Formula Distribution Center and
Food Warehouse

Food Distribution Program: 

This program distributes federal surplus commodities to eligible low income families through existing community operated food banks; and purchases and distributes bulk purchased foods to supplement these volunteer-operated food banks and emergency and congregate feeding programs. The agency maintains a central warehouse for the storage and distribution of these foods to participating organizations.  In addition, CAP participates in the annual National Association of Letter Carriers food drive each May (see photo left) which results in the collection of several hundred thousand pounds of food from individual households throughout Lancaster County.

Infant Formula Distribution Program:

On August 4, 1996, the Community Action Program of Lancaster County (CAPLanc) began shipping specialized infant formula to WIC participants throughout the 67 counties of Pennsylvania. The State WIC office contracted with CAPLanc to perform this service for two major reasons:

1.) to reduce the high retail cost of special formulae

2.) to insure accessibility by clients to the special formulae essential to their low –birth- weight and failure-to-thrive infants.

Again, cost advantage was a serious consideration, but access was a greater issue for rural and inner city clients. .  Under the current system, the eligible client is issued a WIC voucher based upon the physician’s prescription and then must seek out the prescribed formula. Most special formulae are not available in grocery stores, and must be purchased at pharmacies that carry few of the low-volume, high-cost formulae, and who will not tailor a package. (If a client needs 9 cans of neocate, and neocate is packaged 6 per case, the client will only get the six cans, as the vendor will not split cases.)  In addition, many inner city or rural area pharmacies simply do not stock the type of formula prescribed by the physician

From August 4, 1996 until June 17, 1997, the program worked out difficulties and refined procedures, and developed into a highly organized efficient system of delivery. On April 1, 2000, the State of West Virginia  opted to make CAPLanc its vendor for all special formulae; in May, 2001, the state of Delaware followed suit.  The program has recently completed renovations to a larger warehouse and is looking to add Virginia, Maryland and New Jersey.

Program Operation and Current Savings:

The program operation is rather simple. Any local WIC office in any participating state may fax a completed standard order form, requesting an exact quantity of a specific special formula for a named eligible client. If the faxed order is received before 2:00 p.m., it is shipped via UPS or FedEx the same day; orders received after 2:00 p.m. are generally shipped the next morning. The shipment is delayed only in rare cases wherein the distribution center has insufficient stock with which to fill the complete order, or the formula is one which is not routinely shipped, and must be ordered from the manufacturer. Due to the fact that the Distribution Center is stocked with 112 different products, in any twelve month period, CAPLanc will ship over 20,000 separate orders, of which fewer than fifty are delayed for the above reasons.

Concurrent with faxing the order to the distribution Center, the local WIC clinic mails completed signed food instruments (checks) payable to CAPLanc as the vendor, with a “not-to-exceed” limit that is higher than the known cost of the formula. Distribution Center staff then reconcile the original order with the check, compute the wholesale cost of the formula, plus the shipping charges, plus a 9% administrative charge, and enter the total on the check. The 9% covers all costs of the entire operation – staff, fringe benefits, rent, utilities, shipping materials, and equipment maintenance.

Currently, CAPLanc provides special formula, purchased at wholesale prices directly from manufacturers, to an average monthly caseload of 1053 individuals (Pa – 800; West Va. – 175; Delaware – 78). All formula is shipped in one-month quantities, due to the frail nature of the infants, and the need for doctors to routinely change formulae.

Delaware had previously used a high cost, unreliable home delivery system, which resulted in extremely high expenditures, and an actual redemption rate between 40-50% (Redemption rate is the percentage of those persons issued monthly WIC checks who actually use them to purchase the formula.) After switching to CAPLanc, their cost savings have been dramatic (averaging $133 per child per month) and the redemption rate has soared to between 98-100%, as the clients eligible for and in need of the formula actually receive it. The Delaware cost saving on a caseload of 78 clients is $10,374 per month, or $124,488 per year.

The following example illustrates the basis for those savings:

Delaware was purchasing EleCare from their previous supplier for $74.95 per can; a monthly order of 10 cans for one child therefore was costing $749.50.

CAPLanc now sells the EleCare for $28.60 per can, or $286.00 per 10-can monthly order. After CAPLanc has added shipping ($5.64) and the 9% service charge ($26.25), the total cost is $317.89, for a monthly savings for that child of $431.61; if that child stays on that formula for 12 months, the annual savings will be $5179.32.

Pennsylvania enjoys the same greatly improved access for low income WIC clients, and recognizes significant cost reductions, though not as dramatic as those experienced by Delaware.

Clearly, all WIC agencies throughout the United States could benefit from a formula distribution center. CAPLanc currently guarantees delivery of formula to the client’s house or to their WIC service site within 4 working days of receipt of  the order. However, due to Lancaster’s “hub” location, both FedEx and UPS can provide next-day ground delivery to all of Pennsylvania and Delaware, as well as northern West Virginia. Southern West Virginia receives all formula by second-day ground delivery.

For more information, contact formuladistribution@caplanc.org.