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INDUSTR7Y 71i:T )i1 77-1
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0 ..S.O! S AID\ CONTROL LS
Friday, July 21, 2006 (3).max
r 1977
/rz~1
c-_-1
ABSTRACT
Thirty-four dairy processing firms were interviewed in early 1977 to determine the extent of delivery
case losses and to identify feasi.le and acceptable measures to reduce case losses. Sixteen major retailers op-
erating in Florida were also contacted to determine their practices and problems relative to delivery case
use, and their reaction to various case control measures. Six firms which use returnable containers, seven
major case manufacturers, and dairy industry representatives in 8 other states were also contacted to deter-
mine the effectiveness of various control measures.
Virtually all Florida processors are experiencing extremely serious case losses. Case loss due to theft was
estimated to exceed $1.3 million in 1976, about 0.53 cents per gallon.
After considering the alternatives, recommendations for control include (1) more stringent case manage-
ment practices by dairies, (2) a public relations program directed at dairy customers to educate them of the
seriousness of the problem and to enlist their cooperation in -.ducing losses, (3) use of existing legislative
and regulatory measures as well as development of the legislative framework for a mandatory deposit sys-
tem should it become an economic necessity, (4) consideration of technological advances which would re-
duce case theft, and (5) adherance to a code of ethics by all dairy processors which would prohibit unau-
thorized use of each others' cases.
Key words: dairy marketing, dairy delivery cases, case deposits.
Second Printing
March 1982
This research was supported in part by a grant from
the Florida Dairy Products Association, Inc.
Friday, July 21, 2006 (3).max
DAIRY DELIVERY CASE- : IN FLOOR '
'TS AND CONTROLS
by 'y Mathis and L.
a research : ...ect conducted for the
F'-^-'T DAIRY PRODUCTS ^^^-T-TION, INC.
June 1977
The Florida cultural Market ~ ch ter
a part of
The Food and Resource Economics 7- '-tment
Institute of Food and ^ cultural Sciences
University of Florida
Gainesville, Florida
Friday, July 21, 2006 (3).max
The Florida Agricultural Market Research Center
A Service of
The Food and Resource Economics Department
of the
Institute of Food and Agricultural Sciences
The purpose of this Center is to provide timely, applied
research on current and emerging iarL'.etiq problems affecting
Florida's agricultural and marine industries. The Center seeks
to provide research and information to production, marketing,
and processing firms, groups and organizations concerned with
improving and expanding markets for Florida agricultural and
marine products.
The Center is staffed by a basic group of economists trained
in agriculture and marketing. In addition, cooperating personnel
from other IFAS units provide a wide range of expertise which can
be applied as determined by the requirements of individual projects.
i4
Friday, July 21, 2006 (3).max
"". OF CONTENTS
LIST OF TA. : .................................. v
i ENTS ....................... ..........................vii
SUMMARY .........................................................viii
... ..................................................... 1
S ...................................... .................. 3
FINDINGS ........ .......................... 4
Case Usage in Florida....................................... 5
.......................................... 6
Sr Size Classes and Case ....... ...... .... 8
Case Losses and t.. They .. ............................ 13
ts of -. Losses .................................... 13
Processors' .. of Losses................. ............ 14
Do Losses Occur and is ible............ 15
Internal Control Measures... .......................... .... 22
Case Inventories........................................ 22
Driver Education ...................................... 24
Case Identification.. ................................ .. .
Driver Incentives.. ................................... 27
Case ~ .' F ................................. 29
Retailer Incentives.................................... 32
Warni on Cases ...................................... 33
Additional Control Measures................................ 34
its................................................ 35
Universal Plan..................................... 40
State "-,- -tor....................................... 42
Warning Signs...................................... 42
Fenced Enclosures ^ ." ide Retail Stores................. 43
Voluntary Inside Storage by 'i s ................... 44
Joint -. lic Re- tions with Retailers........... 44
Bulk Delivery Systems ................................ .. 45
: ign ........................................... 46
-- ,F T, o,. of Additional Control Measures ....... 48
iii
Friday, July 21, 2006 (3).max
T'-" OF ^ "'TENTS (r- ., )
.. NS "- RECOMMENDATIONS .... ............. ........... ..... 50
Direct "' Practices...................... ........... 50
Sic ,ting........................................ 50
.......................... ........ .......... 50
Driver t. ability................................... 51
Case Collection .-. .............................. 51
Case t..................................... .... 52
Use '.. Cases....................................... 53
Public lations....................................... 53
Retailers .......................................... 53
al 'lic ..................... ...................
Legislative and 7 .,latory res.................. .... ..
STechnology ....................................... 56
Ethics....................................................... 56
S A....................................................... 58
S B........................................................ 66
APP C........................................................ 76
APPENDIX D......... ............................................. "
iv
Friday, July 21, 2006 (3).max
LI T .- T
Table
1 and value of new case :. by case type,
1976........................................................ 6
2 Size classification and numbers of processors.............. 8
3 Fluid product volume, state totals and aver---, '.- firm
size, 1976.................... .......................... 9
4 ^ purchases relative to volume for the .. iod of 1
76 by firm size ............... .. ..... ...... ......... .. .. 9
5 .. : s' ratios of cases in float to '..:' movement.... 10
6 Case "rements duri volume, -- with estimat-
ed case float, by firm size, 1976..... .. .......... ....... 11
7 tage,of cases discarded in relation to volume, by size
of firm, 1976.............................. ..... ....... 12
8 Processors' estimates of cases discarded due to "- or
condition, weekly and annually by size of fi -: 1976........ 12
9 Estimated costs of case losses by size of firm, 1 ........ 13
10 Estimated costs of case losses as related to volume, by size
of firm, 1976............................................... 14
11 s' descri '' of '"'r case loss situation by size
of firm. .. ................................................ 15
12 :. s descripti of their case loss situation,
area........................................................ 16
13 : s' mates of case losses in relation to volume,
by -.. of outlet ....................................... 17
14 -'.-- of milk deliveries per week, Florida supermarkets
and convenience stores.......................... ... .. ..... 17
15 Empty milk case storage locations in retail stores.......... 18
16 : ")nal and ..lation groups suspected of unauthorized
use of delivery cases by processors, by area................. 19
v
Friday, July 21, 2006 (3).max
LIST OF TABLES (Continued)
Table Page
17 Internal case control measures used by Florida dairy
processors ................................................. 23
18 Processors' opinions of the effectiveness of various
internal methods of reducing case losses, by area.......... 25
19 Processors' and retialers' ratings of case loss control
measures................................................... 35
20 oracessors' and retailers' preferences for control
measures ......................................... 36
21 Processors' ratings of selected case loss control measures,
by area............................................ 37
22 Amount of deposit suggested by processors, by size of
firm ....................................... ................ 38
23 Processors' estimates of the cost of a deposit system, by
size of firm........................................... 39
24 Ranking of control measures by processors and retailers.... 49
A-1 Dairy processing firms contacted........................... 59
A-2 Retail firms contacted ....... .... .... ..... .... ... ...... 60
A-3 Dairy groups contacted.............................. .... 61
A-4 Soft drink, egg and bakery firms contacted................. 62
A-5 Case manufacturers contacted............................... 63
A-6 Proportions of various types of delivery cases used by
dairies .................................................... 64
A-7 Presence of manufacture dates on cases.................... 65
A-8 Case exchange costs by size of firm, 1976.................. 65
vi
Friday, July 21, 2006 (3).max
P- EINTS
This research was _. in part by a grant '* the Florida
Dairy ...- '. Association. Mr. John Tri .. i' -irman of the ...d
and Mr. J. R. Antink, President of this association gave leadership
to dairy process i ....' efforts to make the study successful. All
''ves of dairy firms serving Florida are due thanks for their
time and cooperation in ; ?di,., information for the study, as are
members -' retail firms who were interviewed.
We wish to acknowl. '..: the assistance of the representatives of
dairy : .: associations in several other states and members from
dairy firms outside the Florida market area. Their i o on and
experiences were valuable. ". tatives of case
contacted were most helpful, and so were members of other food in, ':,
firms interv"
assistance of Dr. ":-I Extension Economist, and Dr.
Ron Richter, Extension Dairy Technologist, is acknowl- 'i:..:' with thanks.
Mr. Wershow and Mr. Steve F -. :.. P "x D,
1 -: --::-, which we think is a most useful section of this --
Typing, manuscri.' i ':on and o. other key jobs were done by
Ms. Patricia 'ille. '. .- processing and analysis of study data
were 'ded ;. Carol Beran and Ms. Carol Dunham.
s report is circulated without formal review by the Food and
Resource 7." .:: 'cs .... Content is the sole ." ility of
the authors.
vii
Friday, July 21, 2006 (3).max
SUMMARY
Dairy >ru:.es.,ars serving Florida lose thousands of milk cases each year.
Their loss cost the Florida dairy industry over $1.3 million in 1l76.
Problems of case losses are serious throughout the United States.
A large number of measures aimed at reducing case losses were evaluated
by executives from Florida dairy -roce.sing firms and from major retail
firms in the state. Executives in 36 dairy plants operated by 34 firms,
and executives in 16 retail organizations were personally interviewed.
In addition, dairy product association representatives and processors
in 8 other states were contacted by telephone. Executives in 4 soft
drink, 2 egg marketing, and 9 case 4 Ian I ILting firms were interviewed
by telephone. The president of the Florida Dairy Carton Case Exchange
was personally interviewed.
About 75 percent of all cases used in the state are plastic. Some
dairies use wire cases exclusively. Florida dairies purchased 519,000
cases in 1976 at a cost of about $1.3 million.
Dairies were classified by annual volume, expressed in cases of fluid
product, as large, medium or small. Processors purchased an average
of 8.8 cases per 1,000 cases of product volume in 1976. Case purchases
varied considerably by firm size, with a wide range within each size
class.
Total case requirements (float) reported by firms varied from 1.5 to
7.5 cases per case of product. Dairies discard an average of one case
per 1,000 cases of product volume or an average of 35 cases per firm
per week due to damage or condition. Total value of discards was about
$170,000 in 1976.
Case losses cost Florida dairy processors $1,329,720 in 1976. This
includes new cases, and other costs such as plant downtime and other
inefficiences resulting from missing cases. This is an air,.I'-j of
$39,109 per firm, or $21.18 per 1,000 cases of product, and 0.53t per
gallon.
All or a majority of processors in all areas of the state considered
case losses serious or extremely serious. Dairy executives felt most
losses were from stacks of empty cases behind supermarkets. While
supermarkets handle about 50 percent of milk volume, processors felt
that 70 percent of losses took place from outside storage there. Other
types of outlets were thought to account for less case losses than
their proportionate volume.
viii
Friday, July 21, 2006 (3).max
,-c :e-rrs interviewed rated other dairies as most likely to make
unauthorized use of their cases, followed by produce merchants,
supermarkets, other food processors and independent groceries.
Processors rated seven control measures internal to dairy firms or
used within the dairy processing industry: drivers' case inventories,
educational efforts with drivers aimed at cutting case losses, driver
incentive plans for retaining or retrieving cases, case identification,
membership in the Florida Dairy Carton Case Exchange, incentive plans
with retailers, and warnings against misuse printed on cases. The
writ of replevin to recover cases was also evaluated.
.teid on a scale of 0 (extremely ineffective) to 9 (extremely effective)
driver inventories rated 5 or of some value, and driver education rated
almost as well. These two measures were judged effective by about a
third of the processors interviewed, as was a driver incentive. The
remaining measures were rated significantly lower, and judged relatively
ineffective.
Additional control measures were evaluated by processors and retailers.
-'ii measures were: deposits, a universal case plan, state inspectors,
warning signs, fenced enclosures at retail stores, voluntary inside
storage by retailers, public relations efforts, bulk delivery systems,
and case redesign.
A mandatory deposit was the most preferred option among processors.
Virtually everyone was opposed to a voluntary deposit system. Processors
feel that competitive pressures would make the system infeasible. Re-
tailers oppose any type of deposit for obvious reasons, with more dislike
apparent for a voluntary deposit.
Costs of a dr-,r,.it system are a major consideration. Procie .swrr estimat-
ed their costs would range from zero to $94,000 per firm per year; the
average was $20,500 per firm, for an industry total of nearly $700,000.
Deposits would cost retailers approximately $65 per store per year (labor
costs only), for a state total of $487,500 annually. Processors and
retailers combined costs would be $1,184,000. Additional unknown e'^ro"ce-
ment costs could be substantial, as well.
In those states with deposit systems, the major benefit stems from improv-
ed case control by dairies. Florida processors felt that a deposit, if
adopted, should be from 25 per case to the full value of the case. The
average was $1.11.
A universal case plan (UCP) offers greater efficiency of case i:.:i' in
markets where accounts change processors frequently. Processors and
retailers both tended to dislike this option, feeling that it would
increase case costs. One UCP is currently functioning in Cincinnati,
Ohio, but has not resulted in appreciable savings.
ix
Friday, July 21, 2006 (3).max
State inspectors might discourage unauthorized use by business firms
at relatively low cost to the dairy industry. However, this alternative
was unpopular among processors and retailers.
Warning signs could be used to inform the public that taking cases is
illegal. They could also be used as part of a retailer public relations
effort to show seriousness of the problem. Dairy executives were pessimis-
tic about effectiveness, concerned about increasing losses by attracting
attention to cases and concerned about costs. Retailers generally favored
warning signs.
Fenced enclosures are presently used by some retailers, primarily for
storage of soft drink bottles. Enclosures may be feasible for high-loss
locations, but processors and retailers tended to dislike this alternative.
Their concerns were cost, convenience of use, maintenance, and sanitation.
Voluntary inside storage by retailers was rated lower by processors than
by retailers. Dairy executives felt requesting inside storage was an
intrusion in store operations, and impractical for most retailers.
A public relations effort to educate consumers as to the increased costs
of products they buy as a result of "missing" dairy cases and shopping
carts was met with ,ene--l indifference by processors and convenience
stores. Supermarkets were slightly favorable. Processors feel that
publicity might aggrevate the problem. E .eriences in other states
have not been encouraging.
