Minding Menus through Promotions and Offers

Unfortunately, even with a talented staff dedicated to matching supply and consumer demand, preventing stock-outs and overstocks is extremely difficult. The creation of accurate forecasts based on restaurant commitments is critical. However, collecting and rationalizing this information is error prone and time consuming, adversely impacting the forecasts around which operators and their supply chain partners plan promotions. During a promotion or limited time offer, ensuring supply meets demand is a task that requires collaboration amongst all of the parties in the supply chain – a difficult proposition in the foodservice industry in general, further complicated by the fact that until recently there was no effective means of supporting this collaboration. Operators and manufacturers need timely visibility into distribution center inventory levels to effectively match supply with demand, yet distributors struggle to provide this data in a cost effective and timely manner. Lack of a standard product nomenclature further complicates the issue – it’s impossible to address inventory issues in a timely manner when everyone is speaking a different language. By the time an inventory-related problem is identified, it may be too late to do anything about it.

Technology, however, is changing this dynamic. Collaborative solutions that ensure the right information reaches the right people at the right time ensure franchisees, operators, distributors, and manufacturers can make the right decisions to maximize the profitability of promotions and limited time offers and improve the consistency of product and service quality.

For a solution to be effective, it must aggregate daily inventory-levels of proprietary products across the operator’s distributor network. As inventory issues must be addressed near real time to mitigate the impact of potential problems, the daily collection of inventory level data is a mandatory aspect of a technology solution. For this same reason, another key attribute of such a system is that it must automatically standardize and translate the disparate data into meaningful information, eliminating the need for manual mapping of the data. Equally important, once the data has been standardized and translated, is that the information be presented in such a way that users can “manage by exception,” eliminating the need to pour through voluminous reports to identify an issue. Ideally, the technology should allow operators to establish inventory level thresholds and receive alerts when product levels exceed or fall below predetermined values. The solution should also allow them to work directly with distributors and manufacturers to update delivery volumes, reroute product supply, or take other actions necessary to head off costly problems.

Operators, such as International Dairy Queen, Subway’s Independent Purchasing Cooperative (IPC) and Unified Purchasing Group of Canada, maker of YUM! Brands, are leading the way to effective promotion management by leveraging technology to perform accurate promotion planning, monitor and manage inventory levels during promotions, and perform effective post-promotion analysis that improves future efforts.

Within six months of using a management solution, International Dairy Queen eliminated stock-outs of promotional products, dramatically reduced administrative costs, and realized substantial savings by reducing product obsolescence. IPC Subway has been able to enhance the profitability of promotions and limited time offers and shift their focus from managing fire drills to proactively working with their distributors and manufacturers to get the most value from their programs.

Leading foodservice companies understand both the upside and downside of promotions and limited time offers, and the importance of effectively managing these key programs. Technology is allowing these companies to increase profitability and drive brand loyalty without sacrificing product or service quality.

Jeff Smith, vice president of marketing for Instill Corp. (Redwood City, Calif.), can be reached at 650-551-5740 or [email protected].