In the rigorous work of supply chain management, it’s good to have lots of partners on your side. That said, many supply chain managers often overlook the marketing team, one of the most valuable business partners they have.

Supply chain leaders from many of the world’s largest restaurant chains have admitted to ArrowStream that they do not effectively partner with their marketing colleagues to better understand the objectives, strategies and even timelines behind promotions. Instead, they just try to best react and support marketing efforts as they occur. What’s lost in this reactive stance is the ability to execute effective promotions that best leverage resources across the entire supply chain.

Consider this finding from ArrowStream’s 2nd Annual Foodservice Industry Survey: More than 75 percent of foodservice industry leaders cited problems with LTO (limited time offer) demand planning. Stock-outs and inventory obsolescence are devastating to promotions and those troubles erupt quickly into sales and customer loyalty and satisfaction challenges. When supply chain teams are not a part of the LTO/promotion planning process, their ability to deliver on timelines and prepare teams and trading partners is forfeit. Marketing is stuck with a supply chain team that can only “do their best under the circumstances” and the supply chain team is stuck scrambling. Neither position is an enviable or effective one.

So what will greater supply chain and marketing collaboration win a business in these still trying economic times? By partnering with marketing from the very start of promotional campaign development, supply chain teams serve as a valuable information resource to marketing partners. The result for marketing will be more effective promotions driven by greater insight into supply chain processes. The result for the supply chain organization will be early insight that allows teams to better prepare for and, therefore, better execute promotions. The result for the business: more traffic, greater sales, higher rates of customer satisfaction and increased revenue.

Common Sense Tips for Partnering with Marketing

Most supply chain teams know all too well the importance of good collaboration with the marketing team. Often, it’s just a lack of time that keeps them from best practices. Here are a few reminders of the simple, common sense collaboration practices that can help keep communications strong and collaboration effective:

• Meet Regularly - If you want to understand and support marketing’s efforts, you have to get to know them. Work with your marketing peers to establish a regular meeting schedule that will ensure you have a clear and constant picture of marketing’s calendar, goals and objectives and that marketing understands the work and resources required of the supply chain to meet their goals.
• Teach Supply Chain 101 - Marketing professionals have their own objectives and tough challenges to face, leaving them little time to learn the fundamentals of supply chain operations. However, just a small amount of knowledge can go a long way in helping your marketing counterparts understand the many factors that influence product movement, cost and timeliness. Take the time to educate marketing peers about what happens across the supply chain in order to ensure their promotions are fulfilled. Even job shadowing or one-day job swapping can provide a ton of insight that can help marketers more successfully plan marketing promotions and give your team important insight into the important work marketing does.
• Make Knowledge Sharing a Priority - When issues or changes occur in the supply chain that can affect marketing’s promotions and their execution, share the knowledge early and thoroughly. By making marketing a communication priority, supply chain leaders are establishing a powerful knowledge-sharing channel and building a relationship that will allow the teams to better partner and deliver together.
• Consider Technological Integration - Are there ways to better communicate and share information through the technology tools you have in place? Does your supply chain management solution integrate marketing into knowledge and information sharing? If not, it may be time to consider a more expansive supply chain solution that enables collaboration within the business and across supply chain trading partners. Remember, the greater the information integration is, the more informed, effective and reliable the supply chain will be.

Finally, if you should find marketing teams are resistant to sharing information or collaborating, ArrowStream recommends making your business case. Host a meeting or prepare a convincing fact sheet that demonstrates the many ways supply chains processes effect the timeliness and quality of promotions. Marketing professionals, like anyone in your company, are very busy but they are also committed to the same fundamental goals as the supply chain: increasing sales and customer loyalty and satisfaction. Reminding your marketing team of what a useful and powerful partner the supply chain can be is a great way to win support and help everyone work together to improve bottom-line business success.

Restaurant Leadership Offers 2010 Outlook

At the end of April, I attended Restaurant Leadership-a national gathering of industry, business and community visionaries. The mood was upbeat as we heard businesses express their optimism for a profitable year. The consensus is that the restaurant industry is hacking its way out of the thick weeds of the recession, and starting to find room to grow again. 

While it was exciting to debate industry trends (this year the role of social media was a hot topic and one I will cover in a future blog entry soon), the real issue of the event and of this year is the tough competition restaurants have from supermarkets and retail giants like Target and Wal-Mart. With grocers and retailers selling prepackaged meals at very low costs (often much lower than the cost of eating out), restaurants face ongoing price pressure despite improvements in the economy.

