It is no secret service level is important in the food industry. If your product is not in the store, when it will sell, then you and the retailer lose. That is basic retailing. Making it happen is what separates the successful suppliers and retailers from the rest of the pack.
The events of 2020 elevated the importance of service level. Very quickly it became apparent consumers were making their decision on where to shop based on different factors. They wanted to shop where they felt safe and where they believed they had the best chance of getting everything they needed in one store. Sales could be won or lost, based on the consumer’s perception of in stock position.
When something is important, we should all be working with the same definition. Retailers define service level as:
Cases delivered (to the right place, at the right time, with the right labels, with adequate best before date in the right condition) divided by cases ordered.
Full stop. There are not any asterisks or exceptions. Suppliers who take the same approach get more credit from their customers. I do not think there are too many suppliers, if any who can say they have had 100% service level from day 1. There are a lot of challenges to producing and processing food. The pandemic has introduced new hurdles to overcome.
Your customers will respect you when you report accurate service levels and do not try to add the asterisk or in their terms, excuses.
With service level being a key to success what can you do about it?
You need to start within your own business. Here are 5 things you can do in your business:
- Measure service level to every customer every week. This should be an easy metric to measure and share with your team.
- Explain how important service level is to your customers and how a great service level ensures the next order.
- Set targets by customer. These should be achievable and in line with your customer expectations.
- Celebrate the wins and improve process when there are issues. Once they understand the importance talk about your results, good and bad.
- When you do have issues do not ‘hope’ they will get better. Figure out the root cause and make change to ensure you can meet or exceed your customer’s expectations.
Once you have the right focus within your business you should focus on your customers. Here are 5 things you can do to improve your customer relationships with service level.
- Ask what their expectations are. You need to be on the same page for service level just as much as you need to be for sales.
- Be proactive if you are going to have an issue. These are never easy calls to make but it is much better if you call them as opposed to them calling you.
- Share what you are doing to make improvements, if you are having issues. They want to know you are working on it to improve the situation.
- Report your service level regularly. Depending on your volume this could be weekly or monthly. They will focus on the problems so if you are doing well; they should know that too. It isn’t bragging, it is developing the relationship.
- Match your approach to the severity of the issue, as it appears in their mind. For example, if you are in the weekly ad and unable to meet the orders that is a big issue. You need to call. If you have an order for 1,000 cases and your lid supplier shorts you and you can only ship 975 cases it is not as big an issue. An email to the buyer will probably suffice.
Bonus-if your business did have to jump through hoops to get product produced and delivered on time, in full share that as well. Let them know who in your organization put in the extra effort or was proactive to avoid a problem. They like to know you are looking out for their best interests.
Your ability to meet or exceed expectations on service can differentiate you from your competition. This leads to other opportunities and better relationships because your customers will believe they can depend on you.
If you missed the third webinar in Perennia's preparing for retail success series, here is the recording:
On February 24th I will be presenting as part of the “Preparing for Retail Success” webinar series. There are many factors that determine your success in retail. Price is certainly one of them. We will help you understand how to review your category and determine how your item can be priced right. We will also explore category margins to ensure you know what your customer expects for product cost, based on the right retail price.
On March 3rd I will be presenting as part of the “Preparing for Retail Success” webinar series. Getting a food product to the shelf is a major accomplishment, and a lot of work is required. Keeping it on the shelf is just as much work. We will explore the programs required, the investments you need to make, the communication you need to initiate and the results you need to deliver to keep your product on the shelf.
At the end of March I will be moderating a panel of producers and industry experts on "Consumer Trends In Agriculture" as part of the Minister of Agriculture Digital Series.
If you have any questions about how to get your local products on the shelf or in the shopping cart you can always call me at (902) 489-2900 or send me an email peter@skufood.com.
Peter