Bulk delivery systems are presently used by a few firms, and studies
have shown them to be labor-saving. However, this approach was especial-
ly disliked by processors and convenience stores. Supermarkets were only
slightly less unfavorable. The primary reasons for disliking bulk handl-
ing is changeover expense and limited space in many stores.
Case redesign using nesting or collapsible cases would facilitate indoor
storage and make transportation of cases back to plants easier. Dairies
were generally neutral on this possibility while retailers liked the
idea. A few case manufacturers have worked on this problem recently.
Collapsible and nesting cases developed so far were more expensive, re-
quired additional labor or machinery, and did not perform as well as
the standard case.
Recommendations are grouped under the headings of direct management
practices, public relations, legislative and regulatory measures, im-
proved technology, and ethics.
Direct -iaqragement practices recommended were to improve basic accounting
procedures for cases, maintain more detailed case records, make drivers
responsible for cases, improve case collection procedures, consider hiring
a case scout, and use one-way cases for high-loss accounts.
x
Friday, July 21, 2006 (3).max
S'lic relations by dairy with retail firm management
was "-;1 ted, al : with by route .:-. 'sors with individual
stores. Some low-cost with the general public mi. be helpful,
but are not recommended because of their le adverse -- ts.
Legislative and .. la' .
with existing measures,
ing the framework for a '
of assistance from state
recommendations included becoming familiar
"yi these measures when, ate,
t system and investigating the ility
tion stations.
Technological improvements should be monitored and evaluated, and case
designs or other systems investigated.
Ethics were stressed, with the '-
to use only its own cases particularly
e each firm making an
ized.
Friday, July 21, 2006 (3).max
DAIRY DELIVERY CASE LOSSES IN FLORIDA:
COSTS AND CONTROLS
Kary Mathis and Robert L. Degner
INTRODUCTION
Florida dairy processors lose thousands of milk delivery cases
every year. This loss costs the dairy industry well over $1 million
annually. If passed on to the consumer in the form of higher milk
prices, case losses would cost Florida citizens about $1.5 million
each year. Estimates of costs of case losses in other areas are
substantial (Figure 1).
As with processors in many other states, Florida dairy firms
have attempted to reduce case losses for many years. Florida
aj -cet scrs helped organize a case ce<,:h.rirqe firm to return member
firms' cases from other dairy plants. Association officers and
employees have monitored case loss problems and control measures
in Florida and other states.
'.any control measures have been used, with varying degrees of
success, in Florida and other parts of the U.S. State laws and re-
gulations concerning registry of trademarks and recovery of property
have been enacted or applied. In some states depc',its have been
required or requested from customers and case "scouts" have been
hired to locate missing containers.
KARY MATHIS is associate p-Is:.,nr and ROBERT L. DEGNER is assis-
tant professor of food and resource economics, University of Florida.
Friday, July 21, 2006 (3).max
MILK CASE LOSSES
NEW ENGLAND
$2,500,000
MICHIGAN NEW YORK
.. o,o000,000 o5,ooo,(
S70,000, 000
Dairy associations, various states
CITY
Figure.1.--Source:
All these measures have helped reduce or control losses to
some degree, but dairy executives still view case losses as a
serious problem, and one they feel is increasing in severity.
There are almost as many estimates of the amount of case loss as
people estimating, and even more opinions as to those responsible
for losses. Many of these opinions are based on hard evidence of
dairy firm and association personnel who have recovered cases from
unauthorized users and even prosecuted some. However, there are a
great many contradictory or unfounded views and rumors circulating
in the dairy industry concerning case losses. Florida dairy processors
expressed a need for an accurate view of the case loss situation.
The Florida Dairy Products Association requested the Agricultural
Market Research Center to identify and evaluate measures to reduce
losses and improve reuse of milk delivery cases. Specific objectives
were to:
1. Determine the extent of delivery case losses, and estimate
costs of these to processors and retailers.
2. Identify feasible and acceptable measures to reduce case
losses, and estimate costs of implementing these measures.
3. Determine retailers' and other users' practices and problems
with delivery cases, and their reactions to possible control
measures.
PROCEDURE
Beginning in mid-March, Market Research Center and other IFAS
personnel interviewed representatives of all dairy processors in
Florida and those in neighboring states supplying Florida. Executives
in 36 dairy plants owned by 34 firms were interviewed between March 16
Friday, July 21, 2006 (3).max
and April 22 (Table A-1). Executives in 16 retail food organizations
were also interviewed. These were personnel in corporate or regional
offices of the major supermarket and convenience firms serving Florida,
who were responsible for dairy product movement in 3,400 stores in the
state (Table A-2).
Detailed questionnaires were completed for all dairy and retail
firms. Information was coded to insure confidentiality, and then
prepared for data processing (see Appendix B for questionnaires). Appro-
priate computer programs were used to summarize and analyze information
from the interviews.
Representatives of 13 dairy product associations in other states
(Table A-3) were also interviewed by telephone, for information on case
losses and control measures in those states. Executives in four soft
drink firms and two egg marketing firms (Table A-4) provided useful
information on deposit and return experience in those industries as
did personnel of a supermarket bakery division. Nine case manufacturers
were interviewed (Table A-5) and were most helpful. The president of
the Florida Dairy Carton Case Exchange also provided useful information.
FINDINGS
Research findings are discussed in this section under four major
headings: Case Jiuape in Florida, case losses and where they occur,
internal control measures, and additional control measures. All
information discussed comes from processors' responses and records
and from retailer interviews, :.J.pplemented by information from other
states and other industries.
Friday, July 21, 2006 (3).max
Of the 34 dairy ,firms servi Florida, 33 use a wire
or plastic case holding 16 quarts or nine half --llons. One firm
uses a 2' *,t wire case. All 1- t cases have virtually the
same dimensions and thus, will -*' in most dairy plant '"on
lines. Some firms now use or have used cases with one dimension
different those 2 other ., in order to reduce losses.
^ all cases currently in use in Florida, about 75 are
plastic. A few dairies use wire cases exclusively, but most s
have '. or are in the process of '.:.. ng to plastic cases
(Table -'). Dairies in other states "ng to plastic cases
as long as 13 years .: and use high proportions of plastic cases.
Dairy association representatives in Cali" -ia estimated that at least
90 percent of the cases used there are plastic. Estimates of the
tion of plastic cases in other states r- f- 70 percent in
Jersey and percent in Texas, to more than 95 percent in New York.
Plastic cases are lly one color, "- bright, with the
company name and/or trademark or '., ..I-' on two sides. A
warning that unauthorized use is .: 'bited is f '.ly :' on
two sides. Date of manufacture is usually ': on plastic and wire
cases as well.
wire containers will have colored corners with the dai
firm name on them. Wire cases usually weigh 4 1/4 to 5 1.'
pounds for the 16-quart size, compared to 2 3/4 to 4 1/2
plastic cases.
Both plastic and wire cases are extremely s'.... and durable,
while relatively li-' in weight. As a result, the cases are
Friday, July 21, 2006 (3).max
extremely useful for
were designed.
.. other than that for which they
Case Purchases
Dairy ..... -s operating in or serving Florida ... their
cases several i turers. A few dairies buy some used out-
of-state cases the Florida .' All dai- executives
interviewed stated that their case --es were "as needed", with
most new cases bought in the late summer as schools begin. Other
heavy periods ----ially for dairies in central and south
Florida and the west coast, are duri the winter tourist season.
Florida dairies surveyed of 519,000 cases in
1976 with a total value $1.3 million (Table 1). .. .: 87 t
of the cases were plastic, at a total value of $1.1 million.
-. le 1.
and value of new case -:-chases
S of firms .
Case type purchasing in 76 of cases
Plastic 23 451,"
Wire 7 66, "
1,1,
Total 33 519,005
Value
1,102 --
,190
91
1 --V,617
case : 1976
19,622
9,515
545
15,724b
$47,-78
29,313
39.
cases.
-11 aver--- are based on 33 firms; one did not provide data.
Many Florida dairy executives cite several
cases, with wire cases:.
a. Lower '
b. Lighter weight
for plastic
Friday, July 21, 2006 (3).max
--
------
-----
~--- ~--- ----
c. Easier to clean, keep products cleaner
d. Less product damage
e. Easier to identify
f. Fewer problems in plant, less noisy
g. More durable
h. Load and stack better in trucks
However, wire cases have several strong points cor'pared with plastic
according to a number of the executives interviewed.
a. Less theft
b. More durable in processing line
c. Hold shape better
d. Easier to clean
e. Cool products better
f. Stack better in trucks
Case manufacture dates are placed on plastic and wire cases by
makers, unless purchasers request that they be left off. Nearly two-
thirds (62 percent) of Florida processors stated that dates are now
put on cases they buy (Table A-7). Apparently, some wire and plastic
cases !-nuiqht in past years did not have manufacture dates. These
dates can be used to determine the life of cases and to help estimate
loss and replacement rates.
It was not possible to determine the life expectancy of cases
in the dairy y:.t>.. Data on case purchases, discards and losses
were not sufficiently detailed to allow such calculations. A recent
study in New Jersey reported that dairies there expected plastic
I:l,,, Jersey Milk Industry Association, Inc., "Milk Case Loss
Survey in New .e,'-re.", April 22, 1976.
Friday, July 21, 2006 (3).max
cases to have a normal l^.1 life of 65 months. Wire case 11-
was '.' to be 52 months. :1 li' of a case in Jersey
was 14 1/2 months, according to the
*;_- / -.---- -.--r n.-.-_-
Dairies were classified as la -, medium or small, based on annual
volume, in cases of fluid product (Table 2). Large firms
Table 2.--Size classification and numbers of processors
Size of Fluid product
firm volume, 1Q9
Largea 2, ,000 or more 10
b
1. b .^^,000 to 2,749,000 13
Small less than 1,000 "^^ 11
All firms 34
.. plants have less than the indicated volume, but were includ-
ed in this classification because ''" are .-'liated and controlled
a" a 'on obviously in the large ca"---" In most cases,
ants with te ties but i- management were
classified into the volume categories of their respective plants.
lume was estimated for two firms in this class:l cation.
accounted about half of the state's fluid product volume in -1 ,
with medium-sized firms making up 41 and small firms the
remainder (Table 3).
.s :' an average of 8.8 cases 1 .""^ cases
product volume in the 1975-7 'od. Case :.. .. varied consider-
ably firm size, with a wide range within each size class (Table 4).
Friday, July 21, 2006 (3).max
Table 3.--Fluid product volume,
size, 1976
state totals and -vr;-iq:, by firm
Size of Nur-ber- of Average annual Estimated state
firms firms volume totals, 1976
------------- Cases ------------
Large 10 3,124,660 31,246,600
Medium 13a 2,001,945 26,025,285
Small 11 501,755 5,519,305
All firms 34 1,846,800 62,791,190
avolume was estimated for two plants in this category.
Table 4.--Case purchases relative to volume for the period of 1975-
76 by firm size
Case purchases
Size of Number per 1,000 cases product
firms of firms Average Low High
Large
Medium
Smalla
19.3
20.7
10.9
20.7
All firms
aIf two additional small firms are included, the average for
the remaining firms becomes 5.9 and the low figure becomes 1.5
cases. These firms were excluded because their case purchases are
not typical of the majority of processors.
-All 34 firms purchased cases during 1975-76, but 13 could not
supply sufficient data for analysis.
Friday, July 21, 2006 (3).max
Total case -. reported by firms varied '". 1.5 cases
case of product to 7.5 (Table 5). These requirements di"-
between firms due to different di :. .systems and other -.tors
lar to each firm. .. .. firms actually had
records of their total number of cases or an accurate count of the
number needed '.. .-' or average volume. The ratios ....' are
estimates by the executives interviewed.
Medium-sized processors .: -. 'ly have, on the -- enough
cases for their maximum weekly volumes (Table 6), Large and small
dairies, though, are 11 percent short in cases ~ maximum weekly
volume.
Table 5.--Processors' ratios of cases in float to product movement
of
firms
Ratios
lative
of firms
3
6
3
18
12
6
26
6
12
3
3
3
,,,
3
9
12
30
42
48
74
92
95
98
1.
Totals
not sum to 100
Sdue to rounding.
Friday, July 21, 2006 (3).max
-~-----
~I -- -~
Table 6.--Case requirements during peak volume, compared with
estimated case float, by firm size, 1976
Estimated number Case shortage
Size of Number required of cases in during maximum
firms for volume float volume
------------- Average --------------- --- Percent---
Large 63,386 56,701 11.8
Medium 30,216 33,261 -0-
Small 10,357 9,306 11.3
All firms 33,647 32,339 4.0
aased on firms estimates of ktheirv maxrimium weekly volume andt
their case-to-product ratios. Case requirements were based on
responses from 33 firms and the estimates of cases in float were
provided by 31 firms.
Dairies must discard an ,ne'i, of one case per 1,000 cases of
product volume (Table 7) or an average of 35 cases per week (Table 8).
Total cost of cases discarded due to damage in plants and distribution
was about $170,000 in u1976 (Tle 8). lUMost of ose interviewed who
were using wire cases felt there was more damage and discarding of
wire cases than plastic. No one really knew actual damage and discard
rates however, since most firms have not kept detailed case inventories
and records.
Several respondents speculated that plant and delivery personnel
might work harder at damaging and discarding older wire cases in those
firms converting to plastic. In any event, accurate accounting of
all cases and their disposition would identify normal or routine
discards. This could be a significant figure for some firms, and one
where careful management could lower costs. This and other related items
are discussed in more detail in the section on control measures.
Friday, July 21, 2006 (3).max
Table 7.--Percentage of cases discarded in
size of firm, 1976
relation to volume, by
Size of Number of Case discards per 1,000
firms firms reporting cases product volume
Large 9 1.1
Medium 12 0.8
Small 8 0.7
All firms 29 1.0
Table 8.--Processors' estimates of cases discarded due to damage or
condition, weekly and annually by size of firm, 1976
Estimated Value of
Size of Average per Average per annual state discarded
firms firm per week firm per year total cases
---------------- Cases ----------------- -Dollars-
Large 67 3,484 34,840 94,765
Medium 34 1,768 22,984 62,516
Small 7 364 4,732 12,871
All firm 35 1,I a 62,556 170,12b
a0ne large, two medium, and three small firms did not provide
estimates of discarded cases. The state annual totals were esti-
mated by using :jiorage- obtained from firms that provided data.
