A manufacturer, a distributor and a restaurant chain are sitting at an industry conference.  What sounds like the opening line of a corny joke accurately describes the beginning of the path to future success for foodservice and grocery trading partners.  That path is collaboration.  Facing mounting cost pressure, competition and consumer demands, these partners are leveraging supply chain technology to share information that just a few short years ago would have been held close to the vest. 

 I recently had the privilege of spending time with some of the most influential supply chain leaders in the foodservice industry at the Chain Operator Exchange (COEX) on March 3rd in Orlando, Florida.  COEX draws industry professionals, and is recognized as the premier educational forum for the chain restaurant operator market.  Nearly 60 restaurant chains, distributors and manufacturers gathered at a session entitled “Integrated Supply Chains Help Reduce Costs, Build Revenue,” hosted by Dan Cox, COO of Distribution Market Advantage.   This was the fourth such session that ArrowStream has sponsored–making the number of senior supply chain leaders having attended ArrowStream sessions in just over a year nearly 1,000.   

The most recent panelists included the senior supply chain management of leading chains like Wendy’s and distributors like the SYGMA Network.  The panelists and the audience shared insights regarding supply chain technology and process improvements.  I would like to share with you the key learnings I derived from listening to this panel and through my discussions with the panelists and audience members afterward. 

The Evolution to Cross-Enterprise Collaboration

Establishing a fully connected supply chain is an evolutionary process that requires putting the right people, processes, culture and technology in place.  The Supply Chain Maturity four-stage model was shared with the audience that depicts the evolution the restaurant chain can expect to make with better information and visibility across the supply chain. 

Stage 1: Functional Focus: companies have documented their departmental supply chain processes and data flows.

Stage 2: Internal Integration: companies are collaborating internally - cross functionally through company wide processes and data sharing.

Stage 3: External Integration: companies are beginning to collaborate with their supply chain partners. They may identify joint business objectives, develop action plans, implement common processes and share data across their organizations.

Stage 4: Cross Enterprise Collaboration: this is the Holy Grail for supply chain maturity. At this stage, trading partners truly collaborate with aligned business objectives, making decisions and executing against customer requirements together in real-time.

To reach Stage 4, companies must be willing to collaborate and build an integrated supply chain — to share information and make the best decisions cross-enterprise. Mr. Cox reported that no more then five to ten percent of trading relationships are prepared to provide the trust and transparency to reach Stage 4. This lack of trust is due in part to the past prevalence of favoring short-term margin protection over the long-term viability and profitability of all trading partners in the supply chain. 

 Some panelists placed their companies at the early stages of Stage 3 while others reported the majority of their trading partners at Stage 1.  What we’ve seen at ArrowStream is that companies can rapidly advance from Stage 1 when executive restaurant chain management is committed.  This first major step is to lead their companies and trading partners to supply chain integration – making it clear to partners and employees alike that removing barriers, fostering collaboration and leveraging supply chain integration technology are paramount company objectives.  At which stage is your company?

End-to-End Connectivity: A Significant Issue

Supply chain optimization can’t occur without the full integration of all supply chain partners – from the manufacturer to the distributor to the restaurant chain to the franchisee.  Panelists shared that the most common points where links in the supply chain break are between the manufacturer and distributor and between the restaurant chain and franchisee.

ArrowStream restaurant chain customers have facilitated restaurant chain/franchisee connectivity by identifying technology solutions that rapidly address franchisee pain points.  For example, Church’s Chicken was able to offer value to its franchisees through information sharing via an automated invoicing process that saved store managers on average 500 hours per week.

Visibility Enables Fluid Product Movement, Profitable Promotions

One of the hottest topics among the panelists and audience was the need for visibility into inventory levels at each stage of the supply chain – particularly during promotions to make smart product movement decisions.  The panelists shared how they garner support among their trading partners by demonstrating the significant and proven shared freight and process savings that result from sharing information via a centralized supply chain management system.  Once the supply chain software is deployed among trading partners – typically with in three to six months — the rapidly realized savings overcome issues like margin protection and fear of process change, making smart product moves possible.

While the bottom line benefits of the integration of the supply chain would make any CFO smile, the results are no joke:  these panelists report significant annual inbound freight savings, millions in recovered charges to franchisees, improved customer satisfaction and returns on promotions. 

We will continue to provide more insights from future industry events and research to help you achieve the same benefits as described by this COEX panel. Be sure to stay connected and, in the meantime, share your ideas or thoughts by sending me a note!