Ten years after gaining 100 percent ownership of the Solon-based Anderson-DuBose Co., Warren Anderson compares his position as president and CEO to that of a politician.
“It’s one thing to buy a business. It’s a completely different story to manage it and to keep it operating effectively,” he says. “Maintaining health care costs or trying to control them, insurance issues, legal issues, tragedies — it’s like having bits of society.”
The Anderson-DuBose Co. is one of the largest black-owned companies in the United States, supplying Happy Meal toys, paper and dairy products, produce, and frozen meat and fish to nearly 300 McDonald’s restaurants in Northeast Ohio and parts of Pennsylvania and West Virginia.
Anderson looks at his 100 employees — the majority of them male, blue collar and their family’s primary breadwinner — as the key to his company’s success, and he hires “good people, keeping them motivated, empowering them and setting clear strategies to achieve our business objectives.”
Smart Business spoke with Anderson about running a business efficiently, how consumer demand affects his business and the joy of receiving the U.S. Department of Commerce’s National Minority Male Entrepreneur of the Year award.
How do you keep your company running efficiently?
Good management practices and having accountability in being able to measure just about every aspect of our operation so that we know what’s working, what’s not. Someone said if you can’t measure it, you can’t judge your performance. So we have all kinds of benchmarks and measurement tools that allow the management team to know if they’re operating efficiently.
My business is pretty simple. We’re buying cases of product, bringing them in, storing them and then palletizing them and shipping them out to individual stores. So I look at the cases and the labor that it costs to move those cases to my customer.
I know what it should cost for me to get a case in this building and what it should cost to get it out, and I’m always looking for ways to challenge ourselves to make those numbers shrink.
For example, we have a field service manager, and … our dairy provider also has a field service person going to the same restaurants. We got together and decided we could share a field service person, so now when my person’s going to the McDonald’s franchisees, she wears a distribution hat and, at the same time, she can wear a dairy hat — and we’re splitting the cost of that person.
That’s one little snapshot of how you can get same amount of service but get it for at least 50 percent less, in my case. So it’s a win for the customer and it’s a win for both companies.
What was your biggest challenge with your partnership with the McDonald’s distributor in South Africa, and why did you sell it?
It was supposed to be a bigger market than it turned out to be. McDonald’s was estimating that they could potentially put up to 600 stores there. They got to about 100, and growth slowed significantly. I had built infrastructure to accommodate 600 stores, so it was overbuilt.
As a result, my expense structure was high for that market. I had management there but I had a considerable amount of general and administrative costs required to run it, (and) I found my pricing structure ultimately was not going to be beneficial for the operators there because of my added costs. So I ended up selling it to my management team there, primarily to help reduce cost.
It was a wonderful experience (but) I would think long and hard (about) a company my size doing something like that again, primarily because of the physical wear and tear in trying to manage a business overseas, the exposure to currency fluctuations and now with the added complexity of having to worry about terrorist actions around the globe.
How has consumer demand for healthier fast food affected your company’s products?
The salad program that McDonald’s launched recently is doing very well. Before, I think parents would take their children to McDonald’s for Happy Meals, and then they might go somewhere else (to buy their own meal.)
With some of the healthier fare, parents now are still taking the kids to McDonald’s, but instead of the adults buying their food elsewhere, they’re increasingly buying their meals at McDonald’s. They’re very much responsive to consumer demands that fast food be healthier. Our refrigerated space is being challenged, so I’m looking at probably (adding 2,000 square feet to) our 5,000-square-foot cooler to accommodate a larger line of refrigerated products within the next 12 months.
What other initiatives are you working on?
I’m looking at engineered work standards. (We’re bringing) in an industrial specialist who measures the work within our warehouse. They calculate how much time is needed to perform certain functions from an engineering standpoint.
We have a union in the warehouse. You have to sit down and agree that there is a standard that all the warehousemen are expected to achieve, and if not, then there are ramifications in terms of discipline. We’re getting bids from different companies. A lot of it will be dependent upon whether it’s something that can be negotiated within my current union contract or something that we have to explore in 2007 when my contract is up.
I just installed a new Oracle computer operating system. I’m looking at putting in some voice picking system. Right now we pick our products by labels. There are a couple of systems where the cases are bar coded, and the cases are recognized by a verbal computer system.
We’re also possibly looking at moving after five years. There are two markets near me. One is where there are neighboring distributors. There’s one in Rochester, one in Pittsburgh and one in Toledo, and it might make sense for me to consolidate with one of those neighboring distributors. Those studies are being done right now (to determine) if we can squeeze some efficiencies out by getting rid of duplication of overhead.
What does receiving the U.S. Department of Commerce’s National Minority Male Entrepreneur of the Year award in 2002 represent to you?
That (award) would probably be the closest thing to winning an Academy Award because the Department of Commerce comes in, looks at your business practices, talks to employees and takes a holistic approach of evaluating your business. (It’s) one of the highlights of running my business because it says that, compared to any number of other very good companies, we were recognized as the best in the country for minority-owned business, so it was a great honor.
I don’t think I’m eligible to win again, but my goal would be to get another one.
HOW TO REACH:
The Anderson-DuBose Co., (440) 248-8800