The overall value was estimated using the average replacement
costs for new wire and plastic cases. It was assumed that discards
of the two t'yc':l of cases were proportional to the totals of each
in use. Thus, the weighted replacement cost was $2.72 per case.
Friday, July 21, 2006 (3).max
Costs of'- Losses
Case losses cost Florida dai 's an estimated $1,329,720
in 1976 "able 9). This includes purchases of new cases, and other
costs such as plant downtime and other inefficiencies resulting *
missing cases. ". cost per firm for all ^ firms serving Florida
was over t"1,000 in 1976 (Table 9).
Table 9.--Estimated costs of case losses by size of firm, 1976
_. ,_
Size of
firms costs costs Utoais Total, all firms
----------------------- dollars--------------------
Large 61,718 6.7 68,715 687,147
" ium 33, -~ 3. 7 36, ..7
Small 11 3 ," 14, ^S 164,186
All firms 34 4,413 39,1^^ 1329,720
rect cost is the value of missi cases to each firm (wei-'t-
ed by proportions and lacement costs of plastic and wire cases)
less the firm's estimates of discarded cases. This amount does not
include costs of the dai case '- : : : which amounted to
a total of t^1 ""^ for large fir ; -728 for media ., and $11,189
small,a : :' total of $61 .17 ;:, 1976 (see Table A-8).
b
Indirect costs include down time of process plant, i
labor and increased : *:on costs.
.ts of case losses in relation to fluid volume averaged
$21.18 1 ."^ cases, or 0.53 cents per gallon for all firms serving
Florida (Table 10). Total costs 1,000 cases or per gallon were
lowest for medium-sized firms and highest for small firms. Large firms
costs were very near the average (Table 10).
Friday, July 21, 2006 (3).max
Table 10.--Estimated costs of case losses as related to volume, by
size of firm, 1976
Average per 1,000 cases
Size of Direct Indirect Total costs
firm costs costs Total per gallon
------------ dollars ------------ cents --
Large 19.75 2.24 21.99 0.55
Medium 16.71 1.67 18.38 0.46
Small 23.09 6.66 29.75 0.74
All firms 18.79 2.39 21.18 0.53b
abSee notes to Table 9.
Total dollar value of case losses is naturally greater with large
firms (Table 9) but small processors have higher costs per unit of
volume (Table 10). Medium firms have the lowest cost of case losses
per unit of product even though they purchase more cases per 1,000
cases of volume than firms in the other size classes (Table 4).
Processors' Views of Losses
Half the processors interviewed feel their case losses are "extremely
serious" and another 35 percent call case losses "serious". All the
large firms and 11 of the 13 medium-sized firms described their case
losses as "extremely serious" or "serious", as did 8 of 11 small firms
(Table 11).
When considered by areas of the state (see Table A-1 for firms by
area) processors generally viewed their case losses as extremely serious
or serious (Table 12). Fewer South Florida processors rated their case
losses in the most serious categories, with two firms stating case
losses are "no problem".
Friday, July 21, 2006 (3).max
Table 11.--Processors' description of their case loss situation by
size of firm
Description
of case loss Firm size
situation Large Medium Small Totals
No. % No. % No. % No. %
Extremely
serious 8 24 8 24 1 3 17 50
Serious 2 6 3 9 7 21 12 35
Moderate 0 0 0 0 1 3 1 3
Slight 0 0 0 0 2 6 2 6
No problem 0 0 2 6 0 0 2 6
Totals 10 29 13 38 11 32 34 100
Both of these are completely integrated convenience firms that maintain
very tight controls on cases from purchase through store delivery. Five
of the nine South Florida dairies considered losses "extremely serious"
and another viewed case losses as "serious".
Where Do Losses Occur and Who is Responsible?
When asked where they felt case losses occurred, dairy executives
believed most were from stacks of empty cases behind supermarkets.
Processors interviewed felt that the proportion of losses from super-
markets was about 40 percent greater than the proportion of case
deliveries to those outlets. The share of losses occurring at other
types of customers was judged less than those outlets' volume share
(Table 13).
Friday, July 21, 2006 (3).max
Table 12. -
area
Area
-s' description their case loss situation, by
Ratings
of firms
*:;- emely serious
Serious
Moderate
Slight
S ; em
Total
*'"emely serious
Serious
Moderate
Slight
l.em
Total
Extremely serious
Serious
.. te
Slight
Stlem
Total
West Coast
South
Extremely serious
Serious
Moderate
Sli '
No problem
Total
Extremely serious
Serious
Moderate
eight
No problem
Total
Friday, July 21, 2006 (3).max
.
St
S- tral
100
--
Table 13.--Processors' estimates of case losses in relation to volume,
by type of outlet
Percent ofa
case losses
Type of outlet
Supermarkets
Small groceries
Convenience stores
Restaurants
All others
Total
Percent of
total volume
50
19
13
6
12
100
percentage estimates for each firm were weighted by firm volume.
Accumulation of empty cases outside .ul rmrvkets is largely a
result of variations in milk sales during the week and the number of
deliveries per store. Most supermarkets have milk delivered five days
a week with 29 percent receiving three deliveries a week (Table 14).
Heavy milk sales during the weekend, with lighter movement early in
the week, often result in large numbers of empty cases outside stores.
Table 14.--Number of milk deliveries per week, Florida supermarkets and
convenience stores
Deliveries per week
Firm 3 4 5 Total
--------------- Percent of firms -------------
Supermarkets 29 0 71 100
Convenience stores 38 38 25 100
Friday, July 21, 2006 (3).max
~
Deliveries to convenience stores are about equally divided between
three, four and five per week (Table 14). However, total volume at
an individual convenience store is not generally as great as in a super-
market, so cases do not accumulate in large numbers at convenience
stores. Also, empty cases are nearly always kept inside convenience
stores (Table 15).
Table 15.--Empty milk case storage locations in retail stores
Empty cases stored
Type of firm Inside Outside, not enclosed
Number of firms
Supermarkets 2 5
Convenience chains 9 0
Total 11 5
When asked who they felt was responsible for unauthorized use of
their cases, processors interviewed generally felt other dairies were
most likely (Table 16). This view was not universal, however, as other
groups were rated more likely than dairies in the Northeast and West
Coast regions of the state, and other food processors were considered
as likely as other dairies in South Florida (Table 16).
A large dairy in the Chicago area recovered over 5,800 cases in
less than a month, with almost 89 percent from other dairies. Pro-
cessors in Georgia and Alabama reported substantial losses to other
dairies, particularly those operating in other states to the north.
On the other hand, processors in the Cleveland area determined that
only 18 percent of their case losses were to other dairies, with 82
percent lost outside the dairy industry.
Friday, July 21, 2006 (3).max
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There is a prevailing view among many processors, in Florida an,
other states, that plastic cases tend to disappear faster than wire.
Part of this feeling may result from the large numbers of plastic
cases that must be purchased to change over from wire cases. There
has been a general trend towards use of plastic cases, as indicated
earlier.
Greater theft of plastic cases is a definite possibility. The
aesthetic characteristics of plastic cases make them very useful in
the home. Numerous newspaper and magazine articles and advertisements
have appeared which feature in-home uses for plastic milk cases. These
ads have probably stimulated unauthorized use.
A frequent rumor prevailing in the dairy processing industry through-
out the country is that plastic cases are stolen and reground for use
in the toy industry or other plastics manufacturing. This process is
definitely feasible, but is not a likely cause of case loss in Florida.
Most plastic cases are made of high-density polyethylene. This
material can be ground in relatively inexpensive machines (starting at
an estimated $5,000), remelted, and used in injection molding for
plastic products. Virgin high-density polyethylene resin currently
costs about 30 1/4 to 32 cents per pound. Re-processed resin is worth
about 12 to 15 cents per pound which means that a dairy case would be
worth from 34 to 69 cents depending on the weight of the case and the
price of resin, after grinding.
A problem encountered with reprocessed resin is that of color. If
the used material to be reprocessed is all one color, the resultant
product will be the same. However, mixing resin colors will result
in a black plastic.
Friday, July 21, 2006 (3).max
Instances have been discovered where cases were being stolen,
ground and resin sold. In 1968 a major Chicago firm successfully
prosecuted an individual for stealing and grinding cases. During 1973
there was concern that case grinding would become serious due to resin
shortages and resultant high prices. However, at today's prices,
grinding is probably not a serious problem.
Evidence from this study does not support the prevailing view that
plastic cases are more subject to theft than the wire type. One major
midwest firm has several divisions that use wire cases exclusively and
several that use plastic exclusively. They experienced similar losses
with both 'ypes. In Florida, firms with virtually all wire cases re-
ported losses similar to those with all plastic. However, data on
case losses obtained from processors in this study are insufficient to
determine conclusively which type of case results in greater theft.
Information on case losses from four Florida dairies using all
plastic cases and two with predominantly wire cases (90 and 95 percent)
shows some differences in costs of case losses in relation to volume,
as shown below.
Plastic cases Wire cases
Costs of case losses per ioc.t. .:: los s per0
Firm 1,000 cases product Firm 1,000 cases product
A $21.30 A (90% wire) $17.00
B 40.40 B (95% wire) 5.80
C 13.0
D 29.00
Friday, July 21, 2006 (3).max
However, most 'rms contacted did not have data in enough detail to
determine costs of case losses l,- 1.- cases of product volume. Case
and other costs of missing cases will v. depending on the
firm's volume, distribution system, market area, : of customers,
and poss:>ly other -. tors. No definite conclusions should be drawn
from the <:.-es shown just above. Those costs are included as examples
of case losses for each type of case, but should not be cited as
nitee evidence that firms using one type or another '' fewer
losses.
Internal Control "
controls internal to the dairy ing int'. '. were
explored with to determine processors' opinions and -
iences as to their ". "iveness. Seven basic measures were examined:
case inventories, driver education, case identification, driver in-
centives, the case I. ;- -. retailer incentives, and warni
against misuse on cases. -, .' these measures was rated processors
as to effectiveness on a sea from 0 to 9 where 0 ly
i* and 9 represented ly :" In addition, the
Writ of -,levin enforceable under' r 506 of the Florida Statutes
was discussed with s.
Case Inventories
Until recently, few firms required drivers to inventory cases
because the additional :.`" -: was thought to outweigh the benefits.
However, increasing case losses during the .--t several years have
Some '" -- to develop and use invent--' systems. Currently,
about half of the processors interviewed use some : of inventory
Friday, July 21, 2006 (3).max
procedure. Surprisingly, almost half have no case inventory system
at all (Table 17).
Table 17.--Internal case control measures used by Florida dairy
processors
Have used
or are Have not
Measure using used Totals
Case inventories
Driver education
Case identification
Driver incentives
Case exchange :.wror-.Ia
Retailer incentives
Warnings on cases
-------- Percent of processors -----------
53 47 100
88 12 100
97 3 100
21 79 100
73 27 100
0 100 100
38 62 100
percentages are based on the total number of processors operating
in areas where the case exchange service is operating, i.e. the Pan-
handle area is excluded.
Only one firm has a case inventory on an account-by-account basis
for its customers. This detailed system was initiated early in 1977
and its effectiveness was undetermined when firm executives were
interviewed. A few firms have less detailed inventory procedures
which allow them to determine case losses by driver; others have
systems which keep track of net case deliveries and returns by major
customers or by .:,..;.,r.n, branches or distribution centers.
Even though some firms have identified major sources of case
losses, very few have attached penalties for such losses. One firm
maintains loss records for a major account on a monthly basis and
charges $1.00 per case for shortages. This charge was negotiated when
Friday, July 21, 2006 (3).max
the account was established. However, most firms feel that competition
is too keen to enable them to bargain for such concessions from retailers.
Drivers are rarely held responsible for case losses. Where records
are kept on losses by route, the information is usually used for reprimand-
ing drivers rather than for imposing financial penalties for case shortages.
Some firms expressed the fear that wage regulations and/or union contracts
would prevent them from penalizing drivers.
Florida processors generally viewed drivers' case inventories as
the most effective method currently available for controlling case
losses. The average rating was 5.0 (Table 18). A major midwest dairy
which had suffered substantial case losses instituted a case inventory
procedure which has been highly successful. They reduced their case
requirements by approximately 30 percent in less than two years. The
firm gave all drivers notice on Friday that beginning the following
Monday,all drivers would be charged out with cases and all returned
cases would be counted. When the drivers realized that the crr.iprin was
serious about determining where case losses were occurring, many drivers
started returning more cases than they took out. For the first month of
"case audits", all cases taken out and returned were counted. Subsequent-
ly, case audits have been made one day per week on a spot-check basis.
This maintains case control while reducing enforcement costs.
Driver Education
Eighty-eight percent of the firms contacted currently use some
type of driver education in their attempts to reduce case losses (Table 17).
Firms that make no conscious driver education attempts generally felt
that driver turnover was so low that drivers were aware of the problem
and educational efforts were unnecessary.
Friday, July 21, 2006 (3).max
Table 18.--Processors' opinions of the effectiveness of various internal
methods of reducing case losses, by area
North- North- West All
Measure west east Central Coast South areas
-------------.-- Mean ratingsa---------------------
Driver's
case
inventories 4.5 5.3 2.7 5.3 3.9 5.0
Driver
education 4.1 4.8 8.0 5.0 4.6 4.8
Identification 2.8 3.2 6.3 2.0 5.4 3.6
Driver
incentives 5.6 0.0 --- 2.9 2.8 3.4
Florida case b
exchange --- 1.0 4.7 2.5 3.2 2.9
Retailer
incentives 2.8 2.3 --- 2.2 0.6 2.4
Warning 2.4 3.0 0.0 1.1 3.0 2.1
aRating scale: 0 = extremely ineffective, 9 = extremely effective.
bThe case exchange program has not operated in the Northwest section
of the state.
