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!

Lessons in Critical Supply Chain Issues for the Foodservice Industry 

At ArrowStream, we pride ourselves on being experts in our customers’ supply chain and business operations. We also know that there is always more to learn, which is why we host the ArrowStream Customer Conference each year. Who better to help us better understand the hard work and critical needs of supply chain management than our customers-the ultimate, inside-the-game experts?

On September 20^th this year, food service industry supply chain business leaders from across our client base gathered in Chicago to delve deep into the issues having the greatest impact on their operational efficiency and bottom-line success. Every one at the Conference learned-our service teams, our technology experts and even our clients walked away with numerous ideas on how to use supply chain management technology and resources to improve their businesses today and tomorrow, and to confront the challenge of the current recessionary market. I had an inspiration as ArrowStream has been working the lessons of the Conference into the solutions, services and tools we provide - “We should share these lessons and findings with the whole industry-our clients, those we want to be our clients, our partners and, yes, even our competitors because these insights can help us all make the entire supply chain ecosystem even better”

So here they are-the core findings of the 2009 ArrowStream Customer Conference. I hope this knowledge makes a positive impact on your supply chain planning, decision-making and results.  Given that every one of the participants uses ArrowStream’s software and data network a substantial part of the discussion centered on how to further use technology to enable scale, agility, and success in the supply chain.

Finding 1: Business Process Performance Is King
Our customers are competing in the toughest marketplace they’ve known. Customers wield enormous power as they look for the best value for their diminished pocket books. Foodservice business executives agreed that keeping costs down while meeting rising customer demands is the great, perplexing challenge they face today. How do you deliver the variety, value and safety customers seek and reduce costs?

To meet those demands, businesses must continue to increase and maintain the highest levels of operational efficiency. A foodservice company cannot achieve that goal without world-class supply chain management. Every point and every partner across the supply chain affects operational efficiency and the supply chain is the network of processes and people that unites them. A business would do very well to use the supply chain as a pathway to greater efficiency-analyzing each process and partnership across the system to ensure top performance, efficiency and results. Realizing the importance of this strategy, many of our conference participants are seeing investments in their supply chain organization remaining the same or increasing in 2010. Clearly supply chain has taken on new strategic importance in the face of the most difficult market of the last 25 years.

Finding 2: Overwhelmed by New Products & SKUs
At the Conference, business leaders also spoke to the common challenge of introducing and managing new products along the supply chain. One client said that they had introduced a record number of new products to the marketplace this year as they work to compete and win customers in this challenging economy. The difficulty, of course, is managing and tracing this rapidly expanding product portfolio, which puts enormous pressure on teams that are often already over stressed.  We discussed a number of examples where Technology was the key element in helping supply chain teams scale to effectively meet this challenge with little or no incremental overhead.  We also discussed how the same technology is helping all business operations manage and make the very best decisions in terms of new product management, costing, and delivery.  

Finding 3: Reducing Spoilage, Improving Traceability  
Restaurant chains that reduce spoilage and improve product traceabilty are safer, more responsive better foodservice providers in the minds of their customers and the industry. To achieve this essential goal, businesses need better data and far better integration with trading partners-especially with their global manufacturing partners and distributors. Bottom line? Businesses must integrate product management data up and down the entire supply chain to be able to quickly and effectively respond to food recalls and safety issues that could seriously damage customer confidence and the business brand.

Finding 4: The Technology Beacon
Technology has taken the central role in solving many of the issues today’s food service industry businesses face along the supply chain. Businesses will continue to look to technology to address their pressing challenges (such as traceability and spoilage reductions). The food service companies that are thoroughly integrating their supply chain systems and the rich data it provides into their organizations are going to lead the pack in industry innovation and establishing greater competitive advantage in the marketplace. Those that extend the reach and advantage of their supply chain management solutions to integrate trading partners will clearly be on the leading edge of this innovation. Our customers shared some of the innovative approaches they are taking to leverage our technology to address their challenges. For example, one customer had enrolled their distributors into the ArrowStream data network so that all ordering and receiving into their store locations was 100% electronic.  This resulted in tremendous labor cost savings and billing/pricing accuracy improvements for our customer.

Finding 5: Global Identification, Greater Efficiency
Almost all participants expressed a strong belief that a global identification standard would dramatically improve product management and logistics for all partners across the supply chain.  They all voiced strong support for GTIN standardization. While the global industry works towards GTIN standardization, businesses must rely on innovative supply chain technology systems that can consolidate diverse codes into a manageable, smart and effective supply chain management system. Businesses that do are winning big gains in efficiency over competitors who are still saddled with manual data entry and the cost of maintaining redundant systems just to keep pace with business flow.  In today’s marketplace, no one can afford the additional expense of multiple data systems and stores to manage their supply chain.

Because of their importance, we will be exploring some of these topics in great detail in upcoming blogs. The goal is to show how today’s technologies, and the increasingly strategic role of the supply chain, will help businesses meet and beat their toughest challenges. Until then, share with us what your greatest supply chain concern is or where you think technology needs to go to help foodservice businesses grow, innovate and lead in this difficult but opportunity-rich time.