Newsletter March 2009 Issue
This month's features…
Who are you? Where are you going?
Perhaps the most important marketing questions asked of anyone.
News bytes and advice overheard on the floors of the food industry.
Check your Supply Chain!
Isn’t it time to stop the hemorrhaging? Gerry Batsford speaks out.
Hey, you! Who are you?
Where are you going?
When Pittsburgh Steelers Linebacker Jack Lambert asked opposing QB
Tom Flick those questions, “Lambert’s question left me disoriented for the
rest of the game”, recalled Flick, the motivational speaker at the annual
ASB BakeTech meeting (Chicago, March 1-4) see related article below.
It also sent Flick on a quest to determine who he really was and what he
needed to do with the rest of his life.
These are the most important questions that food ingredient suppliers need to ask. If you
can’t communicate what your company is, what it does and where it is going, you are adrift on
very dangerous seas. This is also why companies that ignore the importance of consistent
and focused marketing eventually sink into obscurity.
Most visitors at a trade show spend only two-seconds deciding whether your booth merits
visiting. A product developer will forget 90% of what your sales representative tells them within
minutes after the meeting. Take a close look at your company: just what do your company
name, logo and “look” say about who you are and what you do? Do you constantly remind
your prospective customers of why they should be working with you?
If you have trouble focusing your team on these questions, by the way, we can help
mediate a Strategic Marketing & Profile Session (SP&M™) to help forge a unified vision,
renewed commitment and effective strategy for capturing new ground.
Upbeat Trade Shows!
As our Executive readership knows, we at BEST VANTAGE Inc. remain bullish about our
food industry’s prospects in this economy. Our reasons cited include:
People always eat
People “cocoon” and entertain more at home when times are tough
Food is still a relatively low part of the family budget
People like to feel better about themselves and their circumstances by eating better
There’s less demand for commodity foodstuffs (from ethanol and exports)
Energy and transportation prices are lower
Less upward pressure on labor costs
… and so on.
Well, attendance at the recent and extremely successful March 1-4 ASB “BakeTech” meeting
in Chicago (www.asbe.org) confirms our outlook. Bakers and suppliers expressed strong
optimism about their prospects and the exhibit floor was packed shoulder-to-shoulder. The
more-than 200 trade show booths spilled out into the hallways for Chicago Marriott ballroom
with more on the waiting list. Trade Show attendance was up more-than 50% to 1,300,
according to trade show director Tammi Matthias.
The other major food industry trade show in March was the Natural Products Expo-West.
Our associates reported a similarly positive show environment.
So, stay positive, folks! Soon everyone will need to restock their inventories.
The Science and Art of Persuasion
Want to know how to make your sales proposition stick?
According to a recent workshop held at a major food company, the most effective way, by far,
to influence purchase decisions is not through rational persuasion (“let me show you the
ingredient specs and pricing” but through inspiration (as in, “this new ingredient will propel
your consumer satisfaction to new heights…it is the hope and change they have been
waiting for”). Good sales people, of course, instinctively know this.
Although the large majority of survey respondents preferred rational persuasion as the mode
of choice, the fact was that this approach got very low degrees of commitment and compliance.
This is a classic “left brain” versus “right brain” dichotomy. For a technically intensive industry
where technical sales representatives sell to food technologists and product developers,
this may seem counterintuitive. Certainly, our survey of conventional left-brain focused food
industry trade ads bears this out. Whereas our customer base is trained to emphasize left-brain rationality, effective technical communications must appeal both to the left-brain and right brain psychologies of the buyer. In our view, this is a big reason why so much of the food ingredient advertising dollar today is wasted.
Oh, and according to our sources, these results transcend country and culture barriers.
The year the world’s bread basket turned upside down!
According to U. of Georgia Professor Michael Doyle (presenting to the March Chicago
Section – IFT meeting), that year was 2004.
The year 2004 was the year that the United States became a net importer of food. Not only
that, but the U.S. now exports primarily low-value commodities (grains, soybeans, raw beef,
pork and chicken) and imports high-value foodstuffs (nutmeats, fruit, seafood, vegetables,
orange juice, apple juice, honey). Today, Midwest farmers and ag cooperatives invest in and
even move to Brazil. Whatever happened to our “Breadbasket to the World” and how should
we adapt? We recommend better strategic planning, improved efficiencies and better
investments into supply chain optimization (see below).
Check your supply chain!
You’re probably losing money.
Whether your business is domestic or international, your attention or inattention
to supply-chain issues means money gained versus money lost.
