In the Kitchen
Top 5 Supply Chain Management Priorities for 2009
Jan. 7, 2009 – ArrowStream, a provider of supply chain solutions for the
foodservice industry, has polled its customers to name the top five priorities in
foodservice supply chain management for 2009.
The top five supply chain management priorities for 2009
include: driving store traffic, enhancing menu selection and building customer
satisfaction. These correlate to the economic concerns of casual dining and
quick service restaurants that was revealed in ArrowStream’s Market Outlook
Survey for the second half of 2008.
The continuous rise of commodity costs topped the list of margin pressure
concerns among chain operators, affecting how these companies manage supply
chains to control costs, drive revenue, attract new customers, and assure
The ability to achieve these five priorities and drive
revenue can only be achieved by an integrated and synchronized supply chain
that delivers optimal communication between trading partners.
Accuracy and Effective Promotions Management.
Minimizing error in the forecast is a top priority.
Investment in marketing, product development, production, inventory and
distribution is at risk should demand forecasts prove to be in error. Sometimes
revenue in the millions is on the line.
Forecasting is particularly complex for Limited Time Offers
(LTOs) which can represent up to 75 per cent in total annual investment for a
national chain. LTOs are on the rise including discounts, combos, new items and
new price points to drive store traffic and attract potential new customers
seeking better value in a tough economy. Investment risk can be mitigated
through integration of data across the supply chain.
“In order to stay competitive in this current economic
environment, and continue to offer consumers innovative menu items, we have
increased the number of items and promotions we offer,” said David Cox,
president of ARCOP, Arby’s nonprofit purchasing and distribution cooperative
2. Inventory Management with Fluid
Balancing inventory with demand is critical. And the ability
to move that inventory to the right restaurant at the right time in the right
amount is paramount to cost control and customer satisfaction.
“Guest satisfaction is our number one priority. We must make
sure that items are available when guests want them. There is no room for
disappointment,” said David Parsley, senior vice president of supply chain for
DineEquity Inc., the parent company of Applebee’s and IHOP. “One way we ensure
that we deliver on our commitment to the guest is by creating fluid supply
chains which can only be achieved through visibility across our network,” said
3. Effective Sourcing.
The ability to source the best suppliers for existing and
new items is key to achieving customer satisfaction in price and menu quality
and selection. A flexible supply chain enables complete visibility of a central
repository for item, supplier shipment, and perhaps most importantly contract
pricing data so that the best products at the best prices are within reach.
Having a repository for and synchronizing such data is also critical for
time-savings and accuracy of information.
4. Optimized Freight Management.
Even as oil prices have plummeted, creating more efficient
routes and truckloads is crucial to fluid product movement and reducing costs.
Leveraging nationwide transportation networks fueled by freight optimization
technology and coupled with order management discipline can reduce fuel costs
by over 20 per cent.
5. Rapid Return on Investment.
Whether for a Limited Time Offer or investment in SaaS, the
need to garner quick wins is critical. The ability to synchronize with trading
partners facilitates rapid and accurate implementation of promotions and also
enables quick and comprehensive supply chain visibility from manufacturer to
distributor to store, delivering faster ROI.
“To gain optimal visibility from the supplier to the back
door of the store, we sought a system that would readily link distributor
information to our systems,” said Alan Stukalsky, CIO of Church’s Chicken. “We
have achieved a 202 percent return on our investment in ArrowStream OnDemand.”