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.