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?

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.

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!

Why Information Should Be Shared, Not Guarded

Henry Ford once said, “Coming together is a beginning; keeping together is progress; working together is success.”  His application of this principle led to Ford Motor Company’s profoundly positive and enduring influence on supply chain efficiency. ArrowStream has also made the practice of teaming up with trading partners for mutual success across the supply chain one of our guiding principles. It is a way of working that allows us to partner with customers and their suppliers to eliminate waste, enable timely and informed decision-making, achieve rapid speed to market and enhance profitability.   

But coming together and sticking together is not easy when many and varied businesses are involved. Barriers to true information sharing (such as systems limitations as well as cultural, business and training constraints) can easily hinder effective supply chain synchronization among trading partners. The temptation to keep information in silos as a way to protect margins or perceived territory is a universal one, which is why information is often purposely made unavailable to trading partners.

In order to overcome information protectionism and get businesses to work together effectively and openly across the supply chain, it is crucial for trading partners to establish trusting relationships and understand the bottom-line value of sharing business data. Consider leading national food services chain Applebee’s as an example in laying the groundwork for greater supply chain information sharing and partnership. In an effort to reduce costs and improve efficiencies, the company recognized the need to obtain comprehensive views of supplier, distributor and restaurant data and to gain insight into hidden freight costs.  But before an information sharing process could be established, distributors had to be convinced to share critical freight management information, historically a sheltered income stream for distributors. 

Applebee’s was able to convince its manufacturing and distributor partners to participate in the ArrowStream Network of 2,300+ foodservice manufacturers, distributors and chain operators by demonstrating the significant freight and process efficiencies they stood to gain. The bottom-line argument was that by using the volume of more than just one retail chain, tapping into ArrowStream Logistics’ patented freight optimization technology and leveraging the capacity of The Network’s 200+ Distribution Centers and 61,000 routes, the distributors would have more full trucks.  Costly Less-Than-Truckload (LTL) percentages would be significantly reduced.  Inventory velocity would increase.  Distributors who participated in The Network would share in the savings. 

This mutually beneficial model convinced Applebee’s partners to participate. And while making a successful argument was a challenge, the significant and recurring freight savings across the supply chain that all trading partners now benefit from have been well worth the effort. Today Applebee’s has significantly reduced its LTL percentages and has achieved measurable freight savings as a result, all while gaining real understanding of its freight costs. 

Additionally, by breaking down the freight barrier with its distributors, Applebee’s opened up the opportunity for even greater information sharing across the entire supply chain resulting in over one million dollars in recovery of overcharges on an annual basis. Leveraging the Arrowstream OnDemand technology, Applebee’s is able to quickly and accurately integrate information from all its trading partners.  Applebee’s and its partners share complete information on things such as: supplier shipments, on-hand inventory at the distributor, demand and fulfillment data at the restaurant level, as well as have comprehensive views of contract, pricing and compliance information. This level of supply chain visibility enables Applebee’s to quickly identify trends within a promotion and ensure the right products are getting to the right locations at the right time.  It also ensures franchisees are getting charged correctly, producing optimal profitability and efficiency.

It’s a simple supply chain equation: The ability to work together cooperatively fosters the ability to effectively share information. The ability to share data expands competitive advantage and bottom-line success for all contributors. Before this equation can be applied, you must first establish trust among your trading partners so everyone is rest assured that you are committed to helping them increase their bottom-line rather than take money out of their pockets.

As more companies look to share information across the supply chain the more benefits all trading partners will see.