Altria and woman-owned DSC Logistics
work together on common goals amid vast change
reprinted Women's Enterprise USA Vol. 2, 2011, Suzanne Squyres

Regardless of the industry, the bond between virtually any large organization and its business suppliers can be strengthened by cooperation, communication and alignment. That’s the case with Altria Group Inc., a Fortune 500 company in Richmond, VA., and DSC Logistics, a woman –owned business in Des Plaines, Ill., that has supplied the Altria family of companies with services for more than 30 years.

DSC Logistics and Altria began their current working relationship in the early 1990s when Philip Morris USA Inc., now an Altria subsidiary, underwent an important operational change. Previously, PM USA shipped directly from its manufacturing centers to multiple wholesale distributors and public warehouses, one of which was owned by DSC Logistics.

The change consolidated Virginia, Kentucky and North Carolina distribution to be handled through a primary, bonded, mega-logistics center operated by DSC. From that center, DSC associates shipped products directly to public warehouses and distributors across the United States.

This new strategy allowed PM USA to capitalize on inventory management improvements, efficient use of transportation, reduction in assets and processes for the control and movement of its products.

“Our relationship with DSC has only strengthened over the years,” said Arlene Hallatt, director of logistics and inventory management, Altria Group Distribution Co. “When challenges arise, we face them – and solve them – altogether.”

Deep roots
In the 1960’s PM USA and DSC worked together on a short-term project, and again in the 1980’s when DSC (then Dry Storage Corp.) provided public warehouse space to PM USA. Initially, DSC offered warehousing services in Chicago and nearby Des Plaines. As DSC’s network grew, the company provided storage for Altria’s tobacco products in New Orleans, Memphis, Atlanta and Richmond.

All the while, DSC associates gained valuable insight and expertise in tobacco distribution and methods of maintaining quality, precision and security.

As PM USA’s needs – and the complexity of the operation – continued to grow, the DSC team managed increasing requirements for space and staffing.

When Ann Drake became CEO of DSC Logistics in 19994, taking on leadership responsibilities for the company launched by her father, Jim McIlrath, in 1960, she instituted vast changes within the company’s culture and structure. She placed a new emphasis on integrated logistics operations and brought all 22 of the company’s acquisitions and 2,200 employees under the central DSC Logistics brand.

The relationship between DSC and PM USA steadily gained momentum. After a rigorous bidding process in 1996, DSC became PM USA’s primary supply-chain provider. Soon, DSC’s logistics center in Virginia was up and running along with a second facility in North Carolina. The two operations continued until the late 2000s, when the PM USA manufacturing center in North Carolina closed. As a result, DSC’s logistics center also closed. Today, all logistical operations are handled through the DSC location in Virginia.

Despite these major changes, the two organizations experienced a smooth transition, as they worked closely to create alignment for transparency – especially concerning costs, service and performance metrics. As a result, DSC Logistics and Altria extended their contract.

In 2008, when Altria presented DSC with its first Supplier Achievement Award in the area of customer service and merchandising, Gary Schmidt, Altria senior director of sales logistics and inventory planning, said, “If I had to describe the DSC workforce with one word, it would have to be ‘proactive.’ You are constantly thinking ahead and developing plans for us. In my experience, that’s the reason you’ve achieved world-class standards so consistently for 10 straight years.”

Drake said she is grateful, and the experience with Altria and its company has helped DSC gain scale and indispensable knowledge. In addition to learning Six Sigma, a systematic method for improving operations and performance, Drake said DSC has introduced internal measures to stay abreast of changes in federal regulations concerning tobacco products.
Throughout immense shifts, the companies have created disaster-recovery plans to handle emergencies and major security enhancements to ensure the safety of tobacco products. The organizations instituted a shipper load-and-count system to keep damaged cartons to a minimum.

Drake added that DSC is also helping to integrate Altria’s latest acquisitions, U.S. Smokeless Tobacco Co., and cigar and pipe tobacco manufacturer John Middleton Co., into the supply chain.

“The strength of the [relationship] is based on being able to agree on standards and meet them, “Drake explained. “We work well together because we share the same goals. As Altria and its companies navigate change on many fronts, we remain flexible. It’s in our best interest to see them continue to succeed.”

Mutual benefits
DSC Logistics also helps to further diversify Altria’s supply chain program. Altria has a long-standing diversity program, according to Connie Smith, who leads the company’s supplier diversity development. She added that the firm values diversity among both its employees and suppliers. Over the years, Altria and its companies have benefited from a ‘wide array of ideas, experiences and the entrepreneurial enthusiasm that diverse suppliers bring to the table,” Smith said.

“We can’t maintain our success without the participation of outstanding suppliers like DSC,” she continued. “They are critical to our survival. DSC is one of our top five women business enterprise organizations, and we would like to think that we have helped make it better company. The stronger DSC Logistics is, the better we can do our job.”

Drake was unintentionally slow to have DSC Logistics certified as a woman-owned enterprise. “I just wasn’t aware of WBE certification,” she said. “I would go to meetings and people would ask me if I was certified, then they had to tell me what that meant.”

Now an ardent advocate of certification, she created supplier diversity initiatives at DSC and counsels women entrepreneurs to get certified as WBEs.

“It’s a great tool for getting a foot in the door,” Drake noted. “But, the goal after that is to be absolutely on a par or better in every way than any other supplier could be.”

Altria’s Hallatt added, “We continue to do work with them because they go the extra mile. They make sure everything runs efficiently on our behalf. This truly is collaboration, and we are glad to have DSC Logistics as our vendor.”