Foodservice distributors, on your marks! Accelerate your supply chain to win

With over 2 million Australians working in food and beverage and a consumer market nearing $200bn, the Australian foodservice industry is no small fry. 

A nation of foodies, we pride ourselves on the quality we plate up - in cafes and restaurants, schools, hospitals and countless institutions. Food is undoubtedly a way of life and an important part of our national identity.  

But with soaring labour costs, rising inflation and one supply disruption after another, foodservice is feeling the heat. Distributors are hearing the Australian Productivity Commission’s call, and like many other SMEs, foodservice leaders will need to boost efficiency and lift productivity if the industry is to prosper.

I’ve written recently to many of our customers with insights on where to begin the journey to increase productivity, and whilst relevant to wholesale distributors across all industries, the topic of productivity has massive implications for foodservice distributors in particular.

Foodservice’s other elephant in the room (or 800lb Gorilla in the kitchen) is big supermarket retail, inching ever closer to the sizeable foodservice distribution market. When your restaurant, café, catering and hospitality customers are already fighting to stay profitable (and in some cases, afloat), how do you compete with a retail behemoth who has such buying power and scale? You’ll never win the race to the bottom on price, so what else can be done?

What you need is speed.

Outrun that 800lb gorilla by increasing the velocity of your supply chain. Your smaller size can be advantageous; use your agility to out-service and out-manoeuvre those hulking competitors.

Velocity matters in the supply chain

Accelerating your supply chain is a powerful way to:

• reduce your cost to serve
• maintain and improve your service levels
• protect your margin
• remain competitive.

The speed with which you go from taking the order to collecting the cash correlates directly with your business’s productivity and profitability.

It all begins with order processing - but it doesn't end there

Imagine you could automate the customer orders that travel through your business! You’d be able to process more orders, do it faster, with higher accuracy, less manual handling, fewer returns... and delivery to your customers would be that much quicker. At the end of the order cycle, you'd enjoy faster payments, happier customers, more repeat business… the list of benefits goes on.

If it sounds too good to be true, I can assure you it’s not. Foodservice distributors just like you are already automating this process and watching the speed of their supply chains accelerate. How do I know?

Six years ago, we brought to market a sales order automation tool called Lucy. Reading and analysing the purchase orders your customers send via email, Lucy checks and validates all the data on the PDF, then integrates it to your ERP as a sales order. This happens almost instantly, around the clock, with no human intervention.

Streamlined order fulfillment

Once our Lucy foodservice customers automated their purchase order processing, the benefits began emerging all along the track.

Well-known distributor Royal Foods entrusted Lucy with their order processing in 2017, and they’ve never looked back. Like many distributors, a large proportion of customer orders were being submitted outside business hours each day (in fact, our research has shown that foodservice distributors average more than 25% of their daily orders outside business hours). This was creating a huge backlog of orders waiting to be processed when the customer service staff arrived, necessitating a brutal 4am start for the team in an effort to fill those orders promptly.

Once they automated their purchase order processing with Lucy, the Royal customer service team finally got some sleep. Now when the warehouse staff clock on at 6am, Lucy has already been working through the night, so those after-hours orders are already in the system ready to pick, pack and despatch.

Without increasing warehouse staff or scheduling overtime, Royal Foods used Lucy to streamline the flow of orders and smooth out their fulfillment resourcing. The velocity of orders through the warehouse accelerated, same- and next-day deliveries became the norm, and productivity increased.

Improved service levels

But the benefits of order entry automation don’t stop at the pick face.

Getting all the chefs' late-night orders into the ERP in real time means they can be despatched far earlier - in some cases an additional morning delivery run may be possible. For the logistics team, this opens the door to significant productivity gains by improving flexibility for their delivery drivers who often face scheduling nightmares.

Without increasing the number of trucks and vans on the road, foodservice distributors can optimise their delivery routes, alleviating a pain point for many of their customers.

Fewer disruptions, fewer errors

As we all know, humans are prone to error, and manual order processing is no exception. Whilst customer service teams are generally fast and knowledgeable, frequent interruptions and competing demands don’t help data accuracy. As your team knows, phones always ring, customers log urgent help requests, and colleagues need assistance.

But mistakes are costly. Even an error rate of just 2% can be significant, and the steaks stakes are often even higher in foodservice. If an order is incorrect, can it be returned? With fresh and frozen goods, time is critical and too often, chilled stock is written off. In the event goods can be returned, the whole order cycle has already blown out and the supply chain ground to a halt. The return needs to be received and processed, the order credited, and the replacement goods sent ASAP. The cost involved in restocking negates any profit you were hoping to make, with your accounts, warehouse, and customer service teams all involved in correcting the error.

Fortunately, smart order automation tools like Lucy eliminate those mistakes. Integration to the ERP means order data can be validated against the source of truth before it becomes a sales order. Customer product and pricing issues are flagged before they end up costing you money. When you consider how it affects supply chain velocity, you truly appreciate order accuracy's role in productivity and profitability.

Get set.... go! 

Foodservice distributors stand to reap significant cost savings and customer service improvements if they're bold enough to invest in the speed of their supply chains. To that end, sales order automation is a proven, cost-effective way to boost productivity, with clear benefits along the entire order-to-cash cycle. As labour costs spiral and foodservice margins tighten, reducing cost-to-serve is the smartest way to win the race against an 800lb gorilla.

We’d love to share how other businesses have kicked their supply chain speed up a notch. If you’re keen to hear more, let’s talk.