LAKELAND, Fla.-When the three plant managers at Publix Dairy Manufacturing need to have a face-to-face with product development folks and other management level people, to say, outline an implementation plan for a new product line, only two need to jump on a plane.
Publix Dairy, and its parent Publix Super Markets, is headquartered here, less than an hour from Orlando. Plants are situated in Lakeland, in Deerfield Beach, (not far from Ft. Lauderdale) and in greater Atlanta. In this sense, Publix Dairy is a small organization. But there is nothing small about its scope, and certainly nothing small about its ideas and its accomplishments.
“Dairy is the largest part of our manufacturing division,” says Mike Smith, v.p. of manufacturing at Publix. “And it’s a very important contributor to our retail business. Not only in terms of generating sales and profits, but it also allows Publix (as a retailer) to differentiate our products from those of the competition. The objective for our own products is that they should be as good or better than the targeted comparable brands. We really excel in our R&D efforts.”
There are a number of things that distinguish Publix from its contemporaries. To begin with it’s a captive dairy, owned by a grocery retailer. You may recall, however, that the same can be said about the company we recognized in 2007.
If you look to Publix Super Markets, you’ll find the origin of many of the things that make Publix Dairy unique. Publix is among the 10 largest grocery chains in the U.S., and yet it operates in only five southeastern states. Until a few years ago, it operated only in Florida, and that peninsular state still makes up the core of its market. Publix Super Markets Inc. is employee-owned, and Publix Dairy Manufacturing may be the largest employee-owned captive dairy in the United States.
Publix dairy has gotten approval to conduct fresh milk production runs of more than 36 hours, a unique operating procedure that was born of a desire to produce a more consistent product.
As Smith points out, Publix manufacturing strives to make products that are differentiated both in quality and in price. And they’ve succeeded. In 2007 Publix was recognized for the unique, fresh graphic design approach employed for the packaging of its private label products. In 2007, and again this year, Publix took one of the top prizes in IDFA’s Ice Cream Flavor Contest. The competition, co-sponsored by Dairy Foods magazine, draws entries from the top ice cream makers in the country, including national specialists like Nestle-Dreyer’s, Unilever Ice Cream and Wells’ Dairy.
For all these reasons, Publix has been selected as Dairy Foods’ 2008 Processor of the Year.
Milk on a missionPublix Super Markets is just a little less than 80 years old-rather young compared to some of the other top companies in the food business. But in Florida, a state that was still a relative wilderness a century ago, Publix is part of the old guard. It’s a company that has grown with the state, and become as synonymous with Florida as alligators, orange blossoms, and Jimmy Buffet music. It wasn’t until 1991 before Publix built its first store across the state line in Savannah, Ga.
Dairy manufacturing is even younger, having started in 1980 in Lakeland. Company founder George Jenkins was on hand to start the first milk production run. In the 28 years since, the dairy operations have grown hand-in-hand with the retail operation (see timeline below.).
“Our strategy is to grow to be able to support the needs of our retail business. Not necessarily to grow in size and scale simply for the idea of seeing how big we can get,” Smith says. “Our intentions are to be aligned very closely with the company strategy. We invest a lot of effort making sure manufacturing supports well the overall Publix direction for Publix brand products and determining which items we should produce to serve the customer better.”
The three dairy facilities now employ more than 550 associates and produce a wide array of products including milk, juice and other beverages, ice cream, ice, cultured products and even carbonated soft drinks.
The product lines, and more importantly, the quality of those employees are what really make Publix dairy excel, says Dairy Manufacturing Director Jay Jaskiewicz.
“Quality people and quality products,” Jaskiewicz says. “We know that is our differentiating factor.”
It’s all a reflection of the Publix mission statement says Mike Melville, who manages the Deerfield Beach Plant.
“We have a mission, and it’s to be premier in our industry. Publix supports our efforts to do just that, probably more so than most companies,” Melville says. “Everybody says their people make the difference, but they really do at Publix because we are all owners of our company. You really have a sense among our associates that we are part of a great thing. In manufacturing we’re no less important than one of the stores.”
Mike Nance, General Mgr. of the Atlanta plant says selection and development of personnel is key.
“When we hire folks we are very selective,” Nance says. “We aren’t really hiring employees. We are hiring someone who will become our business partner. So we look for someone who is willing to grow.
“From day one we bring a new person in and they spend that first day learning a little bit about our culture and our focus on quality and safety. From then on we work on getting that associate to the point where they feel committed to everything that we make.”
Extended runsIn January 2006 Publix Dairy’s Lakeland facility instituted a system for extended production runs of fresh milk. The company spent several months getting regulatory approval for the process by offering documentation proving the shelf life of the product.
Publix Dairy now has approval to operate production runs of up to 44 hours at all three of its facilities.
“Lakeland dairy was the pilot plant and that is now being worked on in all the plants,” Jaskiewicz says.
The theory behind the extended runs is that by reducing the number of start ups during a given period there is a corresponding reduction in waste, and an uptick in consistency. Minimizing waste, by the way, is one of the pillars of the Publix mission statement.
