Benny & the jets

South Florida CEO, Sept, 2002 by J.P. Faber

Here Dharmagunaratne oversees workers on two shifts who process the sales information forms that are sent them each day by the various packing stations worldwide. The forms are manually entered and checked -- how much is sold, how much for cash, how much for credit -- and reconciled here. It is also here that the replenishment process is handled, with purchase orders sent to the company's main warehouse near Miami International Airport.

"It's a logistical nightmare," says Dharmagunaratne. "At any time there are some carts on board, some waiting to go onboard, and some being stocked up. We're talking about 5,000 carts in all, which is like 5,000 little stores in the sky."

Air Pirates

With so many "little stores" floating around with such valuable contents, DFASS's obsession with control is understandable. One obvious cause for concern -- and a big reason why few dare enter the inflight duty-free business -- are the potential problems with theft. Not just the fact that theft can occur, but that it can quickly accelerate and be damned hard to pin down.

One example of pilferage took place on AeroPeru, Klepach's first route, and it took eight months to crack the case. For no apparent reason, about 15 percent of the unsold bottles of booze were coming back broken at the end of each trip. DFASS examined the carts being used, and tried to determine if there were problems in the packing or handling -- or even the quality of glass.

Finally, the company began collecting the broken bottles, sifting through the glass in search of the serial numbers on each one. "We found that the numbers were local," says Klepach. "They were stolen bottles being used to replace the originals".

The scam, it turned out, was that a local operations manager for the company was taking bottles from the carts and selling them to local bars, and then taking back the bar's old, empty bottles and smashing them.

"Theft is a big problem, but it's also somewhat predictable," says Klepach. "I mean, you'll have five or six percent theft overall, mostly credit card theft. But this business doesn't have spikes -- except when a new product comes along."

One tough crime spree, which cost the company north of $750,000, was perpetrated by the Tong gang of Asia. Members of the gang were taking flights from Japan to the US, and running up huge credit card purchases with stolen credit cards. Working with client airlines, as well as JAL, Cathay Pacific and ANA -- which were also beset by Tong theft -- DFASS helped solve the problem by instituting an in-flight system to check credit cards.

"We've developed our own hand-held onboard computer systems for onboard purchases," says DFASS purchasing director Garner. "We even commissioned a company in England to develop the software so we can process the cards onboard."

Building the Machine

If detailed control of minutiae is the secret to the success of DFASS, then Benny Klepach was born to do the job. He is blessed with an uncanny ability to remember details - things like names of people he has met only briefly, or the particulars of a product he saw somewhere, just once. It may be the single most effective tool he has in running a company that operates like the inside of a Swiss watch.