At the end of 2009, CREST (Consumer Reports on Eating Share Trends) reported that supermarkets prices had fallen from the year prior while restaurant prices were higher. Wallet conscious consumers have been cooking and eating at home more often and the question is how do restaurants lure them out again? The odds are high that penny pinching will continue among consumers. Americans are saving more than twice the amount they were two years ago according to the Bureau of Economic Analysis. In the fourth quarter of 2007, 1.5% of earnings was going toward savings in American households. By the fourth quarter of 2009, the number had risen to 3.9%.

Rather than waiting for a shift in consumer habits-good habits like saving more-restaurants will need to compete head-to-head with supermarkets and their low-cost, prepackaged foods. That means price is king and efficiency is a must. Restaurant chains will need to squeeze every bit of efficiency out of their supply chains in order to keep prices competitive and attractive to cost conscious consumers. Even grocery and giant retail competitors are loudly talking to the market about supply chain efficiency. Think of Wal-mart’s current TV ads, which speak to making the most of their truckloads in order to deliver lower prices to their customers. The supply chain is your most direct route to greater efficiency and the world’s largest retailer knows it.

Restaurants too must invest in supply chain solutions that provide greater visibility and the detailed knowledge needed to better manage their pricing, spending, logistics and promotions. Only with end-to-end and trading partner-to-trading partner supply chain insight can restaurant chains truly compete in terms of price with grocers and super stores today. And in this brightening economy, restaurant leaders nationwide agree: It’s a good time to get out there and compete.

In a down economy, the importance of loyalty-building customer satisfaction is crucial. While customer attrition at anytime is a problem, in a recession it can be catastrophic. In the world of foodservice supply chains, customer service also extends to trading partners, including restaurant chains, manufacturers and distributors. How well you collaborate with your trading partners affects your ability to serve your customers.

It’s always good to be reminded how valuable good customer service is. The cost of losing a customer is high and the cost of acquiring new ones is higher still. Take, for example, what the best-selling book The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value revealed more than a decade ago: Winning a new customer costs a business five times as much as it does to keep an existing one. As this historic recession loosens its grip on the economy, all businesses need to tighten their grip on high customer and trading partner satisfaction.

At ArrowStream, customer satisfaction is our highest priority in all economies-weak, strong and anything in between. The unique and collaborative approach we use when working with our customers is one of the most important ways we fuel innovation. Just as our customers depend on ArrowStream supply chain technologies and solutions to transform operational efficiency and slash business costs, we count on our customers to help us develop and refine our solutions to maximum effectiveness.

So how do we tackle the important work of achieving high levels of customer satisfaction and loyalty? First, we have adopted an everyday approach to cultivating customer satisfaction and loyalty. Not “everyday” in terms of ordinary, but “everyday” in terms of occurrence. Our entire team-from executive leadership and senior managers to help desk specialists and administrative staff-is trained to make listening to our clients a key aspect of their workday. Whether through regular client check-in calls and meetings, site visits, quarterly business reviews or reading industry trade publications, ArrowStream staff members are engaged and listening  to clients. We know that one of our constant jobs is to stay apprised of the challenges our clients face so ArrowStream can always be a part of the solution.

We believe this is a very smart approach to trading partner relationships as well. Taking time to step back and listen to your trading partners’ issues and concerns can lead to clever solutions you may not have arrived at on your own.

ArrowStream also uses regular surveys and conferences to improve our understanding of client needs. Our biannual customer satisfaction surveys allow us to receive candid, thoughtful feedback from clients into our performance, what we can do better and where ArrowStream is making the biggest difference in their operations. Because we conduct the survey twice a year, we can measure our progress and ensure we are using the insights clients give us to improve our performance.

Our Annual Customer Conference brings together ArrowStream clients from across the country to one central industry forum. Now going into our third year, the two-day event gives ArrowStream’s business leaders, developers, account managers and service professionals the chance to sit down face-to-face with individual clients to get detailed business insights, discuss needs and look at opportunities to improve solutions and results. Clients have the opportunity to share what is working well, ask tough questions to our team and share ideas for innovations and advancements. Also, in bringing the leaders from across the foodservice industry together, we create an exceptional brain trust of experts, whose ideas and industry knowledge invigorate and challenge our team.