When Dairy Foods visited the Lakeland plant in 2007, the extended run operation was in full swing, with associates operating three production runs a week and one preventive maintenance shift.
Operating fresh milk runs of 36 hours or longer is not standard procedure for most dairies, in fact it is quite the exception to the standard runs of 14 to 20 hours. There is nothing unusual about the process equipment or its pasteurization regimen that Publix employs. What is different is the sanitation processes and the attention to detail and thoroughness therein.
“The whole culture had a shift from one that was production oriented to one that is sanitation oriented. You can’t run a business like this with a weak sanitation program,” Paolillo says. “We increased our run time, but what we had to do to accommodate that is to make sure we put the emphasis on sanitation and preventive maintenance.”
Paolillo says the long production runs lead to higher level of sanitation and a product with a longer shelf life. There is a 10-hour period for cleanup and maintenance between each production shift. Production runs are completed on schedule, and sanitation does not have to be rushed.
The end result is a more efficient process and a better product.
“We all put 20 day code on our milk,” Paolillo says. “Right now Lakeland has exceptional quality on white milk. We believe this is quite an accomplishment and good for the customer.”
Winning lineupSomething else that Publix dairy associates take pride in is the product development savvy demonstrated by the company’s ice cream and cultured product lines. The aforementioned ice cream flavor winners are part of the rotational offerings in the Publix Premium Ice Cream line. Publix recently added a probiotic yogurt called Active to its cultured products lineup. As Smith and others indicate these products are not intended as a cheap store brand for a shopper who is looking for bargain basement price.
So who’s the product innovator? Although she is quick to share the credit with all the associates she works with, the person most intimately involved with the development of these products is Laura Johnson, a 29-year Publix veteran who has served as the dairy research and product development mgr. since 2000.
Johnson and Cindy Bridges make up the full time R&D team for dairy, and they also work in concert with a CQA team.
“It’s very much a team effort here at Publix between the production, marketing and the business areas. It’s very much a shared development process,” Johnson says.
“We try very hard for everyone to be involved and we want everyone to know what’s going on and that it’s a time of idea sharing.”
Ideas for products like Chocolate Cookie Quarry come from all points, Johnson says.
“We get ideas from consumers via email and sometimes phone calls. Sometimes associates in the dairy or from elsewhere in Publix come to us with ideas for an ice cream flavor. We also look at cookbooks and restaurant menus, and the other standard things that food companies do.”
Categories are reviewed on an annual basis at minimum, Johnson says. Ice cream gets the most attention due to its nature as a trend driven category.
“Also because of the limited edition flavor offerings, every trimester we are offering a new flavor for a limited time. We also have flavors tied to the holiday seasons.”
The general managers say they appreciate the inclusive approach to product development, but they also note that Johnson is much more modest than she should be when it comes to discussing the role that she plays in coming up with great products.
“Laura really does a fantastic job,” Nance says. “One of the great things about working at Publix is that the general managers get to participate in the R&D. The R&D people don’t just come up with a product and then just say ‘OK we need you to produce that.’ We all work together in developing and testing products, and that’s huge.”
Paolillo says all facets of Publix Dairy work together toward the same goal-to produce the best products possible.
“We are all consumers too,” he says. “And we ask ourselves ‘is this a product I would want to have in my kitchen?’ And we take that to heart.”
To spin the old adage, the proof is in the ice cream. At this year’s IDFA Ice Cream Technology Conference Publix was the top winner in the most innovative flavor category. The competition drew 12 entries.
“We were honored to be once again recognized in the most innovative category,” Johnson said. “Our winning flavor is called Light Creamy Churned Style Lemon Sugar Cookie. It’s a lemon sugar cookie light ice cream with crunchy lemon cookie crumbs and swirls of vanilla icing.”
In 2007 it was Sticky Buns-a bakery-inspired limited edition flavor with a cinnamon streusel variegate, sticky bun dough and mini praline pecans-that took first place in the category.
Steady, sustainable growthWith 2007 sales of $580 million, Publix Dairy is No. 34 in The Dairy 100, Dairy Foods’ annual ranking of the largest dairy processors in North America. If you were to look back at that list any time over the last 10 years, you would find Publix in exactly that same position, or quite near to it.
As a retailer, Publix has grown steadily from its base in central Florida, never rushing to grab up a wider geographic market through acquisition. Its moves into Georgia, Alabama, Tennessee and South Carolina have been careful and measured (see related story p. 44).
The expansion of manufacturing has been just as deliberate. There are 10 manufacturing facilities overall and eight distribution centers, and these facilities work in concert to supply stores from Nashville to Key West.
“We won’t acquire another manufacturing plant just so that we can offer another product,” Manufacturing V.P. Smith says. “There have been other dairy processors that have been for sale in our area. But if it doesn’t fit with our overall strategy, it’s not a good business decision for us.”
Publix does some contract manufacturing for outside companies, Smith says, but it’s a much smaller part of the division than it might be for some other retail manufacturing operations.
One might label this kind of growth sustainable, and as far as building a more environmentally sustainable business model, Publix Super Markets, and its manufacturing division are at the forefront too.
