Positioning your business for 2022
The 4th quarter can be a key sales period for many food and beverage products. Consumers buy differently this time of year. They are more about the experience, perhaps buying items they would not usually buy and price is less important. You need to be ready for this important time in the industry and make sure you are ready to hit the ground running in 2022.
Between now and the end of 2021, we will share 10 SKUFood insights to help you make the most of 2022. We try to help you see the entire value chain and prepare your business to respond to changing customers and consumers. Each week we will share a different theme and some ideas and opportunities for you to consider.
Service level can differentiate you from the crowd
We all experienced the empty shelves in grocery stores when consumers pantry loaded in March of 2020. This was an eye opener for consumers and others in the industry. Few of us were used to questioning the ability of our industry to supply stores and keep shelves full.
Over time the inventory positions improved but there are still a lot of issues when you really look at the shelves. Although there are many reasons a product in not on the shelf, your customers do not care much about why, they just want it fixed.
As we look ahead to 2022 you will be able to differentiate your business from many others if you have the ability to deliver what they need, when they need it.
A definition of service level
It is important to have the same understanding that your customers have. They would define service level as cases delivered (on time, in full, to the right place, with the correct labelling and meeting or exceeding specifications) divided by the cases ordered.
That is the number to measure. That is how their system calculates it.
Yes, there can be a lot of reasons why it might be impacted but you have to start with their definition.
A common definition of success
You will be judged on your ability to meet or exceed service level targets. To ensure you know where you stand you need to know the target. Every customer can be different, so it is always good to clarify the target with them. Most retailers target 95-96% for service level. If you have an internal target, you can share this and confirm it is in line with their expectations.
There are a lot of challenges in the world of food production and processing. Acquiring the inputs you need (ingredients, packaging or even seed and fertilizer for primary production) is integral to your ability to meet or exceed service level targets. Review your own internal process to ensure you have enough and that people are not cutting it too close. This also requires cash flow to buy in advance if that is part of your strategy.
Make sure your customer understands the challenges you face and that you can deliver the service level target they set. Now is the time to have this conversation. Do not wait until you are shorting orders.
Priorities within your business
Every food and beverage business is unique. Service level might have been a top priority for you and your track record is excellent. If so, keep it up! If you have been managing many priorities and your service level was a top 10 but not a top 3 you should consider some changes. Retailers and distributors have a lot of challenges to deal with right now too. If they can depend on suppliers to fill orders you are part of the solution, not another problem.
Share your performance with them
Your customers are busy and unfortunately, they focus on the problems. Give them quarterly updates on your service level. Include the target, which tells them you understand your commitment and let them know the results. Do not wait for the ‘annual review’. Just a quick email to update them helps you build the relationship.
Deal with problems early
Very few businesses are perfect right now. Do your best to anticipate issues and when you know there will be a problem let them know as early as you can. Regular shelf stock is one thing, ad and seasonal products are another. There will be more focus on the ads and seasonal items as it usually involves off shelf merchandising and coordination with retail.
Communicate with the appropriate people and remember in many retailers supply chain, procurement and merchandising are different people. Have a plan and communicate.
Sales require service level
Right or wrong, retailer’s view is when there are problems with service level sales will be missed. You have heard me say before sales are the #1 priority of almost every retailer. They need inventory to drive sales. The right in stock position is dependent on service level targets being met. To differentiate your business from 2022 put as much focus as you can on delivering great service level to your customers.
If you have any questions or help figuring out service level you can always call me at (902) 489-2900 or send me an email peter@skufood.com.
Peter
We are adding more industry updates and interesting ideas to your SKUFood newsletter. Hopefully you have heard me say this before and that it resonated with you in your business.
“Success in this industry is not just about making a great product to sell; it is about selling the great products you make”
Peter Chapman
If you see things happening let us know so we can share them with our community. We also want to hear if you find this helpful and benefits your food and beverage business!
If you are exporting to the US…
The U.S. is our biggest trading partner and every day huge volumes of food go across the border. It is enticing for Canadian producers and processors to serve a market 10X the size of Canada. Despite free trade there are a lot of hurdles to doing business in the U.S. One Prerequisite is to be registered with the Foreign Supplier Verification Program.
As explained in this article there are more inspections occurring which reinforces the advice to have the proper documentation in place. Thanks to Andrea Leiser at RSVP for sharing this.
Food service industry rebounding
As we have endured the pandemic, we know the food service industry was one of the sectors impacted most. With more people being vaccinated and economies opening up there is some optimism in food service. Labour is still a big challenge, cost of goods are rising and many establishments took on debt to survive. There are challenges but the first hurdle is to get consumers back into restaurants and shift sales to more acceptable levels.
US Export capacity
It has been a privilege to work with the team at Aliment to support businesses from Atlantic Canada build capacity to export to USA. We have 4 webinars planned that are packed with great information from people who know how to do this. The team is from across North America who will be delivering the sessions and I know I am looking forward to learning a lot.
Food & Beverage Atlantic US export capacity
Sales & Marketing Basics November 3
Virtual Presentations November 17
When is Peter speaking?
Agriculture and Agri-Food Canada and Learnsphere
Turning pitches into purchase orders in export markets November 2
Food & Beverage Atlantic
Selling in Quebec when you aren’t local November 16
Foodpreneur Advantage
Creating your best pitch for national retailers November 23