Don’t believe us? Consider that, today, some food companies find it
more cost-effective to ship raw fruit or chicken to China for further
processing and packaging prior to shipment back into U.S consumer
markets. Of course, these types of supply chain decisions bring other
factors into play, such as R&D, quality control, food safety and marketing considerations.
Every company has only so much energy and time to expend on generating new business, keeping the production lines humming and
putting out dailyfires. So, it can be easy to postpone optimizing your supply chain.
However, this global economy no longer affords ingredient suppliers the luxury of leaving
monies on the table by ignoring effective supply-chain management. And, resist the temptation
to fob your supply chain questions onto your operations director…any effective supply chain
optimization program should integrate elements of R&D, marketing, sales, operations
Our purpose here is to provide some ideas on how and where to look.
Do I have supply chain issues?
“If you have a recurrent capacity problems, have chronic delivery shortfalls, trouble scheduling
to fill your customers’ promotional needs, or keep getting undercut by your competitors, you
likely have a supply chain problem that is hemorrhaging cash,” says Gerry Batsford, our
BEST VANTAGE supply chain specialist.
“Supply Chain” refers to the entire process of food manufacturing, from raw materials to
customer delivery, say Batsford. “That includes: forecasting; development and execution
of inventory management strategies; rationalization of product formulations with inventory
and production demands; development and communication of improved customer service
and delivery capabilities; and the development of information management systems
whereby to capture these savings opportunities.
“The good news is that the move towards optimizing your supply chain capabilities often
involves involve minimal capital investment, ”, says Batsford. Thus, there are immediate
returns to be realized on your existing capital.
What’s the first step?
How does one evaluate a company’s supply chain? First, by defining the issues!
A typical supply chain assessment is not complicated. “We look at how a company
forecastsand plans, where the supply chain is overburdened, assess costs at each link
of the chain, evaluate alternate scenarios, and recommend improvements,” says Batsford.
The focus for improvement is first placed on processes, and then on tools and technologies
to implement improvements. Implementation of the identified improvements is where
complications and costs can mount, as they can butt-up against long-standing standard-
operating-procedures (SOPs) and corporate cultural practices. But, at that point, the cost-
benefits of implementing such improvements become much more evident. What kinds of
issues can arise?
Production Capacity Management
Maybe your customer is preparing for a major promotion. Or, you can’t decide in which plant
or country to schedule production. Or, you need to do maintenance and you have no idea
where to shift production. Perhaps you’re not sure what your forward ingredient purchasing requirements will be. Ask any of these questions and chances are that your company has
capacity and forecast management issues. “Although we all want our plants to run at full
capacity, we rarely get there and even if you do…what are the implications on your company’s
ability to respond to unplanned demand fluctuations and fulfill additional orders?” observes
Batsford, noting that most companies operate at only 80-92% order fulfillment levels.
By giving your customers more on-time deliveries, better forecasting tools and fewer production headaches to nurse, you become one of their more essential suppliers.
Vendor-Managed Inventory Programs(VMIPs). Some suppliers already offer this invaluable
customer service, whereby they monitor their customers’ forecasts and inventory
requirements…and keep their customer stocked on an ongoing basis. This ideally
includes participation in your customers’ planning processes.
“I am always stunned at how poorly most companies plan, adds Batsford. “I am therefore
a huge proponent of suppliers inserting themselves into their customers’ planning
processes to help them identify additional cost savings, says Batsford. “Not only is it a big
win for the customer, but it is a big win for any supplier to be identified with finding major
cost savings on their customers’ behalves”.
Are you stocking too many ingredients from too many sources? Does it make $-sense to
buy ingredients in pre-blended form? Better yet, can you provide added value to your
customers by helping your customers rationalize their portfolio of SKUs? These are supply
chain questions that beg the participation of R&D and marketing. Most food manufacturers
have enormous waste imbedded in their ingredient inventory management systems. Why not
be the supplier that helps them fix it? “We show them where to look and help them optimize
their inventories”, says Batsford.
What kind of savings are there to be gained?
It depends, says Batsford. Every company has the potential to generate major savings from
by improving their supply chains, but each case presents its own unique set of challenges.
Such savings, when found, tend to be substantial. “I have always generated at-least 25%
inventory reductions when I have been in charge of all of the forecasting and planning
processes for a company.” At bare minimum, today’s economy is the perfect time to
renegotiate your purchase and service agreements with your suppliers. It’s as good a
place as any to start.
For an assessment of your company’s Supply Chain opportunities, call or email
BEST VANTAGE Inc. for more information. Tel. 1-847-714-9527 or email@example.com.
© 2009 to BEST VANTAGE Inc.