What If Your 'Plan A' Hits the Wall?

Ask any food industry CEO and he or she will tell you that while every business function serves a vital purpose--Marketing uses customer intelligence to create products, Operations creates inventory by producing products, and so on—it’s Sales that converts organizational activity to cash.

When CEOs put sales management at the heart of their corporate agenda, they capture astonishing growth, outstripping their peers by 50-80% in sales and profitability. (HBR)

Today, our industry remains extremely volatile, and supplier CEOs need to take much more serious note. The last two weeks brought news and commentaries on two giants:

• SuperValu: Dismal earnings report, uncertain future, pending sale, and Standard & Poors ratings downgrade on more sales and profit erosion in fiscal 2013 and 2014.
• US Foods Inc: Moody's review for downgrade on factors such as debt load, liquidity and operating performance trends.

Both are expected to make changes to their business models that could present significant volume and financial issues for their suppliers. But challenging circumstances don’t end there:

• At least 1/3 of the corn crops in the US are damaged from the worst heat and drought in 50 years, jacking up crop prices and putting more pressure on supplier costs, margins and food prices.
• A growing number of economists predict another recession in the 1Q 2013, with the slide apparent by the 4Q 2012. January-June’s job creation average and weak GDP yielded no productivity growth and a sharp slowdown in corporate profits.
• Economic stimulus aimed at kick-starting stalled employment numbers won’t happen until late in 2013 due to normal political delays in an election year. Until then, many consumers continue to choose between groceries and gas.
• Healthcare costs from new legislation are expected to rise 40-45% in 2014, virtually wiping out the equivalent of an entire year of profit for many operators. This staggering effect will force closures and growing use of third-party purchasing agents at lower margin to manufacturers and distributors.

These issues were not likely on the radar to be factored into 2012 growth strategies, which were built on hopeful, leap-of-faith assumptions about a promising turn around in business conditions.

But as a famous boxer once said, “Everyone has a plan 'til they get punched in the mouth.”

If the last few years taught us anything, it taught us the value of contingency planning. Leaders must prepare their organizations for any eventuality: shifts in customer business models, market downturns, competitive entry, customer failures, key executive turnover, poor operational implementation.

The question for every organizational leader today is, “What’s your B plan?” One missed forecast may be forgiven under the right circumstances, but tolerance is growing very thin for repeat underperformance. This is an era of real-time information and rapid cause-and-effect; getting caught off-guard is as outdated as VCRs and the 5 o'clock news.

Blueberry cannot over-emphasize the need for B Plans, enabling the best strategic minds from inside and outside the company to stand ready to combat the unexpected and grow new opportunities with speed, force and sound decision-making:

• Senior executives adopt a heightened state of alert to market or customer triggers that signal a shift away from Plan A.
• They are willing to realistically assess the trajectory of the numbers, recognizing early nuances that indicate pending stalls or declines.
• Reviewing progress and execution against strategies on a monthly basis, executives are prepared to counter the impacts from a growing list of probable derailers.

It's not getting any easier for our industry and success is far from ready-made. Before writing off yet another underperforming year or transferring their hopes to 2013, successful CEOs insure their organizations are equipped with an arsenal of plans to deliver the top line as well as bottom line numbers in spite of all obstacles.