IFDA Sales & Marketing Conference

In the course of the two-day session, 123 distributor and supplier-members listened to a handful of speakers and panelists analyze the changing landscape that will compel foodservice distributorships to take into account new influences, trends and requirements as they redefine their sales, marketing and procurement functions.

"What's more important is communications among marketing, sales and purchasing than between purchasing and purchasing."
Not only will distributorships need to look at themselves as an army of one, to borrow the U.S. Army's promotional motto that signifies their individuality as well as collective strength, but they will also have to create a new modus vivendi with their upstream and downstream customers - as well as consumers - as they design a successful go-to-market strategy.

{mosimage}In a detailed explanation of the shifting foodservice landscape, conference moderator Bill Hale, president, The Hale Group, Danvers, MA, showed the inherent flaws in the traditional distribution business model, which stacks side by side the sales, marketing, logistics, operations and finance functions, while direction and guidance trickle down each column. Borrowing illustrations from other industries, notably computers, Hale emphasized that success lies in the horizontal reformation of distribution business models.

"What's more important is communications among marketing, sales and purchasing than between purchasing and purchasing. That's a very different business model: horizontal activity vs. vertical activity," Hale said.

In his elaboration, which he dubbed "The Hale Fundamental Truths of Foodservice Marketing," the industry consultant presented seven business trends that he believes will shape the way executives will conduct their businesses in the near future. The perceptive ones, he advised, will heed their lessons.

The first truth, Hale said, is that the participants of the foodservice supply chain are becoming big and specialized and will continue to grow and become more focused. Distributorships that aren't growing or becoming specialized will be marginalized by the other members of the supply chain, he warned.

"In essence, the landscape is changing. If you're caught in the middle, if you're not one of the majors, if you're not specialized, then your reason for being will continue to be challenged. If you're a manufacturer, your customers are getting bigger, if you're a distributor, you're customers are getting bigger and more specialized as well," Hale said, adding that it is imperative for distributorships to position themselves clearly, find their niche and customers, and then develop expertise in that segment.

The second truth, one that has been bandied about in the industry for several years but now it is reaching its pinnacle, is that successful distributorships not only must be customer centric but consumer focused.

DON'T FORGET THE CONSUMER "In each case, distributors cannot just look at the customer that's in front of them, organize in front of them, and service them. They also have to be thinking about their customers: the consumers. If it's a manufacturer, then you'll have to look beyond the distributor, at the operator, strategizing how you sell through. The consumer increasingly will have a bearing upon the decisions we make as the industry becomes more competitive," Hale pointed out.

"It's no more about me, it's about us."
Having enumerated the players of the supply chain and distributors' position among them, Hale dismissed the previously held notion that success could be achieved singularly, in a vacuum, noting, conversely, that future success will be dictated by how well all of the participants co-develop value and demand with all of their trading partners in a collaborative fashion.

"It's no more about me, it's about us. It's about how we start to do things together," he said, clarifying that the supply chain will have to leverage each member's core competencies in order for everyone to be successful.

Consequently, this will necessitate the establishment of what he called a "fully integrated go-to-market strategy and a supply-chain context that will be supported by superior business systems." Hale said a company's business strategy and information system could no longer be disparate because the need to share information electronically will be great, which, in turn, will require an integrated business system.

As for being fully integrated as a corporate culture, Hale said, distributorships cannot treat disjointedly purchasing, marketing and sales.

"The question is how do we bring those pieces together. How do we bring order fulfillment to the market in a more consistent and efficient fashion," he asked. "All of those pieces have to be integrated and consequently sales will take on a different role by becoming an account development function that is done on a team basis with other pieces of the organization."

Hale's fifth truth stipulates that brands must clearly communicate performance and value as their owners guarantee that performance.

"We need to make sure that we're not only letting our customers know what we stand for, but that we deliver on it. Success will be built around consistent performance," he said.

Hale also emphasized that successful distributorships need not be overly large to thrive in the marketplace. The hallmarks of future success, his sixth truth, will be agility and flexibility.

AGILITY NOT MASS "The rate of change in our operating environment will be ever accelerating and therefore organizations have to be agile and flexible in order to accommodate the change that's taking place. So rigid organizations, which don't flow with the opportunity, will become a thing of the past," he said.

Finally, the supply chain must demonstrate innovation otherwise, the resulting commoditization could lead to failure, Hale indicated.

"With commoditization come margin and financial pressure, and also less relevance to your customer," he said.

{mosimage}One upshot of at least the first day's discussions was that the sales, marketing and procurement functions should not be thrust on one person. Michael J. "Mick" Hocker, director of marketing, Feeser's, Inc., an ID Top 50 broadliner, in a humorous presentation warned his distribution colleagues that they were destined for failure if they wore more than one corporate hat.

Hocker, donning five hats to illustrate his point, said when distribution executives and managers accumulate multiple responsibilities they are certain to disappoint.

"When you're wearing all of these hats, no matter what your position, you are a jack of all trades and master of absolutely none. Your competition is mastering each and everyone of those positions that are in your company," Hocker said.

Hocker suggested to his colleagues to identify all aspects of their businesses, so they can be precisely defined, assigned and benchmarked.

"Then you can insist on clear communications among all of those departments. When you wear all of the hats, you don't have to integrate anything because you are everything. You just have to ask yourself questions and then give yourself answers. Now that you have other people, you need their opinion, and you need to work together," he offered.

(In future editions, ID Report will continue to explore the issues raised at the IFDA Sales & Marketing Conference.)

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