Because supply chain trading partners will not have time to survey and conference all year long, they should take advantage of built-in collaboration systems, such as the ArrowStream Network, - the largest, most extensive trading system of 4,000+ restaurant chains, distributors and manufacturers in the foodservice industry.  Representing almost 10 percent of the industry and moving more than $15 billion of product annually, ArrowStream Network members gain operational benefits, take advantage of economies of scale and share information on product, contract, pricing, inventory and freight.

Whether your business likes it or not, your trading partners play a role in your customer satisfaction capabilities. So let them in on your plans and goals and listen to theirs. Collaboration across the supply chain only improves performance for the better of all.  And, in our constant quest to know our clients and keep them tremendously satisfied, ArrowStream has found that every tiny bit of effort that goes into client satisfaction is returned in the highest and best of dividends. The bottom line-the more you invest in improving customer satisfaction, the more engaged, collaborative and happy your clients are. And who can argue with an ROI like that?

According to a mid-February report in the Wall Street Journal a return to food-price inflation is not too far around the corner. In the article, reporter John Jannarone notes that retailers, including Winn-Dixie and Walmart, are forecasting an end to falling food prices in the months ahead and a near-term return to food-price inflation. The article explains how grocers predict that the rise in prices will likely begin with perishables, such as milk. However, packaged food prices could continue to fall even if raw ingredient costs begin to rise because many manufacturers have locked in lower raw-material prices using hedges.

For restaurant chains also facing rising prices, these predictions signal a need to find effective ways to entice customers into the store especially if customers are opting for prepackaged meals from the grocer. Restaurant chains will need to give consumers new, cost-effective options -even post recession- to lure them into the store.  A time-tested, extremely effective way to do that is with strategic, well-managed Limited-time Offers (LTOs).

LTOs have been essential to keeping restaurant chains competitive in this challenging economy. At COEX 2010 earlier this month, ArrowStream hosted an executive roundtable in which leaders from national restaurant chains discussed their challenges and strategies.  Panelist Glenn Douglas, vice president of supply chain for Einstein Noah Restaurant Group, said that his company plans on managing 10 LTOs per year compared to their usual annual average of four. 

Despite the increased reliance on LTOs to drive traffic and sales, restaurant chains reported serious inefficiencies in the execution of LTOs in ArrowStream’s 2nd Annual Foodservice Industry Survey. Nearly 77 percent of restaurant chains cited problems with LTO demand planning. A majority, 62 percent, said that difficulties in getting the right product in the right store at the right time hurt LTO effectiveness. Another 56 percent revealed that they struggled to successfully predict supply and demand - a critical variable in the effectiveness of LTOs.

Improving the management, forecasting and results of LTOs is one of the best ways for restaurant chains to effectively increase traffic, sales and profits while offsetting food-price inflation when it does return. Well-managed LTOs make restaurant chains happy, gain loyal customers location by location and allow the business to carefully synchronize supply and demand in order to maximize every dollar spent.   

Where does greater LTO effectiveness begin? With supply chain excellence and smart management systems able to deliver real-time visibility that informs, accelerates and improves decision making. And for an industry greatly exposed to some of today’s biggest X factors (commodity prices, weather, political instability, etc.), an investment in greater visibility and insight is an investment in a more flexible and responsive supply chain. What does that mean for you? Two things: lower obsolescence and happier customers. You can put a price on obsolescence but who can put a price on customer satisfaction?

February  26, 2010 | Steven LaVoie

Part 4 of a 4 part series

To conclude our series of tips for businesses working to increase supply chain openness with trading partners, I am going to talk about performance goals. As you make significant changes to your supply chain operations and technologies, it’s critical to define and communicate the goals behind these changes. While the senior management team that signed off on purchase orders and read business cases may well understand the motivations and objectives behind major supply chain changes, there are still many people across the entire business organization that might not have that information.

It’s important to make communicating supply chain changes and performance goals to key audiences a formal part of your change management process. Why? Because it helps to ensure that the new strategy and system are embraced and utilized for maximum business benefit. At ArrowStream, we suggest defining your audiences as well as what they need to know and what performance goals are expected and the metrics you’ll use to measure it.

