News Column

Logging Into Efficiency

June 2004, HISPANIC BUSINESS Magazine

Scott Williams

Israel Salazar
Israel Salazar

In an industry where small time savings can translate into large productivity gains, TSN Inc. has become a master of efficiency. So while distributors might not enjoy buying such low-margin items as toilet paper, TSN a Frederick, Colorado-based wholesaler has streamlined the process into a near art that has propelled it to more than $144.8 million in sales of cleaning and business supplies destined for convenience and grocery stories.

"In our industry we are foremost in what we do," says Israel "Izzy" Salazar, the 45-year-old chairman and chief executive officer of TSN, which he founded in 1989. "We're the leader in the area that we specialize in, and we're the largest I know of in the U.S."

TSN's customers are distributors, such as The McLane Co., one of the nation's leading distribution and logistics companies. It serves more than 50,000 customer locations, including convenience stores, mass merchandisers, quick-service restaurants, drug stores, and movie theaters. TSN, which stocks more than 3,000 items, such as paper towels, cash-register receipt paper, and cleaning supplies, orders products from vendors and supplies them to distributors like McLane. The distributors then break down the shipments and deliver the products to their final destinations.

When started, TSN carried about 300 items, and posted first-year revenues of between $2.5 million and $3 million, Mr. Salazar says. Now its sales are enough to rank it No. 36 on the Hispanic Business 500. Mr. Salazar attributes his company's success to intensive sales efforts and "tons and tons of traveling."

The efficiencies TSN provides eliminates the need for distributors to order from several vendors, and that means fewer phone calls, truck deliveries, and invoices. Because TSN buys in bulk and offers one- or two-day delivery, customers can free up warehouse space and don't have to expend as much capital by buying large quantities. The fact that TSN buys in such large quantities also helps keep costs down, Mr. Salazar says.

The company owns warehouses in Frederick, Colorado, and Richmond, Indiana, and a fleet of tractor trailers that it uses to make its shipments. All the buying is done in Frederick, much via computer. Technology is also playing a growing role in numerous other areas of the company: The company's trucks are tracked by satellite. Its forklifts now have built-in computer screens that display purchase orders alongside detailed warehouse maps showing the driver the fastest way to fill the order. As food storage technology improves, Mr. Salazar says he hopes to add freeze-dried and frozen foods to his inventory in the next five to 10 years.

But technology also is putting a new pressure on the wholesale industry. While the National Association of Wholesaler-Distributors believes the ongoing economic recovery will unleash a pent-up demand for goods, competition is growing from direct sellers and online outlets. A recent study commissioned by the association found that leaders in the wholesale industry believe that in the next five years wholesale distributors' share of volume will decline from 67 percent to 60 percent amid increased competition from other sources, including direct-buying on the Internet.


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