Driver education was rated 4.8, second only to case inventories in
effectiveness (Table 18). Most attempts at driver education are re-
latively informal. New drivers typically receive on-the-job training
from experienced drivers or supervisors, at which time proper case
pick-up procedures are stressed. After the initial training period,
most firms use only verbal communication with drivers to remind them
of the effects and costs of case losses. However, a few firms have
used posters, personal letters to drivers, and discussions in sales
meetings to elicit greater driver concern for cases.
Friday, July 21, 2006 (3).max
Attempts at educating drivers should put the loss in a jr-'-p'ctive
the driver can easily comprehend. Relating case losses to a driver's
specific route would probably make a greater inpress;ion than telling
him the "the company spent $100,000 for cases last year". Closely re-
lated to driver education is supervision. Nearly half of the retail
food firms interviewed reported having problems as a result of drivers
failing to pick up cases. Failure to pick up cases promptly not only
results in storage problems for retailers but exposes cases to theft
and damage. Supervisors can assist drivers in developing route patterns
that will minimize empty case exposure.
Case Identiifcation
Only one firm of the 34 contacted does not identify its cases
with the firm name or logo. Wire cases are usually identified with
the owner's name sta'prd into the corner supports, although i:.'r.iplates
are sometimes attached to the sides of the case. Plastic cases usually
have identification printed on two sides. Most case manufacturers
will Jprint identification on all four sides of the case, for an additional
5 -.r case, but most dairy executives do not feel the expense is
justified.
Color is also used for identification. Corners of wire cases are
usually painted a distinctive color, and plastic cases are molded with
a specified color of resin. Color identification makes cases easier
for retailers and drivers to sort cases. However, it is quite likely
that the bright attractive colors currently used for plastic cases
by many processors contribute to case losses.
Friday, July 21, 2006 (3).max
The average rating for identification as a control measure was 3.6,
substantially below case inventories and driver education (Table 18).
There were considerable differences of opinion as to the effectiveness
of identification, as well. Several processors felt that identification
was only useful in retrieving cases from other processors. They thought
identification did little to prevent unauthorized use by the general
public. To a certain extent, this may be true because of the proliferation
in recent years of consumer products on which brand names or logos appear.
However, numerous delivery cases were observed in the possession of the
general public during the course of the study which had the owners' name
obliterated. Apparently, many "consumers" find it desirable to remove
owners' identification. Thus, it can be presumed that identification
has some value in reducing losses. Ideally, identification should be
difficult to remove for maximum effectiveness. Some identification can
be easily painted over or buffed off. It might be possible for manufactur-
ers to stamp, mold or otherwise mark cases more permanently.
Driver Incentives
About one-fifth of the processors interviewed have tried various
types of driver incentive plans to encourage drivers to return cases
to plants (Table 17). Most driver incentive programs are used inter-
mittently when firms experience case shortages. The most common in-
centive is a per case ;iaymtnt ranging from 10 to 25, but one firm has
used gifts and gift certificates as well. Another firm has a company
profit sharing plan, and stresses how case losses reduce profits.
Payments in incentive Frol" .l: s are usually Dased on the number of
cases returned compared to the number taken out. Unfortunately, several
Friday, July 21, 2006 (3).max
firms have allowed the "incentive" to degenerate into a "bounty",
since the payment is made for any case rather than only their own.
One firm recently initiated a promising incentive plan which was
based on a drivers' net case returns on a monthly basis. For :"
month that a drivers' case returns equal or exceed the number taken
from the plant he receives a $10 bonus, to be paid in December.
Drivers are only given credit for the firms' own cases. When this
firm was interviewed, the program had not been operating long enough
to assess its effectiveness.
Processors did not generally view driver incentives as being very
effective in reducing case losses. The statewide average rating was
3.4. The only exception was the .'lori:...,'';t area, where incentives are
sometimes used indiscriminately (Table 18).\
Virtually all processors that had used driver incentives reported
difficulties with them. The primary problem was with drivers stealing
cases from each other and from the plant. Most firms reported incidents
of case theft by drivers from other drivers' routes, from other drivers'
trucks, and especially from the plant. In most cases, security at the
plant was a problem.
Another serious shortcoming of typical incentive plans is that
drivers tended to anticipate and perhaps contribute to the need for
incentives. Where incentives are used intermittently, drivers soon
learn that case short-am: are followed by return incentives. Such
practices encourage unscrupulous drivers to become lax in case return
and in some cases, to stockpile cases for "case drives" and the
resulting incentives.
Friday, July 21, 2006 (3).max
Other problems with driver incentives included reduced effectiveness
after a short while, excessive administration, and indiscriminate case
collections by drivers.
Case Exchange Program
In the normal course of delivering fluid dairy products, especially
to outlets where there are multiple suppliers, it is highly probable
that some mixing of competitors' cases will occur despite conscientious
efforts by drivers. Where drivers are allowed by management to be lax
in their case collection and return procedures, considerable case
mixing occurs. Further, when firms regularly use substantial numbers
of competitors' cases, the problem is compounded, frequently resulting
in many cases moving outside the owning firms' market area.
To maintain better control of their own cases, a few Central Florida
dairy processors began to use case exchange services provided by Mr. Jack
Osteen of Orlando in the late 1960's. In 1970, Mr. Osteen's firm,
Florida Dairy Carton Case Exchange, Inc. (FDCCE) was sanctioned by the
Florida Dairy Products Association (FDPA) to make services available to
all FDPA members throughout the state. Since 1970, FDCCE has established
services in all areas of the state except the Northwest or Panhandle
section. In April of 1977, 19 of the 26 firms in the areas served by
the Exchange were utilizing the services.
Processors use the exchange service on a voluntary basis, paying a
charge of 30t per case returned. The charge compares favorably with
that in other areas of the country. A case exchange in Massachusetts
charges 45 per case for members who own shares in the Exchange, 55t
Friday, July 21, 2006 (3).max
for members who do not own shares, and 65 per case for non-members.
In Cleveland, the charge is approximately one-fourth the price of a new
case, and a similar charge was made in the Chicago area. In most areas,
case exchanges have been only marginally effective in controlling case
losses outside the dairy industry.
The Florida E:...:F'.nAle picks up stray cases primarily at dairy
processors, although a few are obtained at water bottlers and some
food processors. Cases that are abandoned along roadways and refuse
dumps are also picked up whenever found, but according to Mr. Osteen,
these constitute a very small proportion of the total.
The cases picked up by Exchange trucks are stored on a vacant
lot in Orlando leased by FDCCE. Whenever truckload quantities accumulate
for individual processor, delivery is made directly to their plants.
One firm occasionally picks up its own cases at FDCCE's storage lot
when it experiences severe case shortages, and the firm pays a reduced
charge.
One shortcoming of FDCCE's operation is the lack of security at
its storage area. Several thousand cases may be stored unprotected at
any given time. It is quite probable that some theft occurs. However,
it should be noted that FDCCE does not own the storage area, and tighter
security would result in increased operating costs which would eventually
cause charges for returned cases to increase.
Opinions of r,-r's --rcrtiveness in reducing case losses varied
considerably ji if g ;iroceo:.~rs. The average rating for all areas was
2.9, but ranged for 1.0 in the Northeast to 4.7 in the Central section
of the state (Table 18). Reaction to the Exchange was mixed. Some
Friday, July 21, 2006 (3).max
processors were extremely critical, others were pleased. On the
positive side, processors felt that the E/rha.i'je provided them with
improved case returns at a reasonable cost.
Some processors complained that the Exchange "did not come around
often enough". This complaint was heard more frequently outside the
central, homebase area. Perhaps a regularly scheduled route for all
areas by FDCCE would alleviate this problem. On the other hand,
operation of a truck route entails considerable expense, and it may
not be economically feasible for FDCCE to *oro-te routes on a scheduled
basis. An alternative which FDCCE might explore in the interest of
improved public relations would be to :-rovide cooperating processors
with a periodic report on the number of their cases which FDCCE has on
hand. Obviously, FDCCE cannot economically justify delivery of small
numbers of cases, but conversely, it cannot retrieve cases without
visiting processors either.
Some processors also voiced concern over the integrity of the
FDCCE operation. Comments focused on three primary areas: 1) the
temptation to pick up cases behind stores or other unprotected areas,
2) the temptation to sell Florida cases out of state, and 3) selective,
arbitrary case collection procedures from processors resulting in some
firms not obtaining their cases back from other firms. There are no
easy ways to allay these concerns. One procedure which could reduce
or eliminate many complaints would be an inexpensive invoice system
maintained by FDCCE and verified by processors, which would account for
all cases picked up and delivered by FDCCE. Abandoned cases located
by FDCCE would obviously lack verification, but should constitute an
Friday, July 21, 2006 (3).max
extremely small proportion of the total. The accounting system could
be audited periodically by FDPA as a condition for continued sanction
of FDCCE. The records would provide a greater legitimacy for FDCCE
and would provide processors with assurance that they are not being
treated unfairly. Further, detailed auditing of the case exchange
invoices could give processors an indication of which firms are lax in
their own case collections. Individual processors could then take
appropriate action with those particular firms, which should result in
less case "mixing".
It should be noted that the present system is basically unfair to
firms which conscientiously keep their cases separate from their com-
petitors. They pay a fee to get their own cases back (which is still
substantially less than the price of a new case) while firms that
indiscriminately pick up cases benefit from the use of the cases and
are not penalized for doing so. A more equitable, but presently un-
workable arrangement would be to have firms possessing others' cases
bear the costs of returning them to the owners. This arrangement
would probably require legislative action.
Retailer Incentives
Retailer incentives such as discounts or rebates for case returns
have not been used in Florida. Further, processors were of the opinion
that such incentives would probably not be very effective in reducing
case losses. Their average rating was only 2.4 (Table 18). Several felt
that a retailer incentive would not be practical because of the record
keeping that such a plan would necessitate. The combined costs of record
keeping plus the incentive itself were viewed by processors as too great
to make this a viable alternative.
Friday, July 21, 2006 (3).max
Since adequate data on case losses by retail firms were not available
from processor, the retailer incentive plan could not be analyzed from
an economic standpoint. As data are obtained by processors, however,
this alternative may be reexamined.
Warnings on Cases
The use of warnings against unauthorized use of cases appears to
be increasing rapidly, especially on plastic cases. Approximately
70 percent of the firms which use plastic cases reported having warnings
on some or all of those cases. The prevalence of warnings on wire cases
is substantially lower. About 25 percent of the firms reported using
warnings on some or all of their wire cases.
Most plastic cases have flat side panels which allow manufacturers
to print almost any desired warning on the sides at very low cost.
Most plastic case manufacturers will print warnings on two sides along
with the purchasing firm's name and/or logo at no additional charge.
Warnings on wire cases are less commonplace due to the basic case
design.
Despite the increasing use of warnings, processors are pessimistic
as to their effectiveness. The warnings were rated considerably below
other control measures evaluated, averaging 2.1 statewide (Table 18).
Sufficient data were not available to analyze statistically the effects
of warnings on case losses.
Despite the low ratings given to warnings, it is suggested that
processors be sure to specify a strongly worded warning when ordering
cases. Cost would not usually be a factor, and the warning may deter
a segment of the population that may be tempted to "take" cases in the
absence of a warning.
Friday, July 21, 2006 (3).max
Additional Control Measures
Several methods of controlling case losses now used by some
firms in Florida or in other states considered to be potentially use-
ful were investigated with processors and retailers. The measures
evaluated were: deposits, a universal case plan, state inspectors,
signs and fences, voluntary inside storage by retailers, public re-
lations efforts, bulk delivery systems, and case redesign. Each of
these is defined and discussed in detail in succeeding sections.
Processors and retailers rated each of these measures on a nine-
point rating scale indicating how strongly they cited or disliked
each measure (I = like very much, 9 = dislike very much). Average
ratings by dairy executives placed a mandatory deposit as the most
preferred measure while a voluntary deposit was among the least
liked (Table 19). Retailers disliked a mandatory deposit, but opposed
a voluntary deposit even more.
Aside from their differences on a mandatory deposit, processors
and retailers generally agreed in their ratings of the other control
measures. There were differences between ratings by supermarket
executives from those by representatives of convenience store fims
(Table 19). Supermarket personnel showed a much stronger dislike for
the mandatory deposit and voluntary inside storage than did members
of convenience store firms. On the other hand, convenience chain
executives were less interested than supermarket personnel in joint
public relations programs with dairies to attempt to reduce losses in
milk cases and grocery carts. Ratings and other aspects of each of
the measures along with comments by those interviewed are discussed
in detail in following sections.
Friday, July 21, 2006 (3).max
Table 19.--Processors' and retailers' ratings of case loss control
measures
Retailers
uConvenience A1l
Measure Processors Supermarkets stores retailers
Mandatory deposit 3.6 8.1 5.6 6.7
Voluntary deposit 7.4 8.4 8.2 8.3
Universal case plan 7.1 6.2 7.0 6.6
State inspector 6.2 5.9 7.9 6.9
Warning signs 5.8 2.9 4.4 3.6
Fenced enclosures 5.4 6.4 5.2 5.8
Voluntary inside
storage 5.8 4.7 2.6 3.7
Public relations
program 5.0 3.7 5.5 4.1
Bulk delivery
system 7.6 6.1 7.6 6.9
Case redesign 4.9 2.3 3.7 3.1
aScale of 1 to 9,
very much".
where 1 was "like very much" and 9 was "dislike
In addition, ratings on each control measure were combined into
three groups, to give a general indication of processors' and retailers'
overall feelings toward each of the controls. As already noted, both
groups felt generally the same about the measures, with the exceptions
already indicated (Table 20).
Deposits
No subject connected with case losses is so likely to get a smile
from processors or a snarl from retailers. A mandatory deposit, establish-
ed by state law or regulation, was most preferred by processors from
among the choices offered in interviews. As could be expected, retailers
Friday, July 21, 2006 (3).max
ranked the mandatory deposit far down in preference, with an average
rating of 6.7, compared to the processors' rating of 3.6 (Table 19).