• Supply chain staff - These critical team members need to understand how, when and why the changes are happening, how they will affect their roles and what will be expected of them. Make part of the communications process a formal discussion of performance goals and how supply chain staff will be expected to help measure and analyze the effectiveness of any new supply chain solution or approach. It’s also important that staff members understand performance goals will be regularly measured, analyzed and shared. You’d be surprised how many businesses outline performance goals for the supply chain and its teams but never measure them. Incorporate performance metrics such as issue resolution times and total product and freight spend.
• Business partners - Across your organization, various departments will be affected by supply chain solution changes. Promotions, for example, involves multiple departments from supply chain to purchasing and marketing. Be sure they are well-informed of the changes, how they will affect their operations and what improvements they can expect. Include them in the performance management process by asking them to note improvements and/or performance declines as they relate to the new system. Also, communicate the metrics needed to measure performance. For example, with promotion performance, you’ll want to measure inventory obsolescence, stock outs, and ROI.
• Executive management - Keep executive management keenly aware of progress and milestones achieved as you upgrade and open your supply chain operations. They should have access to high level performance metrics such as, total landed costs, spend analytics, inventory volume tracking and promotions management. Likely major objectives have been defined, but also take time to share insights and anecdotes into information executive management might not be tracking. For example, if team efficiency has greatly increased due to automation or better information, share the story. If new information provided through the more open and trading partner-integrated operations has allowed the supply chain team to make unanticipated but important improvements, share the story.
• Trading partners - As you open up your supply chain operations to more trading partner insight and scrutiny, be certain you are sharing performance goals and expectations. Remember, it’s not just more information you are hoping to gain by increasing supply chain openness, its better business performance. Don’t be shy about defining your expectations for improved working relationships with trading partners, whether that is framed in terms of cost, on-time performance or greater information access. And remember, your trading partners will have performance goals as well and in most every case both businesses will benefit from defining and measuring them.

This blog entry concludes the ArrowStream Tenets of Achieving Greater Supply Chain Openness series. As you consider how to increase information sharing and collaboration across your supply chain and trading partner relationships, keep them in mind. We look forward to hearing how your supply chain operations are expanding and improving through greater insight, partnership and visibility.

February  23, 2010 | Steven LaVoie

Part 3 of a 4 part series

In our ongoing series on increasing supply chain openness, I have shared the first two tenets of success: 1) a broad network of partners and 2) strong supply chain technologies that can integrate trading partner systems. In this posting, I would like to share with you the importance of maintaining effective change management processes, which is the third tenet of supply chain openness.

While few people would immediately select change management tools and resources as vital to supply chain operations, we at ArrowStream have seen firsthand how important they are in evolution of opening up the supply chain. Today, technology plays an important role in increasing information sharing and collaboration among trading partners. With the integration of new technologies and capabilities, many manual supply chain processes are automated, such as contract management and price notifications. Increased automation changes the fundamental roles and responsibilities of supply chain team members.

To ensure supply chain staff evolve with technology and are supportive of efforts better integrate trading partners into supply chain operations, businesses need to establish strong change management processes, which ArrowStream defines in three phases: alignment, incentives and, finally, execution.

Alignment - It’s critical that staff members and your trading partners are carefully educated and prepped for the operational and process changes that come with major supply chain advancements. This includes not only solid training around new technologies, but also clear instruction on how their own roles are evolving, an understanding of your business objectives and the metrics that will be used to measure performance (total freight spend, cost per case, inventory levels, etc.). This focus on preparing and aligning staff and trading partners will win more supporters of the change and alleviates many of the growing pains.  

Incentives - To unite the entire business-from trading partners to executive teams, supply chain and procurement staff-explain the incentives. The whole business stands to gain from supply chain optimization so define what it will look like by communicating the benefits and what the rewards will be. Some clients of ours, will even give bonuses tied to reaching certain metrics and performance goals.

Execution - Once you have aligned all team members to the change and defined and communicated incentives, it’s go time. However, maintaining communication excellence throughout the change process is critical in keeping the organization supportive of the new solution. Send out updates and share when milestones are achieved. Most importantly, let all team members know when benefits (lower costs, greater flexibility, and increased productivity) are realized. Let the entire company see that the change was well worth the challenge.

