Cultivating Supply Chain Relationships

An engaged and cooperative supply chain can go a long way toward helping foodservice operators function in a more effective and efficient manner. Cultivating a collaborative environment that allows this to happen requires clear and consistent communication and all parties understanding and executing their roles.

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At one point in the movie “Apollo 13” it becomes evident that the trio of astronauts tumbling through outer space will eventually run out of air. Back on earth, to help find the proper solution, Ed Harris (playing Gene Kranz) dumps a collection of seemingly disparate parts onto a table and tells the flight team, made up of people who hail from different disciplines, that they need to develop a solution using only these items. A few moments later — which translates into hours in movie time — the team proudly runs into the command center with their shiny new solution.

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This scene represents a great example of how people from different disciplines united by the same goal can work collaboratively to meld their own expertise into a solution of immeasurable value for their customers — in this case, three soon to be air-starved astronauts.

Okay, the foodservice industry is not exactly rocket science. But developing successful foodservice operations and ensuring that they continue to operate in the most effective and efficient manner possible generally does take input and expertise from the various members of the supply chain. While each member of the supply chain may play a different role and have a different business model, it is possible for all to come together to create a truly collaborative working environment. This generally happens when each player knows and is comfortable in his or her role and works in concert with each supply chain partner to meet the operator’s needs and objectives. The net result can be dynamic results that transcend the typical product for a price format that seems to consume the vast majority of industry transactions.

Of course, creating a truly collaborative environment can be rather complex and is not easy. It requires commitment and respect from all parties involved — including and most importantly the operator — to communicate openly and honestly and focus on the challenge at hand rather than maintaining territorial boundaries.

When it comes to cultivating good relationships, the jumping-off point has to be an investment on the part of the operator to make sure that the individual members of the supply chain understand the restaurant’s pain points and objectives. “We know what the client wants, and that is, when they walk into the facility, the foodservice operation will do what they want. A lot of that is learned through our meetings with them in the beginning,” says James Camacho, president of Camacho Associates, an Atlanta-based foodservice consulting firm. “We won’t start drawing anything until we meet with most clients so we can find out what they want.”

Unfortunately, discussions about new projects often become territorial as individual members of the supply chain bicker over who owns the customer. When the conversation degenerates to that point, the supply chain tends not to be working in the best interests of the operator customer. “At the end of the day the customer is best served when we are all working on their problem collectively. You will ultimately get to the best solution that way,” says Chris Kannawin, sales and marketing consultant for national accounts for the Redstone Group, an Englewood, Colo.-based independent manufacturers’ rep firm. Kannawin is a 30-year veteran of the foodservice industry, having spent the previous 10 years in a sales and marketing role. Prior to that, he served in an operational role for a family dining chain, both opening markets and as a general manager of a location. “And if you come up with the best solution for the end user, you have done your job.”

Part of determining whether a product or service will sufficiently address the challenges of a specific operator requires an understanding of how their businesses have changed in recent years. “The workload on people in research and development has grown tenfold from what it was five years ago. Many chains that had a research and development department of 10 and 20 strong are down to four or five people, yet they still have to build the brand,” Kannawin says. “So if they can lean on a rep or a dealer or a consultant, there is a value to that, and they appreciate it.”

Beyond resource issues and the need to grow the brand, foodservice operators face increasing challenges in the form of government regulations that require them to disclose nutritional information about their menu items or document the environmental impact their businesses will have on local areas. “There are so many other components these days, and they are becoming more intense,” Kannawin says.

As foodservice operators come to grips with these challenges, many dealers, factories and other members of the supply chain continue to look for ways to differentiate their companies and product lines to gain a competitive edge in the mind of the customer. These two seemingly unrelated trends actually represent an opportunity for the supply chain to develop a closer working relationship with its operator customers. “When you are calling on accounts, you have to be more about asking questions about where their heartburn is today. Sometimes it is off-the-wall stuff, and you can wind up going down a path you were not aware of,” says Joe Schmitt, president of Rapids Wholesale Equipment, a Marion, Iowa-based foodservice equipment and supplies dealer.