Table 20.--Processors' and retailers' preferences for control measures
Processorsa Retailersa
Measure Favor Neutral Oppose Favor Neutral Oppose
------------------- Percent ---------------------
65 11
Voluntary deposit 15
Universal case plan 10
State inspectors 24
Warning signs 21
Fenced enclosures 31
Voluntary inside
storage 26
Joint public
relations 33
Bulk delivery
systems 6
Case redesign 38
aOn a rating scale of
Processors in the Northwest area
by area) and in the Northeast favored
24 25
76 0
68 0
58 14
47 57
44 33
52 54
30 56
1-9; 1-3 = favor, 4-6 = neutral, 7-9 = oppose.
(see Table A-1 for firms and locations
a mandatory tf ~' r.it considerably more
than did executives in the other three areas (Table 21). However, the
mandatory deposit was also preferred to other alternatives in South Florida,
even though rated considerably lower than in the Northeast and Northwest.
Central Florida processors rated a mandatory deposit 3.7, second in their
preferences, as did West Cna-t processors with a 3.9.
Voluntary deposits were rated last or next-to-last in all areas, re-
ceiving an average rating of 7.4 statewide. A voluntary deposit was
Friday, July 21, 2006 (3).max
Mandatory deposit
disliked slightly less in Central Florida, with the strongest negative
feelings in the l it.'eIt and Northeast regions.
Table 21.--Processors' ratings of selected case loss control measures,
by area
North- North- West All
Measure west east Central Coast South areas
------------------- Mean ratingsa-----------------
Mandatory deposit 2.6 2.7 3.7 4.1 4.8 3.6
Voluntary deposit 7.8 7.8 6.7 7.3 7.1 7.4
Universal case plan 6.4 7.3 7.3 7.6 6.3 7.1
State inspector 5.4 5.8 7.3 6.0 6.3 6.2
Warning signs 6.0 5.5 2.0 4.6 5.4 5.8
Fenced, lockable
enclosures 5.3 4.1 5.5 6.0 6.5 5.4
Joint public
relations 5.0 4.2 4.9 3.9 5.4 5.0
Bulk delivery
system 6.9 7.6 8.1 8.1 6.6 7.6
Case redesign 3.4 4.1 5.5 4.4 5.1 4.9
aMean values are based
9 = dislike very much.
on a rating scale where 1 = like very much,
Retailers were even more strongly opposed to a voluntary deposit
than were processors.
Average retailer rating was 8.3.
As mentioned
earlier (Table 19) retailers rated a mandatory deposit 6.7, with super-
markets much more strongly opposed (rating of 8.1) than convenience
stores (5.6 rating).
Processors were asked what amount a deposit should be, if a deposit
were required. Suggestions for deposit amount )-!,i- from 25d to the
cost of a case. Average for all processors was $1.11 (Table 22).
Friday, July 21, 2006 (3).max
When asked to estimate costs to their firms of implementing a
deposit system, processors gave figures from zero to about $94,000.
,A'.'er-lT' cost per firm was estimated at about $20,500 per year. Total
annual cost for the 34 firms serving Florida was nearly $700,000
(Table 23).
Retailers were reluctant to estimate their costs for a deposit
system. Only a few firm representatives would estimate store employee
time and other costs associated with a deposit. Nearly all who would
estimate time needed figured an added 5 minutes per store per delivery.
Calculating only employee time at $3 per hour, average cost per store per
year was about $65. While not appearing large at first glance, this
amount would mean that a supermarket chain with 200 stores would spend
$13,000 per year more than they are currently spending. A convenience
chain with 500 stores would spend $32,500 annually. Costs for additional
storage and accounting could not be estimated.
There are an estimated 7,500 grocery stores of all types in Florida.
At $65 per store per year, cost of a deposit system would be $487,500
annually for grocery stores. Costs to restaurants, institutions and
other outlets served by dairies are not included in this figure.
Table 22.--Amount of deposit suggested by processors, by size of firm
Size of Amount of deposit
firm Number Average Low High
--------------- Dollars -------------
Large 10 1.08 0.25 2.08
Medium 11 1.32 0.50 2.50
Small 10 0.92 0.25 2.00
All firms 31 1.11 0.25 2.50
Friday, July 21, 2006 (3).max
Table 23.--Processors' estimates of the cost of a deposit system, by
size of firm
Size of Average Estimated
firms Number cost Low High state totals
------------------- Dollars-------------------
L-- 10 29,774 0 93,985 297,742
Medium 9 23,467 0 65,000 305,071
Small 9 8,499 0 17,160 93,489
All firms 28 20,479 0 93,9'',5 696,302
aTwn medium firms did not make spcaific estimates, altl+khough t
I -. I I. I~ _V__ U.1+kVUr_- ,
did indicate a deposit system would entail "-, n.I'1, unknown costs". An
arbitrary figure of r.O per v,.-i- was estimated for these two firms.
Total costs estimated for dairies and grocery stores is about $1,184,000 -
about what processors' case losses are now.
Additional requirements for a deposit system are monitoring and
internal accounting in dairies. Those states which have mandatory
deposits also have state employees auditing both processors' and re-
tailers' records to insure that dairies are *:h3r-iing and customers are
paying the deposit. All billing is on a net basis, and most firms use
a computerized accounting system, so actual deposit collections would
not likely be large, nor would accounting costs. California dairies
using a voluntary deposit keep records of customer case use but do not
collect deposits unless the customer leaves that processor.
A major problem reported from all states with either mandatory or
voluntary deposits is the amount of time needed at plants and distribu-
tion centers in counting empty cases back in, and in keeping track of
case movement for individual routes. F:FP''-- entatives from two different
Friday, July 21, 2006 (3).max
state organizations reported that firms that jF',i.n rigorous internal
-a3r q:;ent controls when deposits were required, and maintained those
controls,reduced case losses significantly. One of those representatives
suggested that the main value of a deposit program was the greater
internal control established by dairies.
Other industries have collected deposits on returnable cases
and containers for many years. Soft drink bottlers are the most note-
worthy example. The long history of soft drink case deposits, and
differences in the competitive structure of the soft drink and milk
industries generate a different climate among retailers toward deposits
for each of the containers.
Eggs, bread, meat and other food and beverage products are also
delivered to retail stores in reusable cases and containers. Many
retail organizations, especially convenience chains, use a plastic
case or "totebox" for dry groceries, health and beauty aids and other
packaged merchandise. These containers are usually accounted for with-
in the retail organization.
Plastic egg containers, which hold 15 dozen eggs, are lost at the
rate of 3 to 4 percent per year according to one Florida firm. Losses
for the first six months after these egg cases appear in a given area
are about 10 percent, then drop to the levels mentioned above. One
firm tried to impose a deposit of 50t per case, but decided not to
because of complaints from retailers and competitive pressures.
Universal Case Plan
The concept of a universal case plan where a service firm owns
cases and distributes as needed to dairy members was briefly described
Friday, July 21, 2006 (3).max
to processors and their reaction was obtained. Statewide, two-thirds
felt that such a plan was infeasible. On the nine-point preference scale,
the universal case plan (UCP) was rIne-ally disliked; the average rating
was 7.1 (Table 19) and all areas were very similar (Table 21). Retailers
expressed a similar negative reaction with an average rating of 6.6
(Table 19). Most retailers felt that a universal case plan would have
little if any effect on them. Processors and retailers felt that a
UCP would add another firm that would have to cover expenses and return
a profit, so that case costs would likely be higher than at present.
One plan is currently functioning in Cincinnati, Ohio. The executive
director of this plan was interviewed. The UCP was originally organiz-
ed in 1975 as a non-profit corporation by three major firms, two of
which have since merged. Five dairies in the market area do not partici-
pate. In the two years of the plan's operation, case costs to the dairies
have remained at the same levels as before the UCP.
The two firms which are now members have tightened up their case
accounting procedures, but the UCP has not solved the basic case loss
problem. The UCP executive felt that consumers in general and other
dairies are responsible for case losses. Operating details of the
Cincinnati UCP are presented in Appendix C.
A universal case pool can be particularly helpful in markets which
have a relatively high proportion of volume which is not particularly
loyal, i.e., accounts which are under contract to the lowest bidder.
Case pools can result in greater efficiency by eliminating excess
case requirements that may result when such accounts move from one
processor to another. Given the nature of the various Florida markets,
Friday, July 21, 2006 (3).max
the prevailing attitudes towards a universal case plan and experiences
in other areas, this alternative does not appear to have much promise
of alleviating the Florida industry's problem.
State Inspector
Processors and retailers tended to dislike the alternative of
the dairy industry hiring a state inspector to look for unauthorized
use of cases as shown by the average rating of 6.2 for dairy processors
and 6.9 for reatilers. The primary complaint from both qrr'upr was "we
have too many inspectors already".
A few processors suggested that the present corps of plant inspectors
could be given additional authority and responsibility for correcting
unauthorized case use in plants. However, several other dairy represent-
atives felt plant inspectors should not depart -rr:ril the primary job of
sanitation and plant condition to be, as one processor put, "everybody's
policeman".
The Michigan Department of Agriculture does investigate reports
of unauthorized case use, and provides post cards for individuals to
report such use. However, none of the nine other state organizations
were found to police case use through their agricultural departments.
Warning Signs
Processors' and retailers' reactions to placing warning signs on
loading docks and case storage areas were explored. Processors in
Central Florida and the West Coast generally a!,ipr-,iove of this alternative,
but those in all other areas tended to dislike the idea (Table 21).
The overall average rating was 5.8. On the other hand, retailers,
particularly supermarkets, tended to like the idea. The average rating
for warning signs from supermarket executives was 2.9, for convenience
Friday, July 21, 2006 (3).max
stores 4.4, for a combined average of 3.6. Processors tended to be
pessimistic about the effectiveness of warning signs and a few express-
ed concern that warning signs might attract attention to the cases
which would result in greater losses. Others were concerned about
costs.
Signs do offer the potential of serving a dual purpose. First of
all, the obvious effect would be to inform the public that it is illegal
to take cases. Several processors and retailers felt that many people
were not aware that taking cases was wrong, since cases are unprotected,
and usually at the back of the store in the same areas as the trash.
Another purpose would be to inform retailers that the dairy industry is
serious about controlling case losses. Signs could be used as a part
of a retailer-directed public relations effort.
Fenced Enclosures Outside r- il1 Stores
This measure generated few strong feelings among processors and
retailers. Average ratings were 5.4 and 5.8, respectively, or about
neutral. Some 31 percent of the processors favored the measure, 44
percent opposed it and 25 percent were neutral. Among retailers, 33
percent were in favor, 13 percent were neutral, and 53 percent opposed
fenced enclosures (Table 20).
Several dairy executives, as well as most retailers, were concerned
about likely costs of building enclosures at stores, especially super-
markets. Continuing costs for maintenance and cleaning, and added labor
in moving cases in and out were also expected to be deterrents to wide-
spread adoption.
Friday, July 21, 2006 (3).max
Voluntary Inside Storage by Retailers
Processors rated this measure 5.8, considerably lower than the
retailers' 3.7. Over half of the processors were opposed to trying
to establish this measure, as they felt it would be too costly and
impractical for retailers and an intrusion in internal store operations.
Convenience firm executives favored this control, since many are currently
storing empty cases inside stores. Supermarket representatives were
less enthusiastic about inside storage, rating the measure 4.7 compared
with convenience chains' 2.6. Supermarket executives indicated that
their relatively high volume made inside storage difficult, although
some said they try to keep cases inside in high pilferage areas at the
requests of dairies. Several convenience store executives said their
stores put empty cases back into the cooler. This may be a viable
alternative for many accounts, except where high volume would make
working around empties difficult for store employees as well as drivers.
Joint Public Relations Program with Retailers
Processors and retailers were asked for their opinions about a
joint effort, using mass media and in-store printed materials, to educate
consumers as to the increased costs of the products they buy as a result
of "missing" shopping carts and milk cases. Supermarkets were generally
amenable to such a program, giving it an average rating of 3.7, but
convenience stores tended to react negatively. The obvious reason is
that few shopping carts are used in convenience stores. The overall
processor reaction was mixed as well. Their -eneral reaction was
neutral. There were a few that felt that such a program would have
positive benefits, but there were others that felt that such publicity
would stimulate greater public awareness of milk cases, resulting in
even greater loss.
Friday, July 21, 2006 (3).max
Several dairy organizations in other states have tried various
PR programs. Usually, they have been conducted solely by the dairy
organizations. Results have been mixed, but usually the effectiveness
cannot be measured.
The Cleveland Milk Foundation prepared and distributed news releases
to all local newspapers, radio and television stations. Releases
were used by the media as a public service, at no cost to the foundation.
As a result, several dairies received offers from .;'rr~irycIlr. callers to
sell them small quantities of cases. Dairies suspected that enterprising
individuals had helped themselves to unprotected cases as a result of
the publicity, hoping to make a few dollars. However, the Cleveland area
dairies felt that some cases had been retrieved as a result.
Another media campaign in a southern college town resulted in the
voluntary return of a large number of dairy cases, particularly those
which were the same color as the schools' colors. A major midwest dairy
processor ran a series of radio spots in 1975 aimed at consumers to
educate them as to the seriousness of case losses. The program was
judged to be a total failure because case losses were unabated.
Thus, the overall effects of media campaigns are difficult, if not
impossible, to assess. There is the definite ::o.;ibility of adverse
reaction. Further, to stress the cost of missing delivery cases to
the average family may have little impact, since 1/2t per gallon means
little to family expenditures.
Bulk Delivery Systems
These systems, a radical departure from case deli'.e''y methods now
used, are made up of large wheeled dollies with shelves, holding approxi-
mately 30 cases of milk. Some new or remodeled plants and some large
Friday, July 21, 2006 (3).max
supermarkets have incorporated such systems for many departments,
including dairy products. Some military commissaries also have bulk
milk handling systems.
When considering these systems as alternatives to current methods
with cases, processors did not feel bulk handling was feasible for
existing plants and stores. Processors gave this measure a 7.6 rating,
showing the strongest dislike for it of any of the measures considered
(Table 19). Over three-fourths of the processors opposed bulk systems
as a measure to reduce case losses and only 6 percent favored them.
Retailers rated bulk delivery methods 6.9 and 73 percent were opposed,
with only 27 percent favoring (Table 20).
