By fine-tuning accepted business practices, the regional broadliner, which was recognized as the ID Great Distributor Organization in 1989, has been able to penetrate the heart of its relationships with operator customers and pinpoint areas along the entire supply chain that can be enhanced.
According to Mike Roach, president of Ben E. Keith Foods and an outspoken industry executive, the spotlight of its innovative work in category management and customer relations management is the DSR and his or her relationship with the operator customer. "Our main thrust is really to try to identify areas where we can help our operator customers grow and expand their businesses," Roach explains during a recent interview in the corporate office that could double as a museum and art gallery of cowboy and Native American lore. With the broadliner's expanded version of datamining, the company is able to drill down into that relationship and see where it has been and where it is going. Ben E. Keith's managers are able to keep tabs on their sales reps on a weekly and even daily basis and analyze sales by DSR, customer and product category.
"We have a model of a particular restaurant and we know that if the DSR is selling that restaurant then he should be selling certain types of items. If not, then the DSMs can figure out why not. If someone else is selling the operator that item, then what do we have that we can sell in its place? Why aren't they buying it from us," says Roach.
In its most basic form, the focus of category management and customer relations management is improving DSRs' knowledge about the resources that are at his or her disposal. "As we continue to develop these datamining tools, we really want to be able to get down to where the DSR develops tools of his own to drill down into the account," Roach says. "It may just be an evolution of the role of the DSR. We're giving more empowerment to the DSR, having him play a key role in managing that relationship between the operator customer and the company."
CUSTOMER RELATIONS MANAGEMENT
RESULTS IN HAPPIER CUSTOMERS
James A. Lavender, executive vice president of the distributorship that is No. 9 on ID's 2001 Top 50 roster with $720 million in sales, explains that the customer relations management (CRM) report "shows our performance level with a particular customer. This was a big undertaking and the reason for that was to have a better relationship with that customer."
Lavender further points out, "This report helped us to formalize our relationship with our customers, gave a much greater trust level, and, frankly, it helped us to know what we're doing wrong. I think we have one of the best reports in the industry. It is a very good tool for us and our customers."
The essence of customer relations management is not only eliminating the possibility of mistakes but also anticipating them and nipping them in the bud. "To correct the errors we need to know who did it, be it operations, purchasing, trucking. The customer, who placed the order, may have pressed the wrong computer button. Also when a customer is looking at the delivery, he wants to know whether it's our fault or his fault," says Bill Sewell, corporate director of marketing. Once Ben E. Keith's management is aware of the mistake it is able to go either to the employee who caused error or to the operator and initiate corrections. In addition to improving efficiency and service, a precise CRM does away with the annoying "he-said; she-said" syndrome.
Lavender recalls that the CRM effort began some five years ago. "We always had reason codes for why something was wrong with the delivery. But what we hadn't done was to take those codes and automate them in a way that we would be able to look at them on a regular basis with a specific account. We didn't know for a specific customer what the fill rate was but we new it in general. The customer doesn't want to know what the general figure is, he wants to know what it means for him. We were doing it for operational and accounting reasons, but not for individual customers."
CRM is not about the whole world but about each particular customer who belongs to that world, he adds. "The more specific we can get with a customer, the better our relationship, and the better is our ability to improve our service," Lavender points out.
According to Mike Sweet, sales project manager, a CRM report can also be used to improve the consultative skills of distributorship's 289 DSRs. Sweet says that sales managers, armed with daily information, can impress upon the sales reps the importance of "communicating with the customer, asking the right question, building a better relationship with the operator by asking the right questions.
In addition to the ephemeral benefits, Ben E. Keith Foods garnered welcome statistical benefits since instituting CSM reports. Sweet says that compared with last year, the distributorship recorded a 35.4 percent improvement in mispicks, 38.9 percent improvement in shorts, and 40 percent improvement in sales errors.
CRM reports also enhance food safety and security, adds Lavender. Operators that constantly order more products than they can use cause "catastrophic" problems for the distributorship, he points out. Equipment and supplies can be picked up but perishable and frozen products can't be picked up because, he explains, "they've been out of our control."
"Food safety and food security are high priority today. We have no idea of what happened to the product while it was out of our control," Lavender says. "Those mistakes are more costly today, than they have been in the past, and it's going to be worse in the future because we just won't be able to do anything with it. We can't even send it to salvage because it's been out of our control."
This kind of operator abuse of the distributor will force Ben E. Keith Foods and others like it to pass on the costs because it will be a huge cost to doing business, notes Sewell.
"Customer relations management resulted in a happier customer base. We have a process that everybody understands and we're much more proactive on mistakes," Lavender says.
