There is no doubt 2020 has been a year like no other, but that is not news to you. Food and beverage businesses have had to adapt, service a rapidly changing market and find innovative ways to get the job done. Everyone in the industry has been incredibly busy with all of the change that happened so fast.
Have you taken the time to assess your response to the changes in the market?
One of the strange realities of 2020 is that our two children in junior high have not been in school since March and they received no report cards for the final 4 months of the school year. I believe they were actually disappointed to get very little feedback from teachers and receive no marks for the work they had done. They did adapt to the online learning and did the work they were assigned. My son in university did finish the term online and did have exams to write so he did receive marks for the work he did remotely. The two in junior high really were looking for more feedback and confirmation they had done the work and done it properly.
When you work hard and put in an effort, you should take the time to assess what you did and understand if your customers see it the same way.
Focus on the key issues
Operating your business is complicated and you can’t measure everything. The top three issues I would focus on would be:
1. Your employees
2. Your cost of goods
3. Your ability to service your customers
Perhaps your business has other important factors to consider but these are the three I would start with.
The food industry has adapted to a very different market place since March of 2020. Consumers, suppliers and retailers have all had to adapt to a new environment for buying, producing and selling food and beverage. It is time to understand the impact on your business and share the results with your customers. Almost every food and beverage business has experienced changes to cost of goods and service level. For the long-term sustainability of your business, you need to understand and assess this new environment and communicate with your customers.
Your employees
We know the whole pandemic has been a challenge for everyone. In the food industry we had to keep people healthy because it was the right thing to do and also to allow them to keep going to work. You also had to invest in changes to production and facilities to ensure the health protocols were implemented.
Some producers and processors also had temporary foreign workers coming into their work environment. This created more complexities than other years with 14 day periods of isolation and integration with existing work forces.
You should assess the level of satisfaction your employees have in your business and if possible compare to surveys or other information from before the pandemic hit. You can also assess if you have been able to hire new people because you require them or if you have lost employees.
Your cost of goods
We know the cost of producing products has increased in almost every sector. Some businesses offered premiums to employees for coming to work, physical distancing and other process changes required more labour or slowed production. Labour is not the only input to be impacted, ingredients might be going up and packaging is certainly a challenge for many.
You should have a solid understanding of the impact the pandemic is having on your cost of goods. Retailers understand the market has changed dramatically but as you know they want facts and will not be amused if some suppliers see this as a chance to just take a price up.
Have the conversations early and often to prepare your customers for the impact of this on your business. When you scramble to fill a purchase order to keep them in stock remind them it was extra labour or extra logistics required and document it. You will need these facts later when you have to justify a cost increase.
Your ability to service your customers
Service level (cases delivered on time/cases ordered) is a very important metric to monitor. Your customers have been more focused on inventory and in stock position than ever before. If you have been able to fulfill all of their demands you need to celebrate this in your business and remind your customers.
They manage hundreds or thousands of suppliers and they usually focus on the problems. If you have been able to keep your products flowing and service their needs you need to remind them. This is important and it will help your long term relationship with your customers.
Your entire business should be congratulated if you have been able to fill orders. Make sure your employees understand what an accomplishment that is and take the time to thank them. Many others were not able to deliver during the last few months.
Communicate with your customers
Once you do some assessment remember to share some results with your customers. Keep it brief and be objective. This is not a promotional piece, it is an assessment of how you managed through a very difficult situation.
August Series- Your response to the changes in the market
In the last 2 weeks of August we will discuss how you can assess your response to the issues related to the changes in the market.
August 19- So much has changed since March 2020. You should understand the impact on your business, good and bad. Some food and beverage businesses have been able to adapt and deliver great performance while others have struggled. You need to assess what has happened and the impact to your employees, your cost of goods and your ability to service your customers. Once you have an objective assessment you need to communicate to your customers. They have been focused on getting inventory to their stores and operating in a very different retail environment. It is time to let them know how you are doing and if there will be changes going forward. We will share insights into how you can assess your performance and communicate with your customers. This will be important in your relationship with your customers going forward. Soon we will be into the 4th quarter, which is the most important selling period of the year in food.
August 26- Every business has experienced changes to cost of goods. Labour efficiencies are lower due to physical distancing in production and there are many extra costs for hygiene and personal protective equipment. Some input costs have increased as well as your suppliers react to their own reality. Your selling price needs to reflect the changes you are experiencing. We will give you a process to follow to help you get the price increase you require with your customers. No one likes to see prices go up but they have to when your cost of goods are changing. Peter will share his experience working with a retailer to give you insights and the questions you need to answer to get the right price for your product. Peter has over 19 years working in retail and understands what your customers need to hear for you to be successful.
At SKUFood we understand it is important to give back. We have the ability to share insights and information you can use in your food business right away. If we were able to get in the same room for an event you would hear me say, “Success in the food industry is not just about making great products to sell; it is about selling the great products you make.” Telling your story effectively is one critical piece of selling the great products you make.
If you want to talk about your story or need some advice just send me an email at Peter@SKUFood.com or give me a call at (902) 489-2900.