It’s also important to remember that as supply chain technologies and processes advance, comprehensive and timely information is available to employees across the supply chain. Businesses that prepare their staff for these changes and train them to better manage and understand the information the supply chain provides are cultivating topnotch decision makers. Those that overlook the importance of helping their staff evolve with supply chain technologies are overlooking a fundamental step that will keep them from successfully broadening their supply chain reach, knowledge and effectiveness. 

Please stay tuned for our fourth and final piece of guidance for businesses looking to create greater supply chain openness and integration among their trading partners. I will be posting it in the next several days.

Part 2 of a 4 part series

In December, I posted the first in a four-part series of blog entries focused on the need for greater supply chain openness among foodservice industry trading partners.  That inaugural post looked at the advantages of joining an established network of industry trading partners, which is ArrowStream’s first piece of advice to businesses determined to get on the path to greater openness and more effective cooperation among trading partners.  

Now it’s January. A new year and a new decade have arrived, and it’s time to explore ArrowStream’s second tenet of Supply Chain Openness: Aligning and Integrating Supply Chain Management Technologies.

First, you need to evaluate your relationships with your manufacturer and distributor partners. At ArrowStream, we believe the most fundamental part of technology integration is trust. Have you established trust among your trading partners so that they would be willing to share their data with you? I hope the answer is yes because in order to be aligned and integrated, you must first break the barriers of information sharing by eliminating any fear your trading partners may have with technology integration. Data is the great currency of the information age and when your business is locked out of valuable supply chain data sources due to information protectionism, your organization is the poorer for it. The more your supply chain management tools and applications allow you to connect with those of other trading partners the more information and analytics you have fueling your business decisions.  Explain to your trading partners that with technology integration, everyone shares in the savings.

Look for Compatibility and Integration
So, how does a foodservice business go about ensuring the supply chain technologies it invests in can integrate with trading partners? First, you need to look at the big picture. What is your vision and why is technology good for your business? What results do you expect to see? Widespread technology integration among trading partner supply chain systems can seem like a daunting, long-term goal, however it doesn’t have to be. In fact, integration can be a relatively simple process that will lead to tremendous financial benefits. The more integration you can gain with each technology advancement and enhancement, the more data rich and supply chain efficient your business becomes.

Begin by looking at your 10 most important trading partners and determine what barriers are getting in the way of data sharing - information protectionism; multiple technology platforms; lacking in trust. These unnecessary barriers prevent spend, inventory and supplier data from informing the critical decisions you and your trading partners make every day.   Consider how much more effectively you could work with your suppliers (and benchmark their true performance) by synchronizing data and giving all parties access to valuable information like food spend, procurement, contracts, pricing and shipping information.

Next, talk with the supply chain solution providers to look at how they can support greater integration of supply chain systems. At ArrowStream, we understand how vital integration and data sharing is to the daily efficiency, fundamental success and bottom-line health of our foodservices clients. Any provider of supply chain solutions today knows that helping trading partners better integrate and work together will only make their systems more effective and widely sought after. If you find the certain technologies and/or their solutions providers are limited in helping your business integrate with trading partner systems, quickly take them off your list.

Time & Effort Well Spent
This increased focus on integration capabilities adds only a small amount of time to the technology vetting process but will yield greater visibility, resources and insight to your overall supply chain management solution.  As more and more businesses across the foodservice industry work to better integrate systems and share data, the shorter and shorter this integration assessment process will be. By demanding topnotch integration capabilities from solution providers, industry trading partners are helping to push supply chain technologies exactly where they need to be-on the bleeding edge of secure, smart, innovative supply chain integration.

One Essential Key to Having a Banner 2010

What makes a good manager great? For ages, many believed it was an intangible and immeasurable gut instinct that made strong business leaders visionaries. A manager that took risks by “going with his gut” or “trusting her instincts” had more than moxie, but also a better performance record to go along with it.

While there is always a role for instinct in business, history and measurement have found that sound and timely business information will outdo a sixth sense any day of the week. Take for example the IBM Global Business Services study and report, “Business analytics and optimization for the intelligent enterprise.” The study of more than 400 high and low performing business enterprises showed again and again that top performing businesses are more effectively tapping into timely business data and analytics to improve decision making and business operations. Below are just a few of the outcomes from the study and its executive report, which you can read in full here. 

