by James Dudlicek
Quality Chekd continues to provide its members with a recipe for success in the dairy industry.
with the use of a common trademark and has become much more. Moving into
its seventh decade, Quality Chekd Dairies Inc. continues to provide volume
purchasing, quality assurance and marketing services to scores of regional
and independent dairy processors throughout the United States and Latin
Created to help smaller operators hold their own
against the biggest players in the post-World War II era, Quality Chekd
(QC) has evolved into an organization that helps its members take on an
ever-dynamic market: rising costs of ingredients and fuel, an increased
focus on food safety issues, the changing appetites and nutritional demands
of consumers across the country.
“The number-one thing in my mind has always been
that Quality Chekd represents a formula for success,” says Peter
Horvath, managing director of the Naperville, Ill.-based company.
“The one common element we see in the membership is the focus on
quality and food safety, and the trademark, and how that all ties together.
And you can truly see the companies that have embraced that process, when
that process becomes part of their culture, how successful those companies
Most visible to consumers familiar with QC is the logo,
a red check mark inside a blue letter Q serving as a signal that the
product contained in the package meets or surpasses some of the highest
quality standards in the industry.
“One of the things about our trademark
— and we’ve done a lot of research on it — is that people
will recognize it as being something of very high quality,” says Tom
Bruce, QC membership development director. “All of our research has
come through as saying it’s something that differentiates us from
other products in the dairy case.”
While QC markets some products under its own brand, the
logo is more of a stamp of approval of the member’s brand, explains
Molly Murphy, marketing and sales director. “It’s an
endorsement of the local dairy brand that represents they’ve reached
our standards for quality and food safety,” she says.
But as the industry has changed, so has QC, and the
organization has constantly updated its services to provide members with an
invaluable support system. Pooled resources — financial as well as
intellectual — have given members a leg up in tackling the challenges
facing all dairy companies doing business today.
“Regarding new revenue opportunities, QCS
Purchasing [see sidebar, “Golden Savings”] was the first step
for us to start identifying a new future for how we generate revenue and
bring new members into the organization,” Horvath says. “We are
basically a not-for-profit organization. We run on a zero-sum budget. Our
objective is to break even against operational expenses. Traditionally, we
have sent cash dividends back to our members, year in and year out, based
on their participation in the program. This is in addition to purchasing
dividends they may receive.”
While packaging materials, ingredients and equipment
are among the most common purchases for which QC helps its members, the
past year has brought another challenge to doing business: the
upward-spiraling cost of gasoline. “To address that, through our
purchasing alliance, we are coming up with a couple of fuel program
alternatives to help members contain these costs,” Horvath says.
“That’s another way in which we’ve tried to help our
members stay ahead of the curve.”
QCS Purchasing LLC is “one of the largest
purchasing networks that I’m aware of in the food industry,”
Horvath says of the entity that encompasses some $370 million in purchasing
power. “We cover everything from refrigeration to packaging to
ingredients. Over the years, we’ve established very good
relationships with our vendor partners. They are frequently a key source of
ideas for new products, packaging designs and retail opportunities, so we
rely very heavily on them. Since forming this new partnership, we have
increased dividends exponentially while cutting operating costs in half. It
was win-win for everybody.”
Meanwhile, as the cost of doing business is going up
industry-wide, QC recognizes the need by its members to shore up revenues
by helping boost consumption of beverage milk, which is flat or ebbing
despite campaigns like “got milk?” and a growing body of
evidence supporting milk as a boon to good health.
“When milk consumption remains flat, it is
probably a good year for us,” Bruce says. “We constantly have
to be thinking about new ways to gain revenues, just because there’s
not as many opportunities in white milk as there once was.”
Facing stiff competition from the entire beverage
industry means looking more closely at niche markets into which dairy
processors can easily fit, Murphy says. “To compete in the milk
industry as we know it, there are opportunities to branch off and create
some new opportunities, such as natural foods,” she says. “The
milk industry has been beating its head against soy; instead, we can join
them. If they’re taking our shelf space, we might as well compete
with the theft. I think the new school milk program has opened our eyes,
that [kids] definitely are consumers. We can’t rest on our laurels
that the schools have to buy milk because that’s what’s
mandated. So I think there’s selling opportunities, flavor
opportunities to help us compete with what’s been the standard in the
Horvath says that means expanding beyond the high
volume-competitive price mentality that has dominated processors for such a
long time. “What we’re starting to see from many of our owners
is a shift in terms of how they view their selling opportunities. The high
volume-low price model is still there, but even these companies see new
niche opportunities,” he says. “When you’re looking at
niches in a marketplace of 280 million people, it’s a substantial
opportunity, compared to some other countries across the world where you
may have 20 or 30 million people in any given market. So to say
‘niche,’ you have to put it in perspective. I think there are
some very good opportunities out there; it just takes a different
The independent nature of most QC members makes them
flexible enough to handle such changes, Murphy adds. “Being small
enough, it’s easy to switch and make those adjustments,” she
says, “versus a major corporation, where you have to go through a
little more to get creative.”
