Dairy Procurement Group, LLC (DPG) provides innovate ways to enhance the efficiency and profitability of its members through both aggregated purchasing and data driven improvements in their operations and respective agricultural supply chains.
DPG was founded in 2005 when John Sweeney realized that he could bring the supply chain expertise he had developed during his Wharton MBA program and his years at Deloitte Consulting to his Alpha Gamma Rho (AGR) fraternity brothers from Cal Poly in the dairy industry.
By providing a comprehensive purchasing process for materials and services and improving the use of line item detailed reporting, he realized dairies could reduce errors, increase accountability, improve controls, provide economies of scale and reduce transaction costs for both suppliers and dairies. DPG was born!
Starting with a core group of six great families, thirteen dairies, and just under 30,000 cows in California’s Tulare and Kern Counties, DPG worked with member dairies to develop strategic partnerships with a select group of suppliers for dairy supplies. Since then, DPG has grown to 50 dairies and over 150,000 cows, covering three states, and has expanded into purchasing supplies for nearly 50,000 farmed acres. With our current number of milk cows, DPG would rank between the following US States: just behind #15, Colorado (160,000) and just ahead of #16, Kansas (152,000).
DPG has also gone much deeper into each member’s operational spend, now consolidating the purchases of animal health pharmaceuticals, dairy barn chemicals and teat dip, ag chemicals, fertilizer, seed, tractors, equipment, propane, carcass removal and other maintain, repair and operate (MRO) items.
Beyond significant cost savings, DPG members have enhanced their business performance through analysis, benchmarking, and reporting of 10+ years of unique detailed line item usage reporting in multiple product categories leading to actionable insights. DPG members receive detailed reporting by category and can compare monthly as well as year over year usage by category, product line, and stock keeping unit (SKU). In addition to individual reporting and feedback, group members have the opportunity to meet regularly to discuss best practices and share both good and bad experiences.
More recently, DPG has been exploring additional opportunities for innovations in technology, and brings promising new products and technologies to the group.
DPG’s success is largely attributable to the quality of its carefully curated member families. DPG diaries have the reputation as solid, reliable clients who take phenomenal care of their cows, run great operations, are good for their word, and pay their bills on time, which has allowed DPG to negotiate significant cost savings for our members. As more and more consolidation occurs in the dairy industry, the better business people will have the best opportunity to succeed. DPG believes that our member families are those that will be in the agriculture business for the next generations.
DPG members have also embraced our quarterly reporting of line item spend data as it allows owners to look across their operations and internally benchmark. More than a few dairies consider that data more valuable than the price savings. Most dairies now have 10+ full years of reporting and have found this to be extremely valuable to their operations and to management.
We are very selective and the group has expanded slowly and purposefully over the years, requiring a personal endorsement from a current member before consideration for a new member to join the group.
DPG works by enhancing our member’s businesses through true strategic partnership relationships with our suppliers. We work towards a partnership agreement where both sides work together to increase the value of the relationship to each other.
It’s not just about pricing, although it is an important component in our agreements and our relationships. DPG offers our suppliers unique access to over 150,000 cows in California, Texas, and South Dakota. In exchange for favorable pricing, terms, and services, DPG gives them our business exclusively for a set period of time, keeps information confidential, and consistently pays our bills within negotiated terms.
Our unique approach also lowers selling general & administrative (SG&A) expenses for suppliers and manufacturers, as they don’t need salespeople to continually “sell” to members. Once we establish an agreement, the supplier can focus on service rather than selling.
DPG suppliers can then use the incremental purchasing power we provide to negotiate even better pricing for themselves with manufacturers and in turn pass some of those savings onto our members, creating the win-win partnership that we strive to achieve.