CATEGORY MANAGEMENT BONDS
VENDOR, DISTRIBUTOR, OPERATOR
While CRM looks at the distributor-operator relationship, category management brings the manufacturer into the formula. "We got interested in category management because our philosophy and our competitive edge as a company has always been that if you're an independent operator and if you want something and if you can use enough of it, we'll bring it in for you," Lavender explains. "We are very easy, as a company, to get along with, we want to get the operator the product that he wants to have."
However, that's not to say that efficiencies can't be introduced into this philosophy. "Category management it is also an opportunity is to sell your customers on to a core of products based on an analysis of all comparable products that exist in the marketplace. When we started this process we set several goals for ourselves and one of them is to reduce SKUs, particularly ones that aren't necessary. We had gotten to the point where we were bringing products which had no reason to be brought in."
To launch the project, Ben E. Keith first had to select a product category that can be easily analyzed and will have clear results. Furthermore, the broadliner had to choose a manufacturer, one that it trusted, agreed with the category management process and was ready to provide resources. Lavender also says that a champion or driver is very important to the overall success of the project.
Ben E. Keith Foods chose its dressings and mayonnaise as the category and Ventura Foods as the vendor partner. "This is a process that we're going to do over and over again and the most important thing is that the first category that we pick should be a home run," Lavender relates. "We decided on a private label product that is a premium dressing line that goes along with our own label. So we had a pretty good feeling that this was a really good product line. If this was a winner, that would help us with all of the people that need to involved in the process."
Sewell adds, "Before selecting the category, partner and test sites, obviously we did a lot of datamining up front to figure out who are we buying from, what were the SKUs, what was the monthly movement, what type of customers they were involved in. We had a lot of start-up information that we provided to each branch that helped us to be able to get down as far as we could into the category."
Vertical and horizontal commitment and comprehension are prerequisites for a successful category management plan. Consequently, after conducting detailed cuttings of mayonnaise and other dressings at corporate headquarters, Ben E. Keith Foods management selected two divisions, where the process would drill down to the DSR level. As with the in-depth efforts in the corporate office, the intent in the field was also to demonstrate to the regional staffs, all managers and DSRs that the Ben E. Keith product can stand up to the competition. Furthermore, the cuttings were meant to win their uncompromising support for the project and understanding of which products Ben E. Keith is dedicated to selling.
For the first round, of the six divisions, corporate chose the San Antonio and Amarillo facilities.
"We were chosen because we had a pretty good cross-section of dressings here. We had hired a lot of people from our competition and, as time goes by, they brought with themselves a lot of new business and products that we never had," explains Mike Needham, assistant general manager of the San Antonio facility. His colleague at the Amarillo site, Duke Pepper, grocery department manager, concurs that the reason his division was selected because it stocked multiple dressing lines, spanning 75-80 SKUs and four vendors.
"I was spearheading the project, I was coordinating the sales managers, and coordinating the marketing and purchasing departments to work together," Needham elaborates. "First of all, I let everyone know what we had in SKUs, give that information to Ventura, and then get the marketing and purchasing departments ready for the promotion. And then get the DSMs and DSRs ready for the roll out." Pepper says he went with the DSMs to collect samples of competitors' products for the full-line cutting. "First we wanted to sell our management on the project and then we wanted to sell the DSRs," he adds.
At San Antonio, there were two main sessions. "One was from 8-10 in the morning and the other one from 10-12. We had approximately 28 and 32 DSRs at each session. We brought a pretty good mix of what's out on the street, based on the surveys that the DSRs and DSMs had done. Then we put the Ventura products right next to them all. We had all the whites together and the flavored dressings together. Everybody tasted every dressing and we had a ton of crackers and a lot of water. I went through it three times," Needham details.
The project included all essential personnel, says Pepper: "Our marketing department helped with flyers and point of sales material and Ventura had its reps right along with our reps participating in all the cuttings with us."
Despite the laborious procedure, Needham indicates that there was no opposition to the category management trial. "Our environment is not 'this is what you're going to sell because this is what is the best for the company.' Our environment is that we'll bring in whatever our customers need to sell. Sales drives operations here, operations doesn't drive sales," he points out.
In both cases the results were stunningly positive. Pepper declares: "The results were dynamite. The DSRs were really impressed." Needham adds, "The results were shocking. It was scary, to us, to see the kind of inferior products that are on the market."
Needham says the company originally was not sure whether its DSRs were aware of the breadth of products they were selling against. The survey and the cuttings were designed to raise the DSRs' knowledge of the products and confidence in Ben E. Keith's stock. "We found that what someone calls their Cadillac product, was our middle of the road product," he notes.
According to Pepper, "The DSRs learned how to sell our private label product and how to cut it properly against the competitors' products. They learned how to manage their gross profits on those products and how to make more money. They learned that the quality of the product that we selected was the best available and they could be confident in selling our private label."