As far as school milk is concerned, QC isn’t
taking sides in the paper-versus-plastic debate, suggesting that marketing
and flavor offerings also play a role in boosting youth consumption.
“You take the alternatives to the schools and let the schools
decide,” Murphy says. “As we understand it, some regions are
willing to pay a price variation and some are not.”
Horvath elaborates on the regional nature of the issue.
“One of our members would tell you, everything sounded great when
they were bidding out plastic until they got to the school lunch director
and said it’s going to cost 3 or 4 cents more per unit,” he
says. “The school lunch director is saying, ‘The kids get the
same nutritional value out of that 8 ounces of fluid milk, why would I pay
4 cents more for different packaging?’”
The business model under which the organization
operates today has evolved over 60 years, starting with the common use of a
trademark. “That is still the predominant service and value that the
members join Quality Chekd for,” Horvath says. “Quality food
safety was a direct result of the national exposure of a trademark. The
company was trying to maintain standards within the production environment
for the common use of the trademark across the country by a number of
QC added pooled purchasing services in the 1960s, then
technical and management training in the ’90s. “So basically
the model we operate under is based on a ‘one shoe fits all’
philosophy,” Horvath explains. “What we’re starting to do
now is look at that and redefine the value in these services, trying to
anticipate what future needs are going to be and adapting the organization
to meet those challenges.”
The services are constantly evolving, Murphy says.
“We’re all out in the field and listening to what the members
are saying,” she says, “and based on what we’re hearing
them say, we try to complement and add service or value to what
they’re telling us they need.”
Professional services also include distribution,
marketing and planning, notes Steve Drabek, human resource and training
QC’s mission statement, Horvath stresses,
“clearly identifies our goal is to assist each and every member in
helping them to grow their business. And that’s truly what we try to
focus on when we look at how we are evolving our services.”
QC also helps members adapt to new technology as it
becomes available. “We’ve partnered up with a number of
companies on new technology — handhelds, computer programs,
onboard-type systems, fleet designs — that help improve efficiency of
their routing systems, and help reduce costs like the increase in
fuel,” Drabek explains. “This is becoming one of those critical
areas. We also go in and work with them on their routing programs and help
redesign them, looking not only at their branches but the overall routing
Further, QC assists members with human resource issues
as well, Drabek notes. “That’s one of their biggest
challenges,” he says, echoing a sentiment expressed by numerous
processors, “finding and retaining good people.”
The ‘Q’ in QC
Quality Chekd’s quality and food safety
department draws on a combined 60-plus years of experience in the dairy
industry. “Sixty to 70 percent of our time is spent out with each of
the members,” says Dan Stockwell, quality and food safety director.
“We get to all members at least once a year, spending from two days
to a week. We are pairs of eyes that have seen a lot of things in the past
and can help them with their problems. If they have quality problems, we
troubleshoot and bring our expertise to help define those problems and
Sharing ideas among member plants is key, Stockwell
says. “With our broad exposure to the plants, we carry that
information with us. Just recently I was at one of our members in Mexico,
and I observed two excellent best practices that I don’t think
we’ve ever seen here in the states, and those will be shared,”
he says. “We also focus heavily on the regulatory end of the
business. We are well represented, by Dennis Gaalswyk, director of
operations and regulatory, on a number of task forces with IDFA and other
organizations. With the changing environment on, for example, the GMP
modernization that FDA is focusing on, the biosecurity legislation, the
allergen labeling that’s effective the first of the year … we
are able to keep [members] abreast of what’s happening in those
Quality programs are front and center, for which QC has
a longtime partnership with Homewood, Ill.-based Silliker Inc. to ensure
members meet QC standards. “Members send samples to Silliker
labs every month. This is our barometer to see where members need help and
if they’re meeting our standards,” Stockwell says. “We
have used Silliker for the last 20 years to manage this program. We have
recently enhanced that program and have given Silliker more ownership
within that activity. We are now in a situation where the results our
members receive are in real time; they will be available online.”