Many executives from both types of firms.recognized the long-term
trends toward bulk handling milk, and believed that new plants and new
stores would incorporate these systems in the future. A recent study
from Purdue University showed significant labor time and cost savings
with bulk systems in supermarkets.
Processors were concerned that initial costs in plants, trucks
and stores for such systems would be quite high. They also considered
that trucks could transport less product due to weight and bulk of
dollies, and storage and return of dollies and cases would present
many of the same problems experienced with cases.
Case Redesign
The possibility of redesigning the present case was explored with
processors, retailers and case manufacturers. It was felt that a nesting
or collapsible case would facilitate indoor storage by retailers and also
permit more cases to be returned to the processing plant.
Friday, July 21, 2006 (3).max
Heavy sales during the weekend frequently result in retailers stack-
ing cases behind stores. In many instances, drivers making light deliveries
on Monday find that they cannot remove all the empties. As a result, empty
cases are left in alleys and loading docks where they are subject to
damage and pilferage.
The reaction to case redesign by processors was generally one of
indifference. The statewide average preference rating was 4.9. There
were a few that felt that redesign was a viable alternative, but there were
others that were quite pessimistic. Those that disliked the idea were
concerned that case redesign would entail expensive changes to their
equipment, or that the cost of the new case would be prohibitive.
Retailers, supermarkets in particular, expressed a favorable attitude
toward case redesign. Most of the returnable master containers they
presently receive nest in a ratio of 3:1 or more, and they would like for
dairy delivery cases to be easier to store as well.
The seven case manufacturers interviewed that currently make dairy
delivery cases were not optimistic about the possibility of designing
nesting or collapsible cases. Four of the firms have research and develop-
ment departments. Several have developed prototypes which nest or collapse,
but none has been successful. Production runs have been made but there
have been design problems due to the inherent nature of the product being
handled.
Cases for milk must be extremely strong due to the weight transported
and the rough handling they receive in the processing line and throughout
the transportation system. Thus, collapsible cases must have strong
hinges and locking devices, which result in considerable expense. Further,
Friday, July 21, 2006 (3).max
sophisticated machines or extra labor is required to assemble or disassemble
the collapsible cases designed so far.
Nesting cases also present problems. Due to the strength required,
the side wall thickness results in a case which does not nest efficiently.
Further, the necessary angle of the side walls results in wasted space
in transportation. As with the collapsible case, a nesting case requires
expensive machinery or additional labor in the processing plant to correct-
ly index it, that is, turn it in the proper direction so that it will nest
or stack as desired.
The likelihood of developing cases that will permit nesting or stacking
in the near future seems remote. There is always the -possibility, however.
Since this problem area is of nationwide scope and concern, pe'-haus assistance
in case design could be obtained from the U.S.D.A., land grant universities
and case manufacturers.
Minor changes to the basic case currently in use should also be explored.
Cases should be as open as strength requirements will permit, in order to
make them less useful for unauthorized purposes. Another basic consideration
is color. Bright colors, particularly for plastic cases, make identification
easier for drivers. But it is also likely that bright colors make cases
more attractive for non-dairy uses. Adoption of an ugly color might reduce
losses.
Preference Ranking of Additional Control Measures
It is likely that a number of the alternatives discussed above will
be required in order to reduce case losses. In deciding which to pursue,
processors' and retailers' overall preferences must be considered, because
their acceptability is a prerequisite for success for most measures.
Processors' and retailers' like-dislike ratings of the various measures,
Friday, July 21, 2006 (3).max
when ranked show reasonable agreement on most measures, except for deposits
(Table 24).
Table 24.--Ranking of control measures by processors and retailers
Measure Processors Retailers
---- ---- P. 1---------- i. ----------
a. .
Mandatory deposit 1 7
Voluntary deposit 9 10
Universal case plan 8 6
State insI.'ctt:r 7 9
Warning signs 6 2
Fenced enclosures 4 5
Volunt-ir-, inside storage 5 -3
Public relations program 3 4
Bulk delivery systems 10 8
Case redesign 2 1
al = Preferred most; 10 = Preferred least
Case redesign, joint public relations, fenced enclosures, and voluntary
inside storage were all ranked in the top five by both processors and re-
tailers. Warning signs, rated highly by retailers, were placed sixth by
dairy executives. Otherwise, the last four measures listed state inspectors,
a universal case plan, voluntary deposit and bulk handling systems were
ranked nearly the same by both groups.
Findings show considerable agn-empnt on case loss control measures
among both dairy executives and their retail customers. The recommendations
which follow lean heavily on those findings and the agreement shown.
Friday, July 21, 2006 (3).max
CONCLUSIONS AND RECOMMENDATIONS
The methods of reducing case losses explored by this study can
be classified into five broad categories. They are: direct management
practices, public relations efforts, legislative and regulatory measures,
improved technology, and ethics. Each category is discussed below.
Direct Management Practices
Direct management practices cover a broad -nn" of activities which
can help reduce case losses. Their basic theme is to provide the firm
with more information which can be used for making rational decisions
in regard to cases.
Basic Accounting
Until recently, most processors have apparently given little continuing
attention to the case loss problem. Cases are generally ordered on a crisis
basis, whenever shortages occur in the plant. For accounting purposes, most
larger firms treat cases as part of the production equipment. Thus, the
production manager is primarily concerned with having adequate cases. An
alternative is to make the sales department responsible for cases and there-
fore, more aware of case expenditures. The sales department is closer to
the problem and can exercise more control over drivers. In addition,
coordination among production, sales, and accounting departments is essential
for understanding of case losses and controls.
Case Records
In many firms, records of case purchases are usually aggregated with
other types of equipment purchases, making analyses difficult. Readily
accessible records of case purchases along with records of discards would
50
Friday, July 21, 2006 (3).max
allow firms to determine case requirements more accurately than is presently
done. Only one firm of the 34 interviewed had case discard records.
Periodic sampling of cases in use (provided they have acquisition
dates) with a comparison of purchase and discard records would allow a
determination of case life. Thus, such records can provide the basis
for making decisions as to the types of case least susceptible to disappear-
ance and d.irri.e and result in lower case costs.
Driver Accountability
Making drivers responsible for cases on a customer basis is one of
the most effective measures used by dairies. Lax case collection efforts
can be easily spotted by supervisors and corrective action taken. Further,
if drivers know which customers are losing cases and how many are being
lost, they can frequently gain more cooperation from stores.
Cases must be carefully accounted for, however. Estimates will not
work. "Policing costs" of drivers' case inventories to insure accuracy
can be reduced by spot-checking case returns once the procedure is adequate-
ly established.
Case Collection Procedures
In addition to close supervision, drivers need help too, particularly
those less epxerienced. Supervisors can assist in developing route patterns
to minimize case return problems. For example, reversing the route may
make it possible for a driver to delay picking up a lot of empty cases
until later in the day so that he does not have to work around them as
much.
High-volume supermarkets which have a history of high case loss may
justify special collection routes. When weekend volume results in more
cases that can be retrieved by a driver during his regular Monday delivery
Friday, July 21, 2006 (3).max
it may be economically feasible to collect empties quickly, rather than
to expose them to damage and pilferage for several days.
Case Scout
A major midwest dairy processor recently hired a retired police
detective to assist in retrieving cases. The scout is employed full time
at an annual salary of $18,000 plus car and expenses. He has retrieved
enough cases in several months to justify his entire annual salary. "o=;
cases to date, 98 percent, have been discovered at other dairies, although
he looks for cases ~erviwheire. His only authority is that of comip:nY
affiliation, backed by a threat of the states' writ of replevin and
occasional police protection.
The scout's general method of operation is to visit businesses suspect-
ed or known to have his company's cases. He explains the purpose of his
visit in a firm but friendly manner. He notes the number of his company's
cases on the premises and makes an appointment for his firm to pick them
up. Thus far, there has been considerable cooperation.
The brief experience of this firm's scout and a two month study in
California indicate that a case scout's effr'tiveness would be greatest
where dairy processors and their milk customers are guilty of unauthorized
use. The use of a case scout to retrieve cases form the general business
community and public would probably be economically infeasible and damaging
to the c:nFn', 's rr':dJil.
The company plans to rotate the scout among its several divisions
for maximum effectiveness. This approach may be feasible in Florida
where severe problems exist with other dairies. However, the economic
effectiveness may diminish when processors stop using each others cases.
Friday, July 21, 2006 (3).max
A major consideration in hiring a case scout would be the type of person:
personable, yet firm. The retired detective apparently has the necessary
attributes to function adequately in the case scout role.
Use One-Way Cases
One-way cases are presently too expensive for general use. However,
for certain types of accounts, such as ports (ships), airports, and other
outlets where case losses are excessive, "expensive" one-way cases may
be the most economical.
Public Relations
Public relations can be directed at two basic audiences: retailers
and the general public. Each is discussed below.
Retailers
Most retailers contacted during this study were unaware of the economic
losses that dairy processors have been incurring. Retailers do recognize
that cases are valuable. On the average, retailers estimated the value
of a wire case at slightly over $8.00 and the value of a plastic case at
nearly $6.00. Many feel that case loss is primarily due to poor collection
procedures. Th1-e- do not realize how many are being lost at their own stores.
Loss records on a store-by-store basis could elicit greater cooperation
from retailers.
Once adequate loss records are available, dairy executives could make
personal visits to top management armed with specific loss problems and
r-qiue';ts for cooperation. Also, route supervisors could make similar
visits to individual problem stores to elicit their cooperation in re-
ducing losses. Menti.riinn visits with top management to store people will
usually serve to get their attention. These combined efforts, implemented
by all concerned dairies, will serve notice to retailers that the problem
is serious enough to warrant their attention as well. Further, if
Friday, July 21, 2006 (3).max
losses continue, these public relations efforts will have provided some
of the groundwork for stiffer control measures such as deposits.
G>nera, Public
Radio spots and news releases designed to educate the general public
about the seriousness of case losses are difficult to evaluate. Exper-
iences in other areas have been mixed, with little concrete evidence of
their effectiveness. Public-service advertising may be low-cost, but
paid advertising sufficient to provide market saturation would be quite
expensive. Further, increasing the public's awareness of cases through
various programs could increase case disappearance. In view of the
possible adverse consequences of this alternative, it is not recommended
for widespread use.
Legislative and Regulatory Measures
Many processors complained that the present legal remedy for un-
authorized use of cases is too cumbersome. Attorneys have indicated
that little likelihood exists for revising the present legal procedures
to make prosecution of unauthorized use of cases easier. The ,ra-'-nt
law (Chapter 506, Florida Statutes) provides for relatively stiff
penalties, although it could be amended to make penalties more severe,
as several processors suggested.
Part of the difficulty with the oresenL legal procedures may stem
from a lack of understanding of the procedures. A simplified, step-by-
step outline appears in the Appendix D.
Processors plagued with continued and extensive unauthorized use
of cases by a particular firm or individual should consider using the
legal measures currently available, even though it is somewhat burden-
some. Opinions are that one or two successful u-r-:-'vit ions would do much
Friday, July 21, 2006 (3).max
to discourage unauthorized use. Care must be taken that the plaintiff
has -lean hands", i.e., is not guilty of similar misconduct.
Another major alternative wou- be to devel the legal and admisistra-
tive framework for a mandatory deposit system, which could be implemented
if ".' necessary I the dairy industry. Given the *:-t competitive
situation of the Florida dairy industry, a vol deposit system would
probably be unworkable.
A mandatory deposit -' is not a .'icularly attractive option
at present because of estimated costs. Plant labor, security, and adminis-
tration would be excessive for some firms. In addition, the industry
would have to bear the costs of 'ng the system to insure lance
by the state's 7.' stores and t1 processors. In addition, a
Sit system would entail considerable -.-- for retailers as well.
the total costs of a ':...t system would .; .ly outweigh the
'benefits.
Improved case i: ces, if adopted by more firms, will
de the necessary data with which a deposit system can be more accurate-
ly evaluated. In the immediate future, the Florida Dairy action
should continue to monitor the situation in other states that have or plan
to implement a mandatory deposit system in order to avoid their ."' lls.
Finally, FDPA should explore with the Florida ". '. of "culture
and Consumer Services the possibility of havi inspection station
1 check any trucks with cases for illegal interstate move-
ment. These inspection stations have been of service to Florida,
and as a result, groups have requested their assistance. Adding
another function may not be feasible, but it should be investigated.
Friday, July 21, 2006 (3).max
Improved Technology
Successful firms keep abreast of technological changes. Processors
and retailers should investigate labor-saving methods such as bulk
handling systems for new plants and stores. These systems apparently
offer greater security for cases and dollies as well.
Most current bulk systems still use cases and many dairy customers
will continue to need cases for dairy products because of their small
size. Transition to bulk systems will probably take a considerable
amount of time for lircer firms and may never become reality for smaller
ones. In view of the likely continuing need for cases, Florida dairy
processors should explore possible modifications or new types of cases
with manufacturers. In the short run, case costs may be reduced by
adopting "ugly" cases (drab, unattractive colors) and insisting on more
open sides and bottoms to make them less aesthetically pleasing and less
functional for holding small objects.
In the long run, public agencies such as universities and the United
States Department of Agriculture could also contribute research and
development for more efficient, less bulky or less expensive one-way
cases.
Ethics
Dairy delivery cases are an important and necessary element of the
dairy processing business. As part of the delivery function, cases are
comparable to trucks. Few processing firm managers would condone the
unauthorized use of another firm's truck, but -."ly blatantly and
indiscriminately use cases belonging to others that may have an aggregate
value comparable to a truck. Their morally weak argument is "every-
body does it".
Friday, July 21, 2006 (3).max
If all processors made reasonable -. to use only their own cases,
one major source of l "ict and economic loss could be largely avoided.
