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Monthly Archives: October 2017

Foodservice Trade Promotion to Drive Supply Chain Transformation

Foodservice Trade Promotion to Drive Supply Chain Transformation

Source: Food Service Industry Collaboration Will Drive Supply Chain Transformation


Ran across this article the other day, and it made an impression on me. There are so many moving parts to the foodservice supply chain that transformation must happen. Each part of the supply chain needs to implement a foodservice trade promotion management solution to even try to stay on top of the changes that are happening in the industry.

NPD Group reported that U.S. foodservice traffic declined in 2016. A critical factor in the decline was due to changing consumer tastes. To try and turn the numbers around, Dataessential found that the top 300 chain restaurants in America and convenience stores came out with 5,113 new menu items. These new menu items weren’t all that new, but the key is the new ingredients used. Just a few years ago, chain restaurants wouldn’t have thought they would have been including kale and quinoa ingredients as their big sellers. But consumers have changed…, so foodservice manufacturers and restaurants must evolve to meet the demand.

Is This a Wake-Up Call for the Foodservice Industry?

“The consumer votes with their feet and if we are to win their dollar then all players in the supply chain must work together to give them what they want. And there is a lot at stake to do so.  The food service industry is the second largest private employer in the United States and counts nearly 15 million among its workforce (10% of the overall U.S. workforce).” – Larry Oberkfell, President and CEO of theInternational Foodservice Manufacturers Association.

Oberkfell feels the situation needs addressing. So, IFMA, HAVI, and Kinetic12 have joined forces to bring forth a supply chain optimization initiative. They are focused on bringing the most prominent brands and suppliers together to evaluate and get a better handle on the supply chain across all key stakeholders. They are looking to address ways to bring new offerings to meet changing consumer tastes.

“Imagine the growth and cost savings an industry this size could achieve if all parties worked together to root out inefficiencies and improve communication along the supply chain.” – Oberkfell

Foodservice Trade Promotion Management Is Key

They have already started having summits with over 60 participants. From these summits they have identified three key areas of focus:

  • Data – There’s a need for more reliable, quality data. All parties use different methods of reporting data. The hope is to create a standardization of data among supply chain optimization best practices. This means it will be imperative for foodservice manufacturers to move from traditional methods of managing their trade promotion (spreadsheets, homegrown solutions) to more robust and accurate solutions that can handle the data.
  • Forecasting and Planning – The drive to get more collective visibility into what’s happening throughout the supply chain is an important initiative. When all participants do not have transparency into the various operation activities, it’s hard to accommodate changes in demand.
  • Communication – This one is no surprise. Communication is key to success for any industry. It’s imperative that food manufacturers, distributors, and restaurants stay in communication with each other about what’s happening because it will help all parties manage costs more efficiently. The right foodservice trade promotion management solution will open up the lines of communication.

It will be interesting to see if these initiatives take-off. It’s evident that something needs to change in the foodservice industry. The key will be whether or not the key players will be willing to move to more sophisticated trade promotion management solutions and abandon the traditional methods of managing their trade spend. It’s hard to step out of your comfort zone, but it is necessary for the foodservice industry to survive.

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