sheetz transform itself from a gas station to a convenience store to a fast food restaurant and now a mini mart.  This company is really tracking the needs of the consumer and trying to capitalize on the shifting demands of the market.  As the new millennium begins and consumer tastes and preferences change rapidly, the companies that are the most flexible in their overall ability to adapt to the market will find the most success.