Top Priorities to Ensure Profitable Growth for Today’s Food & Beverage Industry
“If the Great Recession has taught us anything, it is that uncertainty is certain.”
So say executives at Tompkins Associates, business strategy and supply chain specialists, in reference to their Top 11 Priorities for 2011. The list identifies the following priorities food & beverage organizations should focus on on to ensure profitable growth throughout the year. Here is a summary of the list:
- Push for fresh and organic. Consumers are driving demand, but sourcing and quality remain challenges. Place more emphasis on high volume growth while increasing margins.
- Demand growth in emerging markets. Growth-oriented companies should enter the new markets that are driving international convergence through strategic acquisitions or partnerships.
- Sustainability. Sustainable practices and waste elimination (e.g., reducing energy consumption, greenhouse gas emission, packaging, etc.) will help companies reduce costs and improve their reputations as stewards of the environment.
- Operating cost reductions. Companies should strive to lower overall landed costs by improving methods and practices for managing suppliers through production, distribution and delivery to customers.
- More reductions in working capital. Improving Sales, Inventory & Operations Planning (SIOP) – as opposed to simply slashing inventory – will greatly help food & beverage organizations reduce working capital. Brand extensions and packaging innovations will continue to increase SKU account, making reductions even more difficult.
- Food safety. Trends toward global food safety certifications are gaining steam, which will drive new technologies to improve visibility from the field to the store shelf.
- Lean management. Companies need to focus on reducing costly process activities that do not add value to their products or enhance the customer experience.
- Procurement contribution through sourcing availability. As commodity prices rise and emerging markets’ demands for higher value and better quality food increase, identifying and securing reliable, cost-competitive sources will become more difficult. Food & beverage organizations should focus on accessing suppliers in diverse markets, as well as pushing purchasing departments to obtain competitive prices and ensure a reliable supply channel.
- Distribution network rationalization. Ensure that your distribution and supply chain strategy is fully aligned with your organization’s business growth strategy and that it has the structure and facilities needed to support anticipated growth.
- Integrating commodity purchasing and logistics strategies. Food & beverage companies should mitigate commodity price increases by taking control over inbound flows. This will enable them to maintain a competitive cost advantage, but will require new thinking on the part of purchasing and logistics managers.
- Growing government regulation. Food and beverage leaders should be proactive in understanding and addressing the effects (on both costs and processes) that changes in regulations, especially the Food Safety and Modernization Act, will have on their organizations.
Tompkins Associates recently added the following emerging themes/updated priorities as the middle of the year approaches:
- Uncertainty is the new norm. Although each industry has its own individual priorities, there are similar trends throughout each that reveal much about general expectations for 2011. For example, many company leaders are facing a great deal of uncertainty about what 2011’s ‘new norms’ will be – it seems the only clear new norm is uncertainty itself.
- The emphasis on global supply chains is a major theme. With global operations come new priorities: risks that need managing; ever-changing regulations and taxes that must be understood and complied with across global borders; and the need for sustainable, environmentally-friendly operations.
- Innovation is also a key priority for 2011. Already, there are major market upheavals happening in the automotive and high-technology sectors due to new developments in product offerings that allow customers access to cutting-edge technology.
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