The continued unethical use of others' cases could 7. : to ether question-
able business practices that would eventually require costly control
measures as well as tarnish the lic image of the entire in' '
Friday, July 21, 2006 (3).max
APPENDIX A
Friday, July 21, 2006 (3).max
Table A-1.--Dairy processing firms contacted
Area and firm
Mobile
Pensacola, Tallahassee
Mobile
Columbus
Pensacola
Cantonment
Robertsdale
Farmbest
Gustafson
Perrett
Skinner
Superbrand
Superior
Velda
Jacksonville
Green Cove Springs
Jacksonville
Jacksonville
Jacksonville
Jacksonville
Jacksonville
Borden
T. G. Lee
Meadow Gold
Velda
Orl ando
Orlando
DeLand
Winter Haven
West Coast
Borden
Farmbest
Florida
Hart
Pet
Sealtest
Sunnybrook
Tony's
Tampa
St. Petersburg
Tampa
Fort Myers
St. Petersburg
Tampa
Tampa
Riverview
Border
Cumberland
Dade Co.
Farm Stores
McArthur
Sealtest
Tripson
Velda
M amil
Rivera Beach
Miami
Miami
Miami
Indiantown
Vero a '.ari.n
Miami
Friday, July 21, 2006 (3).max
Northwest
Location
Barber
Borden
Farmbest
Kinnett
Polar
Wise
Woodhaven
Central
South
,Jr) r t h ,i ,t.
60
Table A-2.--Retail firms contacted
a Stores in
Area and firm Typea Locationb Florida
Northwest
Sunshine-Jr
Jacksonville
Northeast
A & P
Food Fair
Li'l Champ
Munford
Skinner
Winn Dixie
Zippy Mart
Jacksonville
Jacksonville
Jacksonville
Jacksonville
Jacksonville
Jacksonville
Jacksonville
Central
Publix
Lakeland
West Coast
Affiliated
Li'1 General
Shop & Go
South
Cumberland
Farm Stores
Food Fair
Grand Union
Mr. Grocer
Southland
U-Tote-M
Riviera Beach
Miami
Miami
Hialeah
Hollywood
Hialeah
Miami
Total
S = supermarket; C =
convenience chain.
bCorporate or regional office.
Friday, July 21, 2006 (3).max
200
Tampa
Tampa
Mango
200
240
315
150
191
110
53
101
617
75
3,409
Table A-3.--Dairy ji-cups contacted
State
California
Indiana
Massachusetts, New Hampshire,
Rhode Island, Vermont
Michigan
Mississippi
New Jersey
New York
Ohio
Texas
Wisconsin
Dairy Institute of California
Dairy Services of Indiana
Association of New England Milk
Dealers, Inc.
Michigan Dairy Foods Association
Mississippi Dairy Products
Association
New Jersey Milk Industry
Association
New York State Milk Distributors,
Inc.
Metropolitan Dairy Institute
Ohio Dairy Products Association
Cincinnati Cooperative Milk
Sales Association
Cleveland Milk Foundation
Dairy Products Institute of
Texas
Wisconsin Dairy Products Associa-
tion
Friday, July 21, 2006 (3).max
Group
~-~----
Table A-4.--Soft drink, egg and firms contacted
Firm
r .- la ;tling -
Southeast division
Mobile 'on
Local bottler
Royal Crown Bottling y
Jacksonville division
Local bottler
Pinebreeze Farms (eggs)
Sun City Dai Farms (^---)
Pride Bakery Division
Location
S s,
Mobile, Alabama
Gainesville, Florida
Jacksonville, Florida
Gainesville, Florida
Jacksonville, Florida
Miami, Florida
Jacksonville, Florida
Friday, July 21, 2006 (3).max
---- --
Table A-5.--Case manufacturers contacted
Dairy case
Firm and location manufacturer
Amoco
Seymour, Indiana yes
Belleview, Inc. (Helubell)
Belleview, New HI-m.iii-hire yes
Cumberland Case Comimn'.
(Orlando, Florida representative) yes
Erie Crate Company
Erie, Pennsylvania yes
Lustroware Corporation
Columbus, Ohio yes
Nestier'(Midland Ross)
Cinncinatti, Ohio no
Phillips Products Co., Inc.
Bartlesville, Oklahoma no
Piper Industries
Clarendon, Arkansas yes
Rehrig-Pacific
Atlanta, Georgia yes
Friday, July 21, 2006 (3).max
Table A-6.--Fro;lnr-t lons of various types of delivery cases used by
dairies
Number
of Cumulative
Plastic Wire Total Firms percent
100
95
90
84
82
80
70
65
50
40
35
25
22
20
10
5
0
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(Total firms = 33)a
aOne manager that
the .-.i-riprn' t ions.
used both types of cases could not estimate
Friday, July 21, 2006 (3).max
I- ~--~--
Table A-7.--Presence of manufacture dates on cases
Dates on cases Number of processors Percent
Yes 21 62
No 13 38
Total 34 100
Table A-8.--Case exchange costs by size of firm, 1976a
Size of Average
firm costs Low High Totals
Large
Medium
Small
All firms
--------------------- Dollars -----------------
4,200 600 10,000 21,000
3,716 500 10.030 29,728
2 ..., 189 9,207 11,189
3,440 189 10,030 61.917
aOne firm was unable to provide data.
Friday, July 21, 2006 (3).max
I-
APPENDIX B
Friday, July 21, 2006 (3).max
CO N F I DENTAL
FLORIDA AGRICULTURAL "',!R' RESEARCH E'iL:
I_,l PlITv OF FLORIDA
RETAILER QUESTIONNAIRE
1. How many fluid milk suooliers do you have?
Supplier Deliveries per week Ca:
de
City;
Firm:
Person:
Title:
Stores:
ses per
livery
Total
Weekly cases
2. On the average, how many dairy delivery cases would your tyoical
store have:
A. Containing product in the walk-in cooler?
8. Cnnt~irir:q product in display space?
C. Empty
3. How frequently, if ever, do produce departments in .iur stores use dairy
delivery'cases? (Hand card. Side A)
A. Never B. Rarely C. Usually D. Always
Number
Dry grocery department?
A. Never B. Rarely
Number
C. Usually
Meat department?
A. Never B. Rarely C. Usually
Number
4. What is your estimate of the cost of a dairy delivery case
A. Plastic $ B. "ire $
Where are empty cases normally stored?
A. Inside B. Outside enclosure C.
Outside-ooen D. Other:
Friday, July 21, 2006 (3).max
D. Always
D. Always
-2-
5. Do drivers (milk delivery men) usually Dick up all emntv cases
belonging to their company whenever they make deliveries?
A. Yes B. No C. Don't know
6. Do drivers count dairy cases upon pickup?
A. Yes B. No C. Don't know
7. Do your store employees keep records of the number.of dairy
cases received from and returned to suppliers?
A. Yes B. No C. Don't know
(If yes, how?)
8. What other products are delivered to stores in re-usable cases or containers?
(Circle) Do any require deposits? (Circle) If so, how much?
Product Deposit Amount Where Stored?
Eggs Y N
Bread Y N
Soft drinks Y N
Beer Y N
Y N
Y H
Y N
9.. Milk case losses are substantial. Who do you feel is responsible for the
losses?
What measures would you recommend to reduce case losses?
Friday, July 21, 2006 (3).max
10. !We want to get your reaction to several alternative control measures
using a rating scale (give respondent card, 1=like very much, ?=dislike
very much).
What would be your reaction to:
11. Warning signs on open loading docks, outside case storage areas?
12. Outside fenced lockable enclosures?
13. Do you currently have sufficient outside enclosures for milk case
storage? (1)Yes (2)No
14. Joint public relations program for shooting carts, milk cases using
in-store signs, mass media
15. yolu'ntary inside storage effort Cy retailers
16. Given present store facilities, would voluntary inside storage be
feasible?
A. Yes B. No C. Don't know
(If no, why?)
17. What would inside ;sorAcr' space cost your firm per snuare foot? $
What would be your reaction to:
18. A bulk delivery system which would eliminate carts with
larger racks or rolling carts? _
Case redesign: collapsible, to facilitate indoor storage
Friday, July 21, 2006 (3).max
20. State inspector to locate and recover illegally used cases
with salary and travel costs paid by the dairy industry.
21. A universal case nlan: a system where a service firm owns,
collects, and distributes cases to dairy processors charging
rental to participating processors.
22. A mandatory deposit system which would reouire that all
distributors collect a deposit on cases.
23. A voluntary deposit system which would ajow dlt. *.'nn.-.
to ::hj-re a deposit on cases if they desire.
24. H-L, much additional store employee labor would be required
if a deposit system were used?
(minutes ner delivery
total time per week ___ )
25. What other costs, if any, would a deposit system entail?
Friday, July 21, 2006 (3).max
71
CONFIDENTIAL
FLORIDA A IICULTURAL MARKET RESEARCH CENTER
UNIVERSITY OF FLORIDA
DAIRY CASE STUDY
FPCI:LCt ;,: SURVEY
1. What types of cases do you use? How many of
No. Percent Present cost
Plastic
Wire
Other
City:
Firm:
Person:
Title:
Date:
each type do you have in use?
Colors, markings, etc.
$
$
S
2. Advantages, Disadvantages:
Plastic
Wire
Other
3. Case Suppliers:
Plastic:
Wire:
How would you describe your case loss situation? (Card A)
extremely serious serious moderate slight no problem
1 2 3 4 5
A. How many plastic (wire) cases have you purchased (lost) in recent years?
Fiscal/Cal. Plastic W ire
Year Bought Lost Bought Lost
to_ N. $ Value No. S Value I N. $ Value No. Value
1976_
1975
1974
Friday, July 21, 2006 (3).max
X
4
,,
-2-
6s What has been your yearly total volume for these years?
What has been your maximum (peak) weekly volume?
Year Total Yearly Volume Maximum Weekly Volume
Yr (gals. or Ibs.) (gals. or Ibs.)
1976
1975
1974
7. How frequently do you order additional cases?
8. Do you mark acquisition dates on cases? Yes No
9. .bat proportion of ,.ouL, cases would currently be in use at Plants(s) __
Dist. Centers) Trucks Customers __ ?
10. Ratio of cases to product movement:
11. How many cases are discarded every week due to damage or condition?
Plastic Wire Total
12. Do you 'currently participate in the state case exchange program? YES M0
WHY?
[If yes] What have been your costs of the case exchange program?
1976 S 1973 1970
1975 1972
1974 1971
13. In addition to direct replacement costs, what other costs do you incur, if any,
due to missing cases?
Down time of processing plant S
Increased labor..............
Increased transportation.....
14. What type of delivery system do you presently use?
Service Drop [If drop], When did you adopt?
Supermarkets
Convenience stores
Independents
Restaurants
Schools
Other
Friday, July 21, 2006 (3).max
73
-3-
15. How many delivery routes do you have?_
Trucks? Drivers?
16. [If firm makes drop shipments]
How many routes trucks and drivers would you
need if you made all service deliveries?
17. What kinds of outlets are your main customers? How often, on the average,
do you deliver to these types of outlets? What volume of cases or percentage
of volume goes to each? What percentage of case losses occurs in each?
Deliveries/Week Volume Losses
Supermarkets
Small groceries
Convenience stores
Restaurants
Other institutions
18. Based on your experience and oIbservations, who do you fee is responsible for
.U, LO J kt yVUZ LlUll ZI Uki U f ctJL I uu I I t j1ur
unauthorized use of cases? (Rotate, Card 8)
(Rate on a rating scale where 0 = extremely unlikely, 9 = extremely likely)
Produce merchants Supermarkets
Other dairy processors Convenience stores
Other food processors Independent groceries
Water bottlers Schools
Commercial fisherman Restaurants
Electricians Other
Plumbers
Apartment dwellers
College students
19. How do you currently try to hold down case losses? Which of the following
methods do you presently use? How would you rate the effectiveness of each
on a rating scale when 0 = extremely ineffective, 9 = extremely effective?
(Card C) Comments
Identification (name)
Member, Fla. case
exchange
Driver's case
inventories
Friday, July 21, 2006 (3).max
19. Continued.
Driver education
Company policy
Driver incentive plan
Retailer incentive plan
WE WOULD LIKE TO GET YOUR REACTION TO SEVERAL CONTROL MEASURES THAT ,'L BEEN
PROPOSED IN OTHER STATES.
CONTROL MEASURES
Deposit System
20. Is a voluntary deposit system (1) feasible or (2) infeasible for the Florida
industry?
21. Wh't is your reaction to a mandatory deposit system? (1 = like very much,
9 = dislike very much, Card D
22. Why?
23. Assuming that some type of deposit system could be designed, what size
deposit would you recommend? _
24. What would it cost your firm to implement a deposit -t.: e.?
ITEM APPROXIMATE COST/'-'E r[1
Universal Case Plan: a system where a service firm owns, collects, and distributes
cases charging rental to participating members.
25. Do you feel that a universal case plan is (1) feasible or (2) infeasible?
Comments:
Friday, July 21, 2006 (3).max
-26. What would you expect a UCP to cost per case per trip?
27. What is your overall reaction to a universal case plan?
(1 = like very much, 9 = dislike very much)
28. .'ndt is your reaction to a system which provides for a
state inspector who would locate and assist in recovering
cases, with salary and expenses to be paid by the industry?
Do you feel this would be (1) feasible or (2) infeasible?
29. What is your overall reaction to this system?
(1 = like very much, 9 = dislike very much)
30. What is your reaction to the present "writ of repievin"
which provides for retrieval of cases by the rightful
owner? (1) adequate (2) inadequate
31. [If inadequate], what further measures do you recommend?
WHAT IS YOUR REACTION TO:
(Rate, Card D, I = like....9 = dislike)
32. Warning signs on users open loading docks, outside case
storage areas?
33. 'Outside fenced, lockable enclosures?
34. Joint public relations -;r -, with retailers for shop-
ping carts, milk cases using in-store signs, mass media?
35; A voluntary inside storage effort by retailers
36. A bulk delivery system which would eliminate carts with
larger racks or rolling carts?
37. Case redesign: collapsible to facilitate indoor storage__
38. What other measures do you suge :t, if any, for control of case losses?
(also rate each, 1 = like very much, 9 = dislike very much)
Friday, July 21, 2006 (3).max
APPEND C
Friday, July 21, 2006 (3).max
UNIVERSAL CASE Pi..
