Buyers are not category managers

One of the reasons we are sharing definitions of different terms this year is to help people in the industry speak the language of retailers. You have a much better chance of developing a good relationship when you are speaking the same language.

Buyers work in the supply chain department of retailers. These people, in lower level positions, cut purchase orders to manage inventory through their warehouse network. Buyers purchase the amounts of products recommended by the buying system, from suppliers determined by category managers.

A buyer is different from a category manager. Supplier’s key point of contact is the category manager, they are the decision maker for the listing base and product cost. Buyers do decide how much to buy and suppliers should develop a good working relationship with buyers.

The right terminology makes a difference

Relationships are developed over time. A good working relationship can be the difference between getting an extra opportunity or not. When you use the right terms, it will probably not get you a spot on the front page of the ad, but it will lead to developing a good working relationship.

When your key point of contact is the category manager, using the wrong term for their position always got my attention. When I was at Loblaw, it was one statement a supplier would make that indicated to me they did not understand their customer. People work hard to get to the role of category manager. It is an important position and to be referred to as a ‘buyer’ reduces the importance of the role. Many category managers started as buyers but have increased their responsibility during their career to be the key decision maker with suppliers.

Aside from developing the relationship, using the right term reduces confusion. When you say “I will talk to the buyer”, the retailer will believe you are talking to the person who cuts the purchase order, not the category manager. This can cause a lot of confusion. When you use the right term, it keeps things clear for everyone.

The role of a buyer

The primary role of a buyer is to cut purchase orders, to ensure there is the right amount of inventory in the system to meet sales targets. This is a balancing act to have enough inventory, but not too much. There has been a lot of focus on the cost of inventory within retailers. Inventory takes space, costs a lot of money and reduces productivity.

Buyer’s performance is measured by looking at inventory turns. The retailer’s system will tell them what is projected for sales and the sales history for the item. There are many factors that can impact these projections and history. It is a challenge to purchase the right amount of product for thousands of items. Buyers are not in the stores or really aware of the category strategy, they are just trying to keep the right amount of inventory flowing.

There are other constraints that impact what a buyer has to do. Factors such as pallet quantities, delivery lead times, warehouse space and even store execution will determine the inventory required. Promotion strategy also impacts inventory for items throughout the category.

One of the biggest challenges for a buyer is too much inventory. It is easy for retailers to measure this and it causes a lot of problems through the entire system. Too much in the warehouse takes valuable space and slows down the warehouse’s ability to get things done. Too much inventory in stores is more visible because everyone sees it and it reduces productivity in the store. There is only so much space. If slow moving inventory is taking space on an end, it means better sales potential items do not get on the floor or expensive labour is required to move the product. Employees in warehouses and stores get very frustrated if they have too much inventory to deal with.

Inventory costs money

It is true retailers do not always pay within 30 days. If inventory remains in the system past when retailers pay for it, they really see it costing money. Suppliers get excited when they see a big purchase order. You should really be excited if you are confident the item will sell through the front end, in a reasonable amount of time. Inventory that remains too long in the retailer’s system is not good for your business. True, you cannot always impact their execution but it is your product. When it does not move through they see it as a problem.

Suppliers should focus on the right amount of inventory

Developing good relationships with your customers is more than just using the right term to describe their position. You can impact the amount of product buyers put on purchase orders. You should know the volume of your items and be aware of the promotion plans your customers have. They are not always good at communicating these to you which is another component of the relationship.

If you know about upcoming promotion activity or other factors that will impact movement you can help them buy the right amount. The right amount can be less as often as more. The goal should be to move the inventory through the system in the right amount of time. This will keep your customers happy.

Do not critique every order and pick your battles. Buyers are busy and do not have time to change every purchase order by 50 cases. If you do call or email at the right times they will appreciate the input to make their job better.

Get to know your buyers

You should always know who your buyers are. It is possible to develop relationships with these people. You cannot tell them what to buy, but you can help them buy the right amount. You know your items better than they do. If you are a regional item it is possible they have never even seen your item. It is also possible they have never been to the region. Help them understand the geography and timelines. Yes, they should know but often they don’t. Think of it as customer service. If you help them they are more likely to help you move a purchase order to maintain your 100% service level that you will get judged on.

Buyers change, it is a reality. Don’t complain, think of the new one as a new opportunity. The good ones are promoted and you never know when they might be your next assistant category manager. When they change go back to the beginning and do not assume the previous one shared too much about your specific items.

If you have any questions or require help working with buyers, you can always send me an email peter@skufood.com or call me at (902) 489-2900.

Peter

Royal warrants can be a point of differentiation

With the passing of Her Majesty the Queen, we felt it was appropriate to mention Royal Warrants. These are a specific coat of arms on products that have supplied the official household of the Queen or Prince of Wales for 5 of the last 7 years.

We know claims and other communication on packaging help to sell the products. There are some large brands listed who include the Royal Warrant coat of arms on their packaging. Obviously, this has a bigger impact in the U.K. but in Canada many consumers would like to think they are eating the same crackers chosen by the Queen. 118 companies are listed in the food and drink section of the Royal Warrant website.

Poultry prices increasing as supply impacted by Avian Flu

In Canada poultry products are subject to supply management regulations. We do not see immediate fluctuations in price when supply and demand are impacted like they do in the U.S. Regardless of what you think about supply management, it is important to understand what is happening to this industry.

Egg prices have increased dramatically in the U.S. this year. Very significant amounts of birds have been destroyed with these avian flu outbreaks. Turkeys have also been impacted. Long term sustainable supply of safe food is important for everyone.

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FCC Peer groups in fall of 2022

It has been a real privilege to work with FCC in 2021/22 to launch the pilot program for their food and beverage industry peer groups. We had some incredible discussions with processors about our industry and they really did learn some very valuable insights from each other. We discussed so many topics from customers to ecommerce to distributors to co-packers and so much more.