• In the study, organizations that had analytic programs that were “well underway” were found to be more than three times as skilled at using information to understand risk (and twice as skilled in using that information to predict outcomes) than businesses that did not make analytics a priority.
• Top performing businesses are “twice as skilled as low performing businesses when it comes to extracting and prioritizing relevant information.“
• Top performing businesses were found to be “three times better at applying information for more predictable outcomes, which gives them the opportunity to better anticipate, navigate and handle contingencies.“

This clear link between top performance and the smart use of timely data and analytics across a business organization is irrefutable. In fact, it’s becoming a calling card for success as leading businesses make good, actionable information a main driver of business strategy and competitive advantage.

For the foodservice industry, there has never been a better or more important time to embrace the masses of business data provided by the supply chain and convert it into useful, actionable information. Eating habits are changing and attracting the American consumer will be harder than ever. The peak year for dining out in America was 2001, according to Harry Balzer, senior vice president and chief industry analyst with the market research firm NPD Group. Since then, people have been eating more of their meals at home, ending a five decade trend in which Americans frequented restaurants at ever-increasing rates.  After a decade at the mercy of global fluctuations in commodity and fuel pricing, a brutal recession and falling restaurant traffic, foodservice businesses need to make most of 2010 and the decade it rings in. It must become an era of embracing business intelligence in order to radically improve decision making, efficiency and business performance results. Confident in the value that analytics can bring to the foodservice industry, ArrowStream has greatly expanded its Performance Management capabilities. Our mission is to put critical business information at the fingertips of CFOs and procurement executives. Aggregating spending, inventory, purchasing, volume and contract data from across the supply chain, ArrowStream’s performance management dashboards give foodservice industry leaders an astonishing, new and real-time perspective on costs and vendor performance. 

With the analytical tools performance management provides, CFOs across the industry finally have a simple, flexible system for accurately comparing supply chain trading partner performance and costs. Rather than trusting that a vendor’s costs are low based on price sheets, business leaders can benchmark trading partners in real time to see exactly what is spent and where. This invaluable data can be used to make the very best purchasing and partnership decisions as “best in class provider” becomes a title trading partners must earn rather than a designation assumed by gut feeling. 

Today ArrowStream’s Performance Management Module offers dashboards for Total Landed Costs, Spend Analytics, Inventory Volume Tracking and Market Basket. By the end of 2010, additional dashboards for key functions, such as budget analysis, cost control, inventory, promotion and contract management will be added to the system. To learn more about ArrowStream performance management tools and how they can expand and optimize the ways businesses measure company and trading partner performance, I invite you to click here.

A new decade has come and it’s the perfect time to shake things up for the better. Here’s to 2010, a decade ArrowStream is certain can be one of smarter supply chain management, meaningful business analytics and new standards of excellence across the foodservice industry.

Part 1 of a 4 part series

Synchronized, visible, networked and nimble. That is ArrowStream’s vision of what the foodservice supply chains of today must become. And really, who wouldn’t like that vision? The exciting news is that the industry is not ridiculously far from this goal, which would result in highly integrated, data-rich supply chains that enable fluid product movement and low total cost while delivering prompt ROI.

What’s holding up this very advantageous evolution is the “information protectionism” we blogged about in October. Trading partners in the foodservice industry are not good at sharing information, networks, technology systems or performance goals and that has to change.  

A recent report by CapGemini entitled “Succeeding in a Volatile Market: 2018 the Future Value Chain,” reports on progressive ways businesses across the supply chain can work together and share information. Offering advice such as aligning business planning and establishing new measures for performance, this report confirms what we at ArrowStream know to be true: cultural, business and system barriers to information sharing can be overcome when trading partners work together to achieve mutual benefits.

One of the toughest challenges in this broad goal of greater information sharing is finding manageable, systematic ways for trading partners to do it. Over the last decade, ArrowStream has worked with foodservice businesses to establish and engineer processes for greater information sharing. Today, I gladly share with you the first of ArrowStream’s four tenets of trading partner information openness: Working within a Network. Be sure to watch for steps two, three and four in subsequent blog postings.

Tenet 1: Work within a Network

In the foodservice industry, information is often purposely withheld among trading partners in order to protect sheltered revenue streams or because of simple distrust. In ArrowStream’s 2009 Supply Chain Insights survey, not a single foodservice business reported having completely integrated supply chain data with trading partners. Only 16% of survey respondents noted significant data integration.

