Edit

How to Eliminate $30 Billion in Waste



Defining the supply chain as sourcing, purchasing and physical distribution systems that customers use to acquire products, Kay Taylor, director of training for Progressive Group Alliance, Richmond, VA, moderator, challenged the speakers to remove $30 billion of waste from the supply chain due to inferior coordination.

{mosimage}
Kay Taylor of Progressive Group Alliance, left, opens the supply-chain panel discussion with experts: Scott Stamerjohn of Dot Foods, Thomas Rector of Foodservice University, Jim Spencer of Jordano’s and Randy Wieland of McCain Foods USA.
Despite the daunting mission, the panelists – a vendor, distributor, redistributor and consultant – concurred that cooperation and communication among their segments in concert with operators were the key ingredients of a competent, successful and profitable supply chain.

Speaking from the frontlines, Jim Spencer, vice president and general manager of ID Top 50 Jordano’s, Inc., frankly declared that reducing skus and suppliers is the foundation of an efficient, effective and profitable supply chain. Spencer poked fun at his co-panelist, Randy Wieland, senior vice president of foodservice sales, McCain Foods USA, Inc., asking how many more types of French fries the industry needs.

“I already have 49 of them in my freezer. It’s out of control,” Spencer said. “We have 10,200 items in our warehouse and that’s ridiculous.”

In order to improve his Pocahontas Foods USA-member distributorship’s profitability, Spencer takes advantage of category management practices, which, he said, means driving growth, driving sales, and sharing customer information. It also means developing new reciprocally-beneficial relationships with suppliers.

“Distributors have been forced to get very creative and innovative in order to grow sales and profitability. We need to reduce our skus and suppliers. We need to be more important to fewer suppliers rather than being not important to a lot of suppliers,” he said.

In order to grow sales, Spencer said successful distributors focus on the following actions: developing user-friendly website with supplier hot links and recipe ideas; offering operator-customers value-added services such as food safety and energy-savings tips, posting jobs for customer use, closeout and new-product listings; providing customers with HR, business, financial services through Progressive Group Alliance’s ProVision; conducting customer seminars by in-house category specialists such as COP, E&S, chemicals and beverages, fresh produce and fish; and holding supplier mini-shows, biannual food shows, sales promotions.

These efforts are bolstered by in-house sales-training initiatives for DSRs, including such topics as menu development and layout, food cost and labor cost management, selling and merchandising of COP, pricing menus based on value perception not product cost, and employee retention. Spencer noted that sales training with the assistance of Progressive Group Alliance is key for the distributorship and forms the root for its own Jordano’s University.

He told the audience about the importance of taking advantage of niche markets with in-house specialists such as produce, E&S, chemical and beverages, fresh fish, gourmet specialty and COP, encouraging distributor-colleagues “to find your advantages and just go for it. It can drive out costs if you focus on these niches and increase your sales. The specialist/category managers can lead the way.”

“As distributors, we need more information about America’s eating-out habits.” – Jim Spencer
Next, the distributor manages growth by tending to these points: mega promotions, food shows, off-year road show food shows, themed regional shows, targeted accounts management by reps and sales regions, accelerated pay-for-performance commission program, regional sales managers’ quarterly incentives – 100% growth based, and maximizing supplier promotions, category management, facility expansion, new technology, automated warehouse, new item flyers, and promoting national brands – the only brands it stocks.

He urged his distributor-colleagues to manage slow and dead inventory because “you just can’t grow your business if your warehouse is full of slow-moving items.”

Spencer reserved his most proactive suggestions for the suppliers, saying they are looked to by distributors for a great deal of valuable and needed revenue-building assistance. However, he admitted that there is a lack of trust between manufacturers and distributors along with an absence of information sharing.

“Fact-based marketing information is scarce and distributors lose money on half of all products that they stock. On average 40% of a distributor’s supplier-partners are not profitable,” he said. “As distributors, we need more information about America’s eating-out habits. We should sell more value-added products.”