Training programs include numerous on-site and
regional technical training. “The unique thing we have is, with our
experience, we focus solely on those things that a dairy can relate to
— dairy-specific issues,” Stockwell explains. “An example
would be HACCP; our sole focus is on those points a dairy needs to
QC’s quality team, including its outside
partners, also works with members to help them reduce waste, resolve
shrinkage issues and make recommendations on other ways to help their
bottom line. “Our function is to get out there and protect the
trademark,” Stockwell says. “The trademark is our
To Market, To Market
QC members who meet the association’s standards
earn the right for their own branded products to carry the QC trademark.
But the group also offers some QC-branded products, manufactured by select
members and available nationally.
“The signature [product] is any brand
that’s out there that bears the Quality Chekd trademark. They have to
earn the right to wear that mark. It’s the preeminent quality
approval in the dairy industry,” Murphy says. “Along with that,
we have products that carry just the Quality Chekd brand, because of
economies of scale in manufacturing. That may be butter, whipping cream,
etc., products that require special processor manufacturing.”
In the “if you can’t beat ‘em, join
‘em” department, QC this past year launched a soy beverage in
two flavors. “We did the package design; we worked with a company on
the formulation based on our members’ requests. We’re also
working on some other flavored beverage alternatives to launch,”
Murphy says. “We develop four ice cream flavors every calendar year
with radio spots and point of sale [marketing] to support that, and members
can use those flavors based on whether their market is a target for those
Overall, QC’s role is one of a consultant for
members who would be hard-pressed to conduct its own costly market
research. “We buy [market research] information, something the
dairies don’t need to do. Liz [Dorn, marketing and training manager]
works with them in manipulating that information to use it as a valuable
sales tool with consumers and retailers,” Murphy says. “We try
to spot trends and tell them what’s going on in the industry, because
we travel coast to coast. We see a lot of things in the stores, and we make
recommendations and suggestions, and challenge some of the things
they’re doing out there, to make sure they’re competing to the
best of their ability.”
In addition, members have access to stock package
designs, a photo library to incorporate images into their own designs and
stock formulations. “We have what we call the QC Toolbox, which is
trend information that goes out on a quarterly basis; it’s also on
the Web site,” Murphy says. “If members want to know the latest
information for ice cream flavors to what’s happening with dollar
stores, they don’t have to do the research — it’s a quick
and easy way for them to get updated. And we have two Web sites; one is a
public area and one is for members only, where they can get lab reports,
information on meetings and all the proprietary information about Quality
Murphy also works with some members on annual
marketing plans. “We can go to their facilities as an outside ear and
help them, whether it’s strategic planning or marketing plans,”
she says. “We’re kind of an independent ear that will make
recommendations, suggestions and observations about what we see, and
hopefully they can evolve and create some change.”
That said, is it a concern that some QC member
companies are competing against each other in common marketing areas?
“Obviously the trademark is a nationally
recognized trademark used by 22 companies. There is some overlap in the
distribution and market areas, so you can say there is some competition
between members in that regard,” Horvath says. “These are all
independent companies. As technology allows them to broaden their
distribution range — that’s happening more and more — so
is the competitive nature of the group. They’re all out there
fighting for increased share of market, increased share of stomach in an
What areas does QC’s leadership see as crucial to
growth of the association and its members? They lie beyond the business
model that has served the group well for more than six decades.
“We’re not relying on that as much as we
have in the past because obviously with a consolidated market and the way
that Quality Chekd has been operating as an organization, those
opportunities have become fewer and farther between,” Horvath says.
“So we are adapting how we go to market or how we service the
membership. We’re just now in the middle of that evolution. We
started with QCS Purchasing — that was a major change for our
company; it brought tremendous value to the members, both in better buying
and reduced overhead cost.
“The other side is trying to find other ways to
leverage the skills that we have in the organization. These skills are
still very relevant in the market. It’s just a matter of how you
apply those skills in a business sense — flexible services and
business opportunities, more so than we’ve ever had.”
Bruce says QC must grow to include more services that
“appeal to a broader base of people in our business.”
Horvath adds: “And look at ourselves almost in
the sense of being independent consultants and trying to maintain that kind
of approach where the value is basically determined by the use of the
service. If there’s a demand for it, the service will thrive, and if
there’s no demand for it, then we probably need to shift
Murphy says opportunities abound in the changing
marketplace. “There’s more competition,” she says,
“so how do we — as a group — compete better, more
effectively and smarter?”