Cincinnati, Ohio
There are very universal case pools operate in the U.S.
plan in Cincinnati was initiated in -, 1 ., by three
major firms, two of which have since merged. These ms account
for 40 to -- percent of area milk volume. Five area -' : chose
not to participate in the plan. The UCP is organized as a
Universal Milk '-'le Service Inc., a : 't corporation.
The three 'ci. ': firms were issued a case --:
based .- a "float" factor of 0.8 and their class I sa' : the
month immediately preceding the UCP start No initial inventor
was taken.
Maintenance funds are obtained r .. members on the basis of
volume. ,:ci are ..red to contribute 5i per cwt. on
Class I milk and cwt. on Class II volume each month. In
addition, as members need new cases, ., an initial charge of
40 percent .. new case :. ce. This is currently $1.00. Th
5t and 24 assessments were initially determined on the basis of
costs incurred by the .-'cipati .' firms. The fees are subject t
periodic revision to keep revenues approximately equal to costs.
ts were .' for : and December, "'76. All new
cases are identified by color and name as belonging to the Univers
case .1.
y
e
o
No
al
Friday, July 21, 2006 (3).max
Firms that no longer want to :'"tici :' in the are ''led
to a case refund (actual cases only) based on a .* actionn
schedule as .. lied to their original case i. They do not
get credit for cases ordered -" joini : the zation. Cases
bel :i to the UC 1 are also iated over 5 years.
Case costs are currently estimated to be 0.5 cents -llon
of Class I sales, : -* :' ly what they were to the UCP.
According to the director of the --.-. a major 'lem is the
limited partici '"on. He feels that case costs could ibly be
reduced if more firms would ". Case collection -
have not been ----iably altered the ipating firms, though
firms have "ti."' .-' -. on their case accounting methods. The
UCP with ': '-:. participation : result in increased -" iency
for participati-- firms, but it does not solve the basic case loss
lem.
A Universal case :.- 1 would be "cularly ..CF 'ive in a market
which has a relatively high proportion volume which is not 'ticular-
ly "loyal", i.e., accounts which are under contract to the ::.'
bidder. Case pools can result in greater efficiency by eliminating
the excess case requirements that may result when such accounts move
one ir to another.
The market area where the 'versal case 1 is currently operat-
ing also has a case exchange program. A firm collects other firms'
cases from processors and returns them for 50 cents each. The firms
that belong to the '...'versal case 1 also Iicipate in the case
S program. .-- there are some 'rms in the area that do
not cooperate with either .
Friday, July 21, 2006 (3).max
CONTRACT CINCINNATI UNIVERSAL CASE PLAN
This agreement made in the City of Cincinnati, Ohio, this day
of __, 19 by and between the UNIVERSAL MILK BOTTLE
SERVICE, INC., as Ohio Corporation not for profit hereinafter called
"UNIVERSAL", AND of
hereinafter referred to as "handler", to wit:
I. Whereas, UNIVERSAL provides various services for milk processors
and/or handlers, including the service of providing milk cases;
II. Whereas the "handler" desires to use milk cases owned and provided
by UNIVERSAL: and,
III. Whereas, UNIVERSAL desires to provide milk cases for the use of
the 'Handler".
Now, therefore, UNIVERSAL AND "handler" agree as follows:
1. "case", as used in this agreement, means a moulded or extruded
plastic container of four sides and with a bottom, designed
to hold milk and products of milk packaged in other than glass
containers, and by way of emphasis, cases or containers desiirn,-.
to hold milk and products of milk in glass containers are exclud-
ed from the purview of this agreement.
2. "handler", concurrently with the execution of this Agreement,
will furnish UNIVERSAL the following information and authority -
a. The number of cases now "owned by" "handler", being the
number of milk cases now under the control and possession
of "handler" and which "handler" has the right to use and
to possess; except, as a lesser number results from the
multiplication by .8 of the hundred weight of milk sold
in Class I by "handler" in the last full month of operation
prior to the signing hereof, as such information is furnished
by the Market Administrator for such month. The smaller
number shall be the number of cases i.rwn.ri by" the "handler"
for all of the purposes of this agreement.
b. The "brand" or other identifying mark or insignia used by
"handler" in indicating ownership of milk cases acquired
from other than l'UN]E ',AL.
78
Friday, July 21, 2006 (3).max
c. "Agency" authority to "register" the "brand" or other "'nart"
or "insignia", of the "handler", as provided in Sec. 1329.41
et seq. ORC, except as "handler" may have here-to-fore made
such a registration; and to pick-up (take possession) milk
cases carrying the brand, mark or other insignia of "handler"
wherever they may be found except as "handler" is in
control and use of such milk cases.
c. Direction to the appropriate office of the "I.irk-t Administrator
to furnish to UNIVERSAL the pounds of Class I and Class II
sales of "handler" for the month.
2. a. UNIVERSAL will provide milk cases to the order of "handler"
on order placed on and after 1975, and such
order will be delivered to "handler" place of business
days after the placing of such order for milk
cases with r'NIV']RSAL.
b. UNIVERSAL will endeavor to recover milk cases of "handler"
and other similarly situated, as the same can be determined
by the 'L.rrad", "mark" or other insignia or sign of owner-
ship, wherever they may be found, except as such cases may
be under the control and use of "handler", as in part 1(c)
authorized.
3. a. "handler" agrees to pay UNIVERSAL for milk cases ordered
from UNIVERSAL, as aforesaid, at the rate of 40% of the
cost of such cases) (as in part (b) of this part provided),
payment to be made to ..'1rVERtiFAL by "handler" within ten
(10) days of the receipt of an invoice from UNIVERSAL by
"handler"; and, additionally, "handler" shall pay monthly
to UNIVERSAL, as part of the consideration for the services
of UNIVERSAL, as herein specified, as follows:
(i) 5t per cwt on the Class I sales of "handler" in
the month, as such information is supplied by
the appropriate office of the Market Administrator,
as in Section 1(d), hereof provided, and,
(ii) 2t per cwt on the Class II sales of "handler" in
the month (supplied as in 1(d) above).
(iii) The monthly payment as in parts (i) and (ii)
hereof provided shall be made by "handler" as
aforesaid, to UNIVERSAL not later than ten (10)
days following the furnishing of the Class I
and Class II sales oni~rl' for the month to
UNIVERSAL as in part 1(d) hereof required.
(iv) Provided, however, that O:ir.neint rates, as set
forth in parts (i) and (ii) hereof, shall be
reviewed by UIV','L::.AL not less often than once
each year and any modification or adjustment
Friday, July 21, 2006 (3).max
of such rate shall be made known to "handler"
not less than 120 days prior to the anniversary
date of this agreement, except as the parties
hereto may otherwise agree.
(v) and provided further, that the obligation of
h-incler" to U:VEPiAL, calculated as in this
part set forth, shall be subject to a credit
to "handler" on product shinnpped in a '.- s)"
furnished by a third party not a party to an
agreement with UNIVERSAL (see part 5 of this
agreement) or as may be shipped in paper, wood,
or metal containers, not ",e;' provided by
UNIVERSAL as herein provided; such credit to be
taken on the invoice from UNIVERSAL TO "handler";
and, "handler" ships product subject to such
credit, generally, as follows:
(if none, so indicate)
b. .ilIVEI2'L shall make known to "handler" its "cost" of
a casess, as the term is used in part (a) of this part.
c. "handler" acquires no ownership or right or duty of
ownership in milk cases "ordered" from and received
from UNIVERSAL and for which payment is made to
UNIVERSAL as in 3(a) hereof provided except:
(i) The right to use and to possess said cases
for the purpose of storing, holding and
delivery of milk products.
(ii) The right to recover and possess said milk
cases against the adverse claim of any party
except UNIVERSAL, and even against i" ;I'VER'dAL
as long as payments are made in accordance
with the provisions of part 3(a) hereof.
d. I.iVE'.SAL shall hold and meet the duty of ownership
in said milk cases, except that of "use" and ',-.:::....ion"
which may be in "handler" as a result of making payments
of money as in part 3a, 3a(i) and 3a(ii) provided, and
as aforesaid.
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4. a. is agreement shall continue in effect ... .- to
year, bei a one (1) year contract renewable automatically
:-' as cancel" '. and cancellation and termination
can be had by either .rty on the gi.'. of notice in
writi to the other .. of the intention to terminate
and giving such notice in writing not less than ninety
( ..) days prior to theanniversary date of such contract.
b. On termination by either the rights of
to milk cases which he be usi or which it may
have in possession shall be determined as follows:
(i) The .-- of cases by
as provided in .:: 1(a) shall be reduced '
20% for year that '- 1 and UNIVERSAL
have been ties to this contract. (Example:
At the end 5 years, 1 would "own"
no milk cases).
(ii) number of milk cases by '
the calculation reduction as in
t (i) of this part shall be furnished to
"-.. by UNIVERSAL whether,
marked or bearing the ia of 1. '
is immaterial to this agreement, .. there
s to be an -'. in furnishi .milk
cases so marked, to the extent available.
(iii) milk cases in the use, possession and/or
control of in excess of the number
"-.. .' by as calculated according
to the provision of part (i) of this ,
shall be returned to
5. It is and understood by and between .. AL and
that UNIVERSAL has more than one agreement of
this type, of the same terms and 'sions : for
difference of name of 1- number of milk cases
listed, etc., and that UNIVi. will be .. 'ding
service to all with whom it contract and that any
-.y, a on this or another such .,
might receive a milk cases) bearing the' .... mark,
or insi .-'a of a "hand'. on another such agreement
with UNIVERSAL and, a ,. r" on another such
t with UNIVERSAL receive a cases(s"
beari : the brand, mark, or other insignia ', "ler"
herein, and "cases" so furnished and marked or branded
is not a violation of this ..; ; is immaterial to
this :- .-. -. or to any other like it; and in no way
diminishes, enl -. upon, or alters : duties
imposed by the agreement or others like it.
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82
In Witness whereof, Witnesseth the : "te signatures, binding
S rties hereto to the ':sions and duties of this .
affixed on the day and year first aforesaid.
UNIVERSAL M' BOTTLE "-.'I-, i: :
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~~~
APPENDIX D
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PRESENT LEGAL REMEDIES
The following is an outline of legal procedures that are presently
available to the Florida dairy industry for controlling unauthorized
case use. As in all legal matters, extreme caution should be exercised
when using these remedies, and a competent attorney consulted prior to
taking action.
I. Statutory Remedies
A. Florida statutes (506) stm .iped on marked bottles and boxes.
i. Obtaining possession of containers (506.37).
a. The owner may take possession of any such container
and shall not be liable in damages therefore, on for
any trespass arising out of taking possession.
b. Under common law, trespass would be involved but for
the provisions of F.S. 506.37.
(1) An owner is entitled to enter the premises of
another for the purpufis of demanding the return
of his property. He may use whatever force is
reasonable and necessary in self-defense of his
person if he is physically attacked by the owner
of the premises, (Arlowski V. Foglio, 135 Atl.
397, 1926).
c. F.S. 506.37 essentially permits self-help but there
can be no breach of the peace in so doing. Where
there is a reasonable likelihood of physical violence
or opposition the search warrant route should be used.
(See next major section.)
d. Statutory trespass (810.08).
(1) Whoever, without being authorized, willfully
enters or remains in any structure or having been
authnri7Pd is warned to depart and refuses to do
so commits the offense of trespass.
(a) F.S. 506.37 provides a statutory exception to
the above rule concerning trespass.
84
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(b) However, where there is a 3tr--nq possibility
of a breach of the peace occurring (if the
owner does much more than merely request the
return of his containers), the owner should
refrain from relying on the statutory pro-
tection of 506.37.
II. Search Warrant
A. Steps involved (506.03).
1. When any person shall make an oath
2. before the county court judge
3. that he has reason to believe and does believe that his
containers are being unlawfully used by another person
4. the judge shall thereupon issue a search warrant signed
by him
5. to the sheriff or r-in other person authorized by law to
execute process
6. commanding the officer to search immediately the r-'n.o't'v
described in the warrant for theproperty specified and
bring the same before the court.
B. Court Proceedings
1. Where such containers are found to have been unlawfully
held the county court judge who issued process shall
proceed to trial and judgment.
2. Upon rendering judgment, the court shall award possession
of the containers so taken under such warrant to the
owners of the containers.
III. Replevin (F.S. 78)
A. Right of replevin (78.01).
1. Any person whose property is w.- 'rinlfully detained by any
other person may have a writ of replevin to recover such
property.
B. Procedure for obtaining pre-judgment writ.
1. Plaintiff shall first file with the clerk a complaint
reciting the following information:
a. Description of the claimed property which is sufficient
to make possible its identification along with a state-
ment of its location and approximate value.
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b. Statement that the plaintiff is the owner of the claimed
property.
c. Statement that the property is wrongfully detained by
the defendant al-,ni: with a statement of the means by
which the defendant came into possession of the con-
tainers, as well as, a statement of why the defendant
is wrongfully detaining them.
d. Statement that. the claimed p:pe--ty has not been taken
for a tax assessment.
e. Statement that the claimed property has not been taken
under an execution or attachment against the property.
2. Court will examine the filed complaint, and if, on the basis
of the complaint and further showing of the other relevant
evidence in support of it the court finds that the defendant
has waived his right to be notified and heard, the court shall
promptly issue an order authorizing the clerk of the court
to issue a writ of replevin,
a. Waiver by the defendant can be in terms of:
(i) Engaging in any conduct which clearly shows that
he wants to forego his right to be heard.
(ii) Failing to appear at the duly scheduled hearing.
(iii) Any writing signed by defendant that he wishes
to forego the hearing.
3. If the court finds that the defendant has not waived his
right to be notified and heard, the court shall pr-c-rptly
issue an order to the defendant to show cause why the
claimed property should not be taken.
4. If, after serving a show-cause order the court finds that
the defendant has waived his right to be heard, it shall
dispense with the hearing on the show-cause order and promptly
issue an order authorizing the clerk of the court to issue
a writ of replevin.
5. If the court finds the defendant has not waived his right
to be heard on the order to show cause, the court shall
at the hearing consider the affidavits and other showings
made by the parties .:ilp-riring and make a determination of
which party, with reasonable uro-bability is entitled to
the possession of the claimed property pending final
judgment.
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