It is like treading water with a brick in your hands - SKUFood
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It is like treading water with a brick in your hands

If you service level is below 95% it is like treading water with a brick in your hands

Sales are one of the most important metrics in our food and beverage industry. Most retailers would tell you it is their #1 priority and they need to generate traffic to get people to buy the products they sell. So many expenses in their business are measured as a percentage of sales.

Suppliers need to be focused on sales. One of the best ways to deliver sales is to have a good in stock position. We can measure this with your service level to your customers.

Service level is defined as the cases you deliver (on time, with the right label, the correct BB date to the right place) divided by the cases they order. Most retailers want your service level to be at least 95%. If you cannot get your products produced and delivered to the market it makes it very difficult to succeed in this industry.

Understand the targets

Retailers have expectations for their suppliers. This is how they will judge your business and the relationship you have with them. Service level is one metric that is very important to retailers. When they make the commitment to put your product in their stores, they expect suppliers to deliver. You need to have a great product and you also need to get it to them.

Your sales people should talk to your customers about service level and ensure they understand the targets. Measure your results relative to these targets. If you deliver to the warehouse you can measure what you deliver, divided by what they order. If you have direct store delivery (DSD) then you will need to measure service level objectively. You can track the product that should go into the stores to fill the shelf, divided by what you actually put in there.

Report your results to your customers. If you deliver to the warehouse they can measure it but save them the time. Prove it is important to your business by sharing the results.

Find the root cause of issues

If your service level falls below your targets, it is important to know that, but more important to figure out what is causing the issues. Get the people in your business engaged in solutions and getting the service level back to where it needs to be.

When you get your team engaged, it will become a very valuable component of your business. People in production should know service level targets and understand how important it is to your customers.

Be proactive

If you are going to have issues; be proactive. Contact your customers and let them know. We suggest you share the facts but also the solution you are working on to get back on track. If you are in ad or on in-store special, you really need to let them know. These are not easy calls to make but usually your relationship will be stonger in the end.

Remember your position in the category. If you are the leading item in the category and you are on ad it is an issue they will really want to know about. If you are the number 3 item in the category and you are just at regular price it is not as big an issue. You should get it fixed but probably does not require interrupting their ad meeting.

Get your products to market

We can get focused on a lot of things in food and beverage. Service level should be at the top of your list. If you are falling below 95% it really can be like treading water with a brick in your hands. It will wear out your business quickly. Your sales people will be frustrated and your sales will suffer. Measure the performance and keep your business aligned to deliver the great products you produce.


Peter

SKUFood Recipes for Success Podcast

We are super excited to announce we have launched our SKUFood Recipes for Success podcast. We have been working on this project for a while and it is finally ready to share with all of you. Our intention is to share the stories of food businesses and others in the value chain while also providing insights that are interesting and helpful to people in the food and beverage industry.

In this episode, we sit down with Shivani Dhamija, the founder of Shivani's Kitchen, a company that's been making waves in the world of ethnic food products. Join us as we explore Shivani's entrepreneurial journey, from establishing her CFIA (Canadian Food Inspection Agency) certified facility in 2020 to the remarkable progress she's made since.

Discover the secrets behind Shivani's success in manufacturing authentic and delicious ethnic products for grocery stores. Learn about the challenges she faced, the milestones she achieved, and the passion that drives her to bring the flavors of her culture to a broader audience.

Get ready for a conversation that delves into the art and business of creating ethnic products, with Shivani as our guide through the aromatic and flavorful world of Shivani's Kitchen on SKUFood Recipes for Success podcast, presented by FCC.

Listen and subscribe where ever you get your podcasts.

Where is Peter Speaking?

Join us for Ag Day on Monday

Ag Day on the the South Shore is on Monday, March 25, 2024 at the Oak Island Resort & Conference Center in Chester.

Come join us and learn more about Getting More South Shore Products into the Shopping Cart.

Dynamic pricing in grocery stores

Recently Wendy’s announced the testing of dynamic pricing. This concept, where prices fluctuate based on demand is popular with some and frustrating for others. In a food service establishment like Wendy’s, you might find a burger for less between the lunch and supper rush. Others might change that to describe it as more expensive at the supper time, when they really want a burger.

Is this something we will see in grocery stores? Perhaps lower prices on Monday or Tuesday morning when stores are not as busy as they are on Friday or Saturday. It is more complicated for grocery stores because they can have multiple displays of products and there are not many stores where all price labels are electronic. You do see more of these in place at Loblaw where it is more an initiative to reduce labour costs and improve accuracy.

Stay tuned, I am sure like every other grocery pricing conversation there will be lots of debate.

We are really excited to partner with Food and Beverage Manitoba on this program for food and beverage businesses. The objective is to help companies take advantage of the opportunity in retailer’s local programs and take the next step. We are delivering the first 3 sessions virtually then I will be in Winnipeg for the last session in person.

Excited to collaborate with FCC to create this workbook for food and beverage entrepreneurs. Managing your costs in this environment is so important.

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