Many smaller independent companies continue to look
toward national resources to take on challenges, Horvath says. “Latin
America is another opportunity we’ve continued to develop,” he
says. “We have seen the membership there grow considerably, and a lot
of that is predicated on what we do in terms of quality and technical
consultation. Being a U.S.-based organization is very highly regarded in
those markets in terms of our levels of advanced expertise in dairy
Among the technology that Horvath sees playing a larger
role in QC’s future is extended shelf life (ESL) processing.
“It has been on the market for some time, but we just launched a soy
product, and rather than have each dairy produce it in HTST with short
shelf-life codes, we went to one of our members who was able to pack the
product in ESL,” he says. “We then help them distribute it to a
number of independent dairy companies, so there’s economies of scale
QC also needs to help its members leverage their
experience in fresh distribution as a competitive advantage. “They
run these trucks six or seven days a week and are running by all kinds of
retail opportunities,” Horvath says. “So, it’s not just a
matter of them taking their white milk products but to find other products
they can mix in because of the refrigeration expertise they
What will QC look like five years from now? “With
the evolution of the marketplace and our membership base, it’s
created new opportunities for us that we may not have had in place 10 or 15
years ago,” Horvath says. “One of the key success elements in
our evolution is going to be the flexibility of how we adapt to these
changes, in terms of the services, how we apply the services and how we
view membership. Our board of directors is currently considering new
opportunities to help us identify what we need to do in order to continue
to create value. It’s been a change that has been going on here for a
few years. So we do expect to see a broader line of services, services that
may look a little different in the future than they do today, but really
driven more by what the marketplace has dictated and by what the membership
is asking of us.”
The QC management team offers many ideas on what makes
their organization unique to the dairy industry.
“One of the strengths Quality Chekd has is a
well-defined process for an awards and recognition program that ties back
to all these standards and practices that we’ve established,”
Stockwell says. “This has been an intense quality driver for our
membership because it is quite an achievement when those standards have
QC excels by providing members with “support
that’s very specific to them,” Drabek offers. That comes from a
pooling of vast resources, as Horvath outlines in detail.
“We are a community in which we create many
opportunities during the course of a year for learning and
improvement,” he says. “Each one of our departments has one to
two committee meetings each year. We do regional workshops. We do local
on-site workshops. We have a training department that spends, on average,
up to 85 percent of its time in the field for learning and improvement
opportunities. Finally, we have two major member and vendor partner
meetings each year, which are also heavily focused on learning, improvement
Ultimately, it comes down to a wealth of industry
expertise. “All of us come from backgrounds with various experiences
in the dairy market or in markets that have fed into dairy,” Horvath
says. “We also have outside resources that are committed to the dairy
industry that we frequently bring in to help the members. These are the
things that truly differentiate Quality Chekd and make us unique as an
And it’s a team effort, Murphy stresses.
“It’s integrating our philosophy, which focuses on the
trademark, which represents quality and food safety,” she says.
“When members commit to the Quality Chekd process and incorporate the
guidelines, the results are phenomenal.” m
An Idea Whose Time Had Come
Quality Chekd was created to take on the post-WWII
II’s strict rationing of milk, cream, butterfat and sugar meant ice
cream and dairy plants were able to sell all the products they were able to
manufacture with these ingredients in such short supply.
Looking ahead to peacetime, the big three dairy
processors of that era — Sealtest, Borden and Meadow Gold —
prepared their own aggressive merchandising campaigns to seize their shares
of the postwar market. Facing this strong competition were smaller,
independent processors not equipped to forge similar plans on their own.
So, five of these smaller manufacturers set out to
create a strategy. Ultimately, they hired a Chicago advertising agency to
create a program that included a common trademark to be used with each
company’s established name, a carton design and a year’s
Thus Quality Chekd was born in October 1944 with 21
charter members; the group held its first general membership meeting in
Chicago in April 1945. It was the first time a group of independently owned
dairy companies had voluntarily formed themselves into a cooperative group
with a national trade name and a professionally planned program.
The number of members increased consistently each year
from 1944 to 1955, when the total reached 156. While the number of members
dropped after 1955, total member sales volume continued to increase each
year beyond, even as the dairy industry entered the era of mergers and
consolidations. The 21 charter members had sales volume of $15 million in
1944; total member sales volume surpassed $242 million by 1965; approached
$3 billion by 1994, Quality Chekd’s 50th anniversary; and reached $4 billion in 2005.
Quality Chekd’s first headquarters was a cubicle
in a Cincinnati office building, then moved to Chicago and eventually to
the suburb of LaGrange, Ill., in 1955. After a stretch in nearby Hinsdale,
the company finally settled in Naperville in 1987.