He called on the supply chain to avoid category bloating and suggested to distributors to become more important to their suppliers. Success also means mutually agreeing on courses of action with suppliers, he said, adding that both partners should manage change together by understanding the conflicting ways both businesses are run.

“When a supplier establishes a business relationship with a distributor that gets it, then that’s a good reason for deepening that partnership,” he opined.

From the manufacturer’s corner, McCain’s Wieland built a case for clear, concise and consistent communications along the supply chain as the pretext for reducing efficiency and increasing effectiveness and revenues.

“One of the things that manufacturers don’t do is provide information on promotions to the trade – brokers, distributors, and operators – in a timely manner. We need to get our information in the hands of the supply chain at least 45 days in advance of a promotion,” Wieland said.

Emphasizing the importance of the distributor and DSR in this formula, Wieland said manufacturers should prepare marketing and merchandising information and training that focuses on the benefits of products rather than the features along with their revenue-building applications.

“We can make the supply chain efficient and effective by providing information that can be funneled to the operator. This allows the distributor to take ownership of the message and operator, and allows the manufacturer to get the message to the operator-customer,” Wieland suggested.

Websites are essential elements of this effort, he said, pointing out that they need to be functional and the information that is most used by the trade should be readily accessible. He indicated that product information and nutrition are the most important areas of a foodservice website – more so now than five years ago, followed by rebates and training.

“You have to be committed to the timeliness of the information and making sure that your point-of-sales materials are reaching the operator. You have to do it on a consistent, regular basis,” he said.

{mosimage}
They came from as far as Watertown, NY. CFM Food Distributors was one of many distributorships that we found at this year’s NRA Show. From left are: Paul Levos, Peter Levos, Karla Richardson and Steven Derrigo.
Speaking about technology in building sales, Thomas D. Rector, president of Foodservice University, Atlanta, touted the singular benefits of Google – “one of the most incredible inventions ever.” Rector said the Internet is a multi-faceted vehicle that can help the supply chain acquire not merely data but information and consequently knowledge to grow sales. Furthermore, it is a useful venue for webinars and other interactive training occasions.

“On-line training or e-Learning is a valuable tool for manufacturers, distributors, DSRs and brokers. If you can get your sales team to sell one more case a month that would be pretty significant. One more case a week would be even more significant. By focusing on training and empowering your sales reps, and giving them the right tools, they’ll use the tools properly to grow sales,” he said.

Rector listed five rules for successfully using web technology:

  • If you can’t find it on Google, you probably entered it wrong;
  • Google gets you to the door but you have to decide which one to use;
  • Reach out and touch someone (on-line communications);
  • You don’t have to be there, to be there (webinars);
  • Training is for dogs – sales productivity requires contact.

    The following websites are a few that he recommended:

    Google

    ThomasNet

    itools

    Diigo

    Linkedin

    Foodservice University

    Turning to the supply-chain role of redistributors, Scott Stamerjohn, vice president of marketing, Dot Foods, Inc., Mount Sterling, IL, explained that redistribution is the result of intense operator pressure on distributors to carry broader product offerings as well as national and regional chains specifying more items.

    Stamerjohn explained that a large number of suppliers and distributors have created a costly supply chain while the demands of a low-margin industry has placed pressure on cutting costs and improving service levels at all points of distribution. Redistribution, he continued, helps manufacturers and distributors to sell more and reduce costs.

    Specifically, he said, distributors can use redistribution to reduce lead times and minimums and grow their businesses without adding footage to their warehouses.

    Redistribution, he said, helps distributors:

  • Reduce investment in equipment and drivers;
  • Access a greater variety and number of items from one source;
  • Improve service levels to customers;
  • Improve return on investment and turns;
  • Reduce expenses through consolidation.

    In her concluding remarks, Taylor urged suppliers to establish a solid working relationship with their significant distributors.

    “If distributors invest in suppliers with their purchases, they can help distributors substantially grow their businesses through their time, experience and, in most situations, a vast array of resources,” she said.

    Trending

    More from our partners