Stores are now being designed with solar arrays and alternative refrigerant systems. In dairy manufacturing, as with the other manufacturing operations, steps have been taken to drastically reduce BODs in the wastewater streams, and decrease energy consumption with more efficient equipment components.
All three of the dairy plants bottle gallons and half gallons of milk, blowmolding their own bottles. Other product mixes vary. Products are sent from each plant to one of the distribution centers and mixed orders are then pulled and sent to individual stores. Many dairy products reach most stores within 48 hours of leaving the plants.
There are more than 141,000 associates of Publix Super Markets including the more than 550 in dairy manufacturing. Making sure they have a safe place to work is a key priority, Jaskiewicz says.
“Our safety culture is centered around Target Zero, which is the goal of completely preventing accidents,” he says. “We believe that this can be achieved. We spend a lot of time and effort on associate safety.”
To instill a culture of safety, along with a culture of quality, Publix appoints hourly associates as safety (and quality) leaders for a term of six months. That safety leader works with every shift in every department of the given manufacturing plant to help bring all associates up to speed on the latest approaches to safety and on what’s being done within the facility.
Chocolate Cookie QuarryOne of the limited edition flavors in the Publix Premium Ice Cream line, Chocolate Cookie Quarry is a rich chocolate ice cream with a decadent chocolate cookie variegate and pieces of cookie and cream. Some consumers have described it as a chocolate cookies and cream, while others just call it “awesome.”
To be the premier quality food retailer in the world.
To that end it commits to be:
• Passionately focused on Customer Value
• Intolerant of Waste
• Dedicated to the Dignity, Value and Employment Security of Associates
• Devoted to the highest standards of stewardship for Stockholders
• Involved as Responsible Citizens in our Communities
Publix Super Markets Widely Recognized
With its June acquisition of 49 Florida stores from Albertson’s LLC, Publix Super Markets now owns and operates more than 975 supermarkets in the Southeastern United States.
“The demand for the high-quality service our associate owners provide gives us the opportunity to reinvest in these communities by acquiring additional sites for Publix stores,” Publix CEO, Ed Crenshaw, said of the acquisition. “We continue to focus on being the premier food retailer in the areas in which we operate.”
The company is in the process of renovating and reopening those stores.
Publix has come a long way from when George Jenkins, an ambitious former Piggly Wiggly employee founded the company with one store in Winter Haven, Fla., in 1930.
Yet in some of the most important aspects, it has not changed a bit.
Legend has it that Jenkins took the leap into entrepreneurship after being snubbed by an executive with his former employer, he therefore set about to make his company different from the beginning by giving each employee an ownership stake.
In 1940 Jenkins opened Florida’s first supermarket with air conditioning and automatic doors.
By 1955, gross sales had increased to $49 million with earnings of $830,504. In 1956, Publix recorded its first million-dollar profit year. Today the company has annual sales of more than $23 billion. Net earnings for 2007 were $1.2 billion.
Publix was recently ranked No. 7 in the Supermarket News Top 75 North American Food Retailers listing. Publix is included in numerous lists of progressive companies and outstanding employers.
For instance, for the fourth consecutive year, Publix has been honored as one of IDG’s Computerworld, the “Voice of IT Management” top workplaces for information technology (IT) professionals. This honor is part of the weekly IT publication’s 15th annual Best Places to Work in IT survey, published in the June 30 issue of Computerworld and online at www.computerworld.com.
Other Publix honors and recognition include:
• Ranked No. 20 on the Reputation Institute’s Global Pulse U.S. list of The Most Respected Companies in the United States (2008)
• One of the top 10 Companies That Treat You Right in a poll conducted by MSN Money-Zogby (2008)
• Ranked as one of BusinessWeek magazine’s list of the top 25 Customer Service Champs (2006-2007)
• One of the top 10 companies in Forbes list of the largest private companies (2005-2006)
Publix has been recognized for a cutting edge approach to marketing its private label products, and other aspects of retailing. Recently it responded to the rising prices of food commodities with the Publix Essentials program that offers lower prices on certain key products including milk. Publix also offers savings tips to consumers and recently expanded country of origin labels to many more products.
Among the community organizations Publix has partnered with are Special Olympics, United Way, March of Dimes, Children’s Miracle Network, and Food For All.
Introduced in 2007, Publix Active Yogurts are a probiotic functional yogurt designed to promote immunity and aid digestion. They contain Lactobacillus acidophilus, Bifidobacteria (BB-12), and Lactobacillus casei probiotic cultures. Active comes in four-ounce cups in Peach, Strawberry and Vanilla flavors.
Publix Dairy Fast Facts
Facilities: Lakeland Fla., Deerfield Beach, Fla., Lawrenceville, Ga.
Associates: About 550
Products: Milk, flavored milk, eggnog, orange juice, grapefruit juice, fruit drinks, lemonade, packaged ice, drinking and spring water, carbonated beverages, ice cream, and cultured products such as yogurt, sour cream, and cottage cheese.
2007 Sales: $580 million