Unfortunately all businesses along the foodservice supply chain lose when information sharing is minimal. Studies again and again show that in today’s competitive global marketplace, information sharing among suppliers, distributors and their business clients is essential to winning market share, increasing profitability and maintaining customer satisfaction and loyalty. By sharing insights like order entry time, manufacturing lead time, distribution time, operator rebate data and distributor billback information, all trading partners can make better decisions for their operations and their customers. The results include greater contract compliance, more agility to react to the marketplace and customer demands, more effective promotional programs and opportunities to share in “group” savings as a result of economies of scale.

So how does a food service distributor, manufacturer or restaurant chain open up their proverbial supply chain books to its partners? The easiest approach is to join an existing network of trading partners. In the interest of full disclosure, I must tell you that ArrowStream has built the nation’s largest Network of restaurant chains, distributors and manufacturer businesses-over 4,000 trading partners and growing. Clearly, ArrowStream is biased when it comes to the advantages of working within a trading partner network, but let me just give you some stats on why we are certain it’s advantageous, extremely advantageous, to all foodservice businesses:

• All members, every single one, of the ArrowStream Network has gained 2-6% bottom line savings as a result of joining. And this is just the beginning into the opportunities of economic integration.
• Over $37 million in customer rebates flow across the ArrowStream Network.
• $15 billion in product (representing over 10% of the industry) moves across the ArrowStream Network annually.
• Network members have access to over 32,000 lanes and see their full truckload rate increase after joining

When a foodservice organization joins in an existing supply chain network, their supply chain data integrates with the network platform and therefore the data of participating trading partners. The barriers to information sharing fall easily without requiring extensive negotiation and the establishment of a new framework for managing and sharing information. The message here is that technology and extensive, established networks are available to foodservice companies that are ready to lose some of the secrecy in order to win a lot of visibility, cost savings and agility.

Watch for ArrowStream’s coming posts on Trading Partner Openness Tenets 2, 3 and 4 and be sure to let me know what you think of Tent 1: Working within a Network.

Musings from the 2009 IFMA/IFDA Presidents Conference

They say a little wine can help you learn a second language- dissolving the fear of making mistakes as you try out a foreign tongue.  We also found it to be an excellent conversation complement at the ArrowStream wine tasting event during the IFMA/IFDA Presidents Conference this November.  While none of the attendees, who included foodservice industry executives from leading restaurant chains, distributor companies and manufacturing businesses, were at all nervous about sharing their industry savvy, the wine was a great reason to step back from the conference hubbub. It was a reason to gather, relax and muse philosophically about how to “fix” the biggest problems the industry faces today.  

So, with wine in hand and conference badges off, what did this room of industry leaders reflect on?

First, there was the inescapable economy.  Even the best of Bordeaux cannot erase the heavy weight of economic woe. With commodity prices increasing, foodservice leaders are once again faced with a struggle to cut costs at a time when their core costs are rising. It was agreed in most circles that night that the strongest weapon foodservice businesses have against cost creeping is supply chain knowledge and process excellence. The more efficient and informed your supply chain, the more control you have over costs.

The second great area of focus for the industry and the leaders who attended the tasting was value menu programs. In light of widespread shifts in how people spend and save money, industry leaders agreed that smart value menus will attract and retain customers. The challenge to these efforts will be a successful launch and management of these programs in the marketplace as well as the struggle to win the attentions of a stretched and stressed consumer base.

At ArrowStream, our foodservice clients have found time and again that one of the most effective ways to increase the success of value menu programs is to better partner and integrate with internal departments (such as marketing, distribution, etc.). The better coordinated internal departments are in planning, creating, launching and monitoring local market promotions, the greater the results are.

The final thought was really more of an affirmation that open dialogue among foodservice trading partners will lead to great achievements. If one simple wine tasting can have so many industry participants and leaders agreeing and collaborating, consider what the results would be of a more open, trusting supply chain.  Forums like these are essential to helping the entire foodservice industry work towards greater partnership and the eventual goal of widespread, strategic information sharing.

Establishing trust and common operational goals is the first step to successful foodservice industry supply chain data sharing as it focuses all parties on bottom line results rather than the small costs they can squeeze from their trading partners. While the goal of sweeping openness and trust across foodservice supply chains is a long-term and-some would argue-lofty one, it’s one well worth having because it will transform operations and expand profitability possibilities for the entire industry.  And that’s a goal well worth raising your glass to!