The primary role of the food industry CEO is to reconcile the company with the external environment. One of the uncontested methods of doing this is by maximizing organizational strengths and minimizing weaknesses.
I am puzzled by the number of c-leaders who rest on this line of thinking.
A supplier’s strengths that were relevant as little as 6 months ago may be irrelevant today--or matched by a competitor to level the playing field. A weakness once considered an inconvenience or annoyance in the larger context may now be the deciding factor in supplier selection when that weakness does not exist in a competitor.
Customers we talk to are doing great things and taking big risks to adapt to changing consumer demands and tastes. They realize their strengths from yesterday will not necessarily carry them into the new competitive environment: A major restaurant chain is diversifying its casual dining brand with a fast-casual variation. A new system-wide breakfast program is threatening other giants’ share of the morning day part. C-stores are focused on enticing consumers away from QSRs—and its working. A mass merchandiser is opening hundreds of smaller concept stores. Retail private label continues to grow, influencing new shopping behaviors with quality as good as national brands and at a better price.
These expanded customer models require an evaluation of a supplier’s ability to keep up, to educate themselves on the new business, to help them be competitive and reach their goals, and meet other important performance metrics. Those that fall short add costs and complexity to the accounts they are trying to win, maintain or grow.
“A lot of manufacturers don’t get it,” one chain executive told me. “They miss the mark in areas critical to our business today. The problem isn’t necessarily their price; it’s that the cost of doing business with them is just too high.”
Internal meetings that review supplier performance have a direct impact on the financials supplier CEOs are tasked to deliver. It’s disturbing how often problems, negative experiences or perceptions that lead to volume loss are discovered too late. When all factors are tallied, RFPs or sample requests from competing suppliers can result in split volume, price pressures that drive down margins and extend ROI on investment, missed opportunities…or the volume disappearing completely.
Think about it: Changing or adding a new supplier carries with it considerable cost and risk for the customer. What does it say when the benefits of making a change or foregoing one supplier in favor of another outweigh the costs or risks?
Uncovering and avoiding these scenarios ultimately rest with one individual. Only CEOs possess the total-enterprise perspective and authority to reconcile their company with the realities of customer perceptions and feedback. That requires a willingness to look at hard facts--a job that should not be delegated or filtered through vice presidents or functional managers. It means getting the most unbiased, clear-eyed read from an independent, experienced resource with no stake in the outcome. A two-way direct dialogue between the customer and an experienced third party food industry specialist who knows how to probe and gather input from multiple areas of the customer organization to determine what’s being said, what’s being decided, the “why” of past decisions, and extract perceptions and experiences that affect future business decisions is essential. This information becomes the basis for improvements that drive more customers and cash towards winning suppliers.
Galileo said, “All truths are easy to understand once they are discovered; the point is to discover them.”
How will you discover what customers believe are your organization’s truths?