While adapting to a changing economic and consumer
climate, the Quality Chekd mission remains constant: to help make its
members more competitive through strategic purchasing, unified marketing,
human resource guidance, training and unsurpassed product testing and
SOURCE: Quality Chekd: An Idea Whose Time Has Come,
QC members are located across the Western
Quality Chekd members from
across the United States and Latin America represent some of the best
dairies in the marketplace. These companies encompass more than 60
facilities that generate $4 billion annually in sales of milk, ice cream,
juice, cultured products and other dairy food items.
Las Vegas, Nev.
Creamland Dairies Inc.
Curly’s Dairy Inc.
Dairy Rich Ice Cream Co.
Deluxe Ice Cream Co.
Eberhard’s Dairy Products
Galliker Dairy Co.
(including Potomac Farms, Cumberland, Md.)
Gandy’s Dairy Products Inc.
Hiland Dairy Foods Co.
Hiland-Roberts Ice Cream Co.
Hilmar Cheese Co. Inc.
Junction City, Ore.
North Aurora, Ill.
Oregon Ice Cream Co.
Producers Dairy Foods Inc.
Roberts Dairy Co.
Sinton Dairy Foods Co.
Colorado Springs, Colo.
Smith Dairy Products Co.
(includes Smith Dairy-Wayne Division, Richmond, Ind.)
Sunshine Dairy Foods Co.
Superior Dairy Inc.
Super Store Industries
Umpqua Dairy Products Co.
United Dairy Inc.
Niagara Falls, N.Y.
Western Quality Foods
Cedar City, Utah
Bogota, Colombia, South America
Empresas Lacteas Foremost, S.A. de C.V.
San Salvador, El Salvador, Central America
Gomez Palacio Dgo., Mexico
San Nicholás de los Garza, Mexico
Manantiales de Tehuácan S.A. de C.V.
Bosques de las Lomas, Mexico
Santa Clara Productas Lacteas S.A. de C.V.
Pachua Hgo., Mexico
Quality Chekd Awards
At its annual spring
management and leadership conference, Quality Chekd (QC) honors member
companies for accomplishments in marketing, production and overall
company achievements with the following awards:
Harlie F. Zimmerman Award
This award recognizes the QC member dairy that creates
and executes the best overall marketing plan and promotional materials to
enhance brand awareness and get results. Harlie F. Zimmerman was QC’s
managing director from 1949 to 1980.
Wayne Gingrich Award
This award recognizes the single best production plant
within the organization. It highlights superior performance in finished
product quality, plant operations and quality systems. Wayne Gingrich
joined QC in 1955 and was its first quality and production director. He
remained with the organization until 1980.
Irving B. Weber Award
Patterned after the Malcolm Baldrige National Quality
Award, the Weber Award recognizes the best overall company achievements in
manufacturing excellence, customer satisfaction, management leadership and
highest product quality. Member companies are invited to apply after having
met Production Merit of Excellence Award levels. Irving B. Weber was a
co-founder of QC and served as president of its board for 25 years during
his half century of involvement with the organization.
New purchasing alliance brings even greater benefits
to Quality Chekd members.
QCS Purchasing LLC was
formed on January 1, 2005, when Quality Chekd (QC) and Florida-based SECO
& Golden 100 fully integrated their purchasing units in a move aimed at
bringing member dairy companies more buying power and purchasing benefits.
Based in Deland, Fla., QCS’ creation formalized a
joint venture that began in 2001 to benefit both organizations’
member companies. Since the consolidation, QCS has taken its cooperative
purchasing programs to a new level by bringing together a wealth of
resources from which the membership can choose to create value-based
packages tailored to their specific needs.
Members can create customized benefit programs from
expanded services including new volume purchasing discounts, marketing and
sales programs, quality and food safety technical training, management
performance seminars and human resource services, import/export network
opportunities and strategic partnerships with Quality Milk and Silliker
The partners continue to explore new cost-saving
opportunities and evaluate the array of purchasing programs and resources
to bring added value to members. QCS programs continue to provide reduced
costs in packaging, commodities, ingredients, chemicals and other valuable
offerings crucial to dairy and agricultural businesses.
“Our combined membership has already begun to see
immediate cost efficiencies, while our suppliers are benefiting from one
face, one single point of contact,” says Ron Edmundson, SECO &
Golden 100 president and chief executive officer, and president of QCS.
SECO & Golden 100 Inc. is a member-owned purchasing
cooperative formed in 1945 by a group of southeastern dairy producers and
processors who sought to improve their bargaining power by combining and
leveraging their purchase requirements. Today, the membership of 37
companies comprises a select group of ag-based co-ops and proprietary
companies involved in the production of food and dairy products.
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