Still, earning the business today takes more than delivering a reasonable product for a price. “You have to pull from other experiences and make it easier for that customer to solve their problems,” Kannawin says. “You have a lot of ‘me too’ options on the equipment side. So, when trying to differentiate yourself from the competition, it comes down to what other intangibles you can bring to the table.”

One cornerstone element to forming a collaborative relationship between operators and their supply chain partners is communication. Handled correctly, this can serve as a clear differentiating factor, too. “Tell the truth. Be forthcoming. Identify the problem immediately. And if the customer is wrcong, let them down nicely,” Schmitt says. “If you are unwavering in that communication, life is a lot easier. We focus on doing the right things, being firm yet fair, and being straight up with our customers. If you can’t live in that world, then we are not going to be very happy together.”

Transparent and honest communication also includes knowing when your products or services are not the right fit for the operator and having the confidence to say so. “If your piece of equipment gets specified and it is ultimately not the right piece of equipment for that end user, it is a nightmare to undo it,” Kannawin says. “So not communicating in an open and transparent manner will lead you into a trap that is difficult to get out of. Another common trap companies fall into is adopting a philosophy of ‘It is my way or the highway.’ But I have never run into a dealer where if you shoot straight with them you won’t be okay.”

Of course, communication can’t be a one-way street — all parties need to be engaged and openly share what they can and can’t do. Basically, this means the conversation transcends the traditional transaction-oriented details, such as pricing and freight terms, that seem to dominate too many meetings. “When I think about our top ten customers, what makes them different from others usually is the level of engagement we are allowed to have with them. The relationship goes beyond our being the equipment guy. We try to create touches that are not based on equipment,” Schmitt says. “In fact, a lot of times the challenge is not related to foodservice equipment. It can be, for example, logistics.”

For their part, the operators should openly and honestly discuss the direction of their businesses and opportunities for improvement. In turn, the supplier offers solutions — or at the very least offers to research them. “I had a conversation with an operator customer that was eager to share his shortcomings, and I was eager to tell him how we could help address them,” Schmitt says. “If you talk to our salespeople, that’s their mindset. Understand your limitations and be bold enough to say that you can help them find a solution.”

In the instance Schmitt refers to above, the operator was working with 25 to 30 vendors to open one location, and they wanted Rapids to be an expediter for them. While that might not be something every foodservice equipment and supplies dealer is prepared to handle, Schmitt and his team accepted the challenge, and as a result the company’s relationship with this operator customer has continued to evolve to the benefit of everyone involved. “We plotted it out together and now procure more than foodservice equipment — other items like laptops and so forth,” Schmitt says. “They are delighted with what we have done with them. It is that sort of conversation and dialogue that you have to have with them. When they have a problem, you have to work your way through it with them.”

Adopting an approach that is detail oriented and thorough is critical to establishing good communication. “The design process can run for a month or a whole year depending on the size of the job,” Camacho says. “So we go back to review our notes from the initial meeting with the owners to make sure that we are addressing all of their concerns they have expressed from the beginning.”

Occasionally, communication on a project can be heavily structured per the operator’s request. “Some clients don’t want us to talk directly to the dealer, for example,” says Camacho. “It has to go through the architect or the contractor. They want to know anything that is being discussed to remain in the loop. Other clients tell us it is okay to work with the dealer to resolve any issues.”

Regardless of how the communication is structured, each of the players has to realize the impact his or her role has on the other suppliers. “Sometimes you can have an abundance of people on the project, and we each have our area that we are working on inside of the building. While it is collaborative, the communication among team members is the most important part,” Camacho adds. “We need to keep everything open and running.”

That’s why communication that is credible — honest, accurate and timely — can have more than project-based benefits. It can lead to strengthening relationships by introducing new business opportunities and solving challenges before they become large problems. “We feed local reps leads and tell them about any frustrations we see on the front line. That allows them to feed it back to the manufacturer,” says Brock Coleman, president of Commercial Kitchen Parts and Service, a San Antonio-based service agent. Prior to entering the service agent segment, Coleman spent 10 years working as a restaurant manager for a large operator.

