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TOP 5 SUPPLY CHAIN MANAGEMENT IN 2009 FOR FOODSERVICE TRADING PARTNERS

Source:- ArrowStream (BUSINESS WIRE)—DEC 2008

The top five supply chain management priorities for 2009 include: drive store traffic, enhance menu selection and build customer satisfaction. These correlate to the economic concerns of casual dining and quick service restaurants that was revealed in ArrowStream’s Market Outlook Survey for the second half (H2) of 2008. The continuous rise of commodity costs topped the list of margin pressure concerns among chain operators, affecting how these companies manage supply chains to control costs, drive revenue, attract new customers, and assure customer satisfaction. The ability to achieve these five priorities and drive revenue can only be achieved by an integrated and synchronized supply chain that delivers optimal communication between trading partners.

1. Forecasting Accuracy and Effective Promotions Management. Minimizing error in the forecast is a top priority. Investment in marketing, product development, production, inventory and distribution is at risk should demand forecasts prove to be in error. Sometimes revenue in the millions is on the line.

Forecasting is particularly complex for Limited Time Offers (LTOs) which can represent up to 75 percent in total annual investment for a national chain. LTOs are on the rise including discounts, combos, new items and new price points to drive store traffic and attract potential new customers seeking better value in a tough economy. Investment risk can be mitigated through integration of data across the supply chain.

“In order to stay competitive in this current economic environment, and continue to offer consumers innovative menu items, we have increased the number of items and promotions we offer,” said David Cox, president of ARCOP, Arby’s nonprofit purchasing and distribution cooperative group. Year-to-date in 2008, ARCOP has efficiently managed over 76 promotions & tests encompassing 161 new SKU’s, using ArrowStream OnDemand.

2. Inventory Management with Fluid Product Movement.

Balancing inventory with demand is critical. And the ability to move that inventory to the right restaurant at the right time in the right amount is paramount to cost control and customer satisfaction.

“Guest satisfaction is our number one priority. We must make sure that items are available when guests want them. There is no room for disappointment,” said David Parsley, senior vice president of supply chain for DineEquity Inc., the parent company of Applebee’s and IHOP. “One way we ensure that we deliver on our commitment to the guest is by creating fluid supply chains which can only be achieved through visibility across our network,” said Parsley. “As we analyzed other systems, ArrowStream best fulfilled our need for an end-to-end solution that integrated supplier, distributor and restaurant data.”

3. Effective Sourcing.

The ability to source the best suppliers for existing and new items is key to achieving customer satisfaction in price and menu quality and selection. A flexible supply chain enables complete visibility of a central repository for item, supplier shipment, and perhaps most importantly contract pricing data so that the best products at the best prices are within reach. Having a repository for and synchronizing such data is also critical for time-savings and accuracy of information.

“By using ArrowStream’s OnDemand supply chain technology that automates processes and synchronizes with distributors’ systems, we no longer call the DCs all the time for information because we now have the data at our fingertips. It saves them, and us, a lot of time,” said Wendy Kleefeld, vice president of supply chain management for ARCOP.

4. Optimized Freight Management.

Even as oil prices have plummeted, creating more efficient routes and truckloads is crucial to fluid product movement and reducing costs. Leveraging nationwide transportation networks fueled by freight optimization technology and coupled with order management discipline can reduce fuel costs by over 20 percent.

“By leveraging ArrowStream’s freight network, we have already realized more than 25 percent in savings on ArrowStream managed moves, and we project future savings to keep growing,” said Scott Deibert, vice president of supply chain management for Steak ‘n Shake.

5. Rapid Return on Investment.

Whether for a Limited Time Offer or investment in SaaS, the need to garner quick wins is critical. The ability to synchronize with trading partners facilitates rapid and accurate implementation of promotions and also enables quick and comprehensive supply chain visibility from manufacturer to distributor to store, delivering faster ROI.

“To gain optimal visibility from the supplier to the back door of the store, we sought a system that would readily link distributor information to our systems,” said Alan Stukalsky, CIO of Church’s Chicken. “We have achieved a 202 percent return on our investment in ArrowStream OnDemand.”

Copyright Business Wire 2008

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