Dont consider signing a contract with a distributor until youve asked six crucial questions, says Paul Pegg.
Theres an old proverb that says: customers are not inherited. You dont have to look too far to see the reality of this on every high street. Take the example of a bustling restaurant, loved by all its patrons. The owners sell-up and a new team take over what is a thriving business. Yet, almost inexplicably, the popularity bubble is burst and its formula no longer works. The food tastes the same but customers drift off. Something about the quality isnt the same and the magic ebbs away.
Quality is made up of many facets, and the whole is greater than the sum of its parts. But determining this magic mix isnt always easy. Many companies realise this. So they take great care with sales, customer service and finance. They source high quality food and adhere to excellence models that aim to take care of every aspect of quality. But then they employ a low quality distributor the type of company that is little more than a warehouse and a fleet of wheels. This type of distributor often knows very little about the foodservice outlets it delivers to. Its task is simply to drive up and deliver a few boxes before going on to another job.
Choosing the wrong company to distribute your goods can affect the quality of your foodservice offering. So its vital that you consider potential new suppliers very carefully. The secret is to look at where a distributor can add extra value. Of course, its essential to take care of the pennies and pounds but dont let price be your primary decision making tool. Instead, ask a series of probing questions to find out more about the company.
The following six questions will help you to pick the perfect partner.
1) What is your overall company vision?
Choose a supply chain partner who is able to see the bigger supply chain picture. Make sure that it is one that will add to every aspect of your business and who clearly understands you. Remember, true understanding is about more than just the specification of the distribution system. Its also about knowing the needs of the managers at the foodservice outlet and working in partnership day in, day out. Ask yourself: How willing is this distributor to anticipate the needs of my company and do that bit extra to help us through difficult times?
2) How embedded is your Quality culture?
In some companies, the quality management process is something that sits on a shelf and only comes out when the auditors come in. But quality needs to be something that is lived by every member of the organisation from the boardroom to the warehouse. It needs to be part of the culture and something that is believed in and delivered by everyone. Look for evidence of a culture of continuous improvement by asking a range of staff members about their views on quality.
Your supply chain partner needs to be a company that is good at proactively spotting what it can do better with an open attitude to making changes.
3) What is your people policy?
Its important to choose a supply chain partner that trains and develops its staff effectively. If you were hiring an employee youd insist on seeing the CV of the person you were employing. Treat prospective distributors in the same way. Ask to see the companys staff training and development plans. And look for evidence of strong internal communications systems and employee engagement strategies.
Simple tools such as forums, employee newsletters and intranets demonstrate that employees have a voice in the organisation. And they help to give you a flavour of the type of people that the company employs.
Make sure you also interview one or two of the drivers to find out if they are the sort of people you want delivering to your restaurants. Research has shown that around three quarters of drivers in the distribution industry dont know about the business theyre delivering to, how to look after the products, or the health and safety procedures of the customer. You should be confident that the employees understand the business that theyre being enlisted to service. The rule of thumb is to never hire a distributor without a deep or implicit knowledge of their human resources policies.
4) What is your corporate social responsibility agenda?
Over the next five years, sustainability and environmental issues will come to the fore and all companies will be obliged to have relevant policies. So make sure you look at the sustainability practices of potential supply chain partners. Dont enter a three-to-five year contract with a company that doesnt have a sustainability perspective today. Progressive companies will have a corporate social responsibility agenda that treats both employees and the environment well.
Dont give a large part of your company to someone who doesnt understand the need for excellent HR and sustainability practices.
5) What makes me different?
Short-term supply chain relationships can do more harm than good. It takes time for a distributor to fully get to know your business. And by knowing you inside out, they can save you money by implementing personalised initiatives such as hedging fuel costs, installing special routing software and using telematics for fuel efficiency.
Through a collaborative approach, a distributor can add much more value. Instead of just doing the physical distribution, they can also look at what happens when the delivery arrives, such as the efficiency of the stock holding and health and safety. Look for a supply chain partner who will work with you to create an agenda that adds ever-increasing value to your business.
6) Can you last the course?
Finally, its all very well choosing a distributor with a host of added extras. But theyve got to be able to perform day in, day out. Choose a company that prides itself on guaranteeing to deliver the right items on-time, at the right quantity and temperature, with the correct use-by dates. A quality service also includes traceability. There needs to be a guarantee that any box, pallet or delivery can be recalled at any time should there be a problem with the supplier, warehouse or dispatch system. The temperature in the warehouse and trucks also needs to
be carefully monitored to meet required storage temperature. And there must be stringent hygiene practices in place.
Just like the once-bustling restaurant that gradually sheds customers, negative changes to the quality of the supply chain can happen in a slow, insipid way that may initially go unnoticed. You might find that the distributor saps your time, energy and attention, instead of adding value to your business. They may be reactive rather than proactive, waiting for you to lead the way with initiatives and innovations. Or they may simply not have the type of quality culture that demands continuous improvement at all levels. Unless there is a food scare or other disaster, its unlikely that your customers will leave in droves. However, a quiet unrest can happen internally, which eventually affects the quality of what you put on your customers plates.
A supply chain partner shouldnt be a marriage of convenience, but a true partnership based on trust and the willingness to go the extra mile to get the job done. Choose carefully and pick a partner who truly cares about your business.
Paul Pegg is Vice President of Keystone Distribution Europe, end-to-end supply chain providers for the foodservice industry.