Operators were not included in these cuttings, but afterwards the DSRs conducted scaled-down taste tests for their customers. "Their reaction was great and our sales increased," Pepper says.
"We are continuing to realize sales and gross profit increases," Needham offers. "Turns have definitely increased. We've gone from two or three trucks per week, to five truckloads per week between dressings and whites, and we don't keep inventory out more than 12 days." The San Antonio facility eliminated 38 SKUs and five out of nine vendors and of the remaining 84 SKUs, 51 are Ventura or Ben E. Keith. "We definitely gained business from our competition. The reception was good in the respect that they switched. This was business we didn't have before," Needham continues.
Both distributor managers believe Ben E. Keith sent a positive signal to the industry and its customers through its category management process.
Says Pepper: "The category management project says that Ben E. Keith wants to run its facilities efficiently. We don't want to tie up slots with items that don't move. We want to move the best quality items and keep an efficient inventory. We exposed our customers to the wide range of good and bad products that are available in the market."
Notes Needham: "It gave our label that much more exposure. Ben E. Keith went an extra mile to service its customers and expose them to what is out there, not only a better alternative, but a whole lot more alternatives."
ENCOURAGING SALES AND PROFIT RESULTS
Sewell says the distributorship attained significant increases in sales and gross profit at both locations: San Antonio achieved a 73 percent increase from March to September of 2001; Amarillo realized a 59 percent boost in the same period.
"We learned that a real focused approach on a particular product category could accomplish all of the goals we set out to accomplish. We also found that the process, itself, has value, it's enhanced our relationship with the manufacturer, it's given our sales force much better focus on what they're doing. They know that they can sell any product and they know exactly what product we want them to sell," Lavender says.
With tests in two divisions completed and two in process at the Dallas-Fort Worth and Oklahoma City locations, Ben E. Keith Foods is confident it will develop a template that could be used for all divisions and all category lines. The broadliner will introduce the next category before the end of the year.
According to Lavender, these are the lessons learned from the initial category management test: "As far as procurement is concerned, our hopes are that we can concentrate on fewer product lines, fewer categories, fewer manufacturers. We're buying the chosen product more often, we're turning it more often. I think we are much more hesitant in picking up any other dressing. Also, the DSR won't be suggesting new lines because he has been trained as to the qualities of these dressings, and trained how to sell this product. And he has confidence in it."
As the members of the foodservice supply chain fine tune their relationship in line with datamining principles, Roach feels that everyone will benefit. He is adamant about finding partners at both ends of the supply chain that are dedicated to collaborating, sharing sales leads, eliminating problems and identifying alternative products. "We are determined to eliminate duplication and to better control the proliferation of items, beginning with our operator customer," he says.
Efficient foodservice response - EFR, deems Roach, is a "major prerequisite" in category management and, in light of international terrorism and other current events, in food safety and security. Unfortunately, he continues, "I still see a lot of confusion in the industry, a lack of understanding about what supply-chain management and EFR are all about." Though there has been movement among the supply chain players, Roach says "it's still not at the point where it needs to be." For Ben E. Keith Foods, that point is "95 percent of the products, including our own branded products."
Roach indicates that many distributors have made the investment in EFR and bar coding along with the major manufacturers, but when you get to the second level, compliance is spotty. He notes that it is the responsibility of EFR, along with the International Foodservice Manufacturers Association and the International Foodservice Distributors Association, to convince middle-tier manufacturers to get with the program. Roach also foresees the day when independent and chain operators will demand EFR fulfillment from their trading partners.
While he is hesitant in placing a dollar value on universal EFR adherence, Roach thinks that it could add about one-half percent to the company's bottom line.
As he explains his concept of category management, Roach, like his executive team, are careful to point out that its goal of eliminating SKUs is not draconian nor is it calculated to cut off operators from their favorite products. His intention is to realign products strategically and not to overload the supply chain with excessive SKUs.
As for its own product offerings, Roach describes Ben E. Keith as a national brand house. "We are concentrating in certain segments where it makes sense for us. Will we ever be a totally branded company, no, we're not looking in that direction. We're looking for the right balance of offerings for our operator customers and we're not looking to introduce a new brand of products to compete with Heinz," he explains.
The future looks bright for this regional broadliner and Roach is "very optimistic." According to him, "Even in bad times we've done pretty well, perhaps even better than most. I wouldn't define these times as bad; I've seen a lot worse." Waxing philosophically about business in the past six months, Roach asks, "When you think about it, what really has changed?" With stable demographics, Generation X and Y, he argues, "Purchasing capability and purchasing needs are still there."
Ben E. Keith Foods made a decision to move forward regardless of the economy, Roach declares, adding, "We are fortunate to be in a part of the country where the population continues to grow, our customer base is carefully selected and it's a good partnership."