Good communication and trust between supply chain partners tend to go hand in hand. “You build trust initially through open communication, and after that it is about consistency,” Coleman adds. “If we act in a consistent way, then there is trust built with the dealer and the rep. And once you have that trust, it becomes a highway for communication.”

It also helps when an organization takes a consistent approach to working with all of the players — customers and suppliers alike. For example, the leadership at Rapids wants the factories and reps that call on them to approach the relationship in much the same way the dealer treats its customers. “We have to get them out of the mindset about trying to sell me specific products. They need to understand our business and be willing to discuss challenges,” Schmitt says. “Let’s have the relationship be based on more than the equipment. There are a lot of good choices out there. Some of the factories and rep agencies get it. Unfortunately, it becomes a thin crowd pretty quickly.”

Remaining somewhat neutral when it comes to supply chain relationships can be helpful, too. “We work with several dealers but do not necessarily recommend one dealer over another. We’re consistent that way, and then they let us know about customer issues and the like,” Coleman says. “The customer benefits in the long run from a healthy supplier. Once a company starts slashing customer service attributes, there is a backlash they will feel later on. We have a vested interest in the dealers in our community, and they have a vested interest in our being healthy.”

When it comes to working with any member of the supply chain, foodservice operators ultimately want to know the value they will receive. “Be a solution provider, no matter what the problem is. Whether they are trying to manage food costs or other expenses, bring it back to our team, and we will work it out for them,” Schmitt says. “The power of taking that time and taking those things seriously is huge.”

Kannawin agrees and adds, “The customer is the one ultimately writing that check. So if other members of the supply chain see you are in there trying to serve the customer correctly, then it will work. But you have to manage that communication with the dealer. Winning the confidence of the customer carries a lot of clout with the dealer. It all goes back to relationships.”

Business leaders need to understand that not all companies will be good trading partners. “You have to ask, ‘Is it the kind of company that you can build a relationship with?’ And if they don’t fit, don’t force it,” Schmitt says.

Knowing when to walk away can be difficult and often counterintuitive for many salespeople and business leaders. “It is hard for a sales guy to do that, particularly if they work for three months trying to crack a new prospect. We have to be disciplined in saying, ‘Thanks but no thanks,’” Schmitt says.

By the same token, not every business relationship gets off to the best of starts. “Sometimes, it seems ugly at first, but you work your way through it. They can be testing you at first, too,” Schmitt says.

So how does a company know when to stick it out despite a rough start? “We try to identify customers that are smart enough to engage in dialogue and are willing to partner up with us,” Schmitt says. “They have to be willing to listen to other ideas and entertain other thoughts. We think our customers have to be smart and understand their business.”

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Understanding Everyone’s Role

One critical aspect in most collaborative environments is each player understanding his or her role and that of everyone else and how they all relate in supporting the operator’s goals. “Yes, we have to be sensitive to the cost of projects. But the cost of the equipment is not my number-one issue, as a consultant,” says Camacho. “The biggest issues are ‘Will it do the job as advertised?’ and ‘Will it be properly supported after the sale?’”

“My competition is not the dealer. It is the manufacturers of other equipment. My motivation is getting my equipment specced by a customer,” Kannawin adds. “But I want to make sure that my piece of equipment is the optimum solution for the end user, and I need the dealer to support that.”

In a variety of projects, ranging from design build to renovations to replacement purchases, it is easy to come to the table with preconceived notions about who does what. That’s why understanding and keeping an open mind about everyone’s skill set and capabilities is critical to creating collaborative teams.

Service agents represent one great example of a part of the supply chain that can be easily overlooked early in projects. While most foodservice professionals — from dealers to reps to operators — simply call the service agent to repair a broken piece of equipment, the fact remains that many technicians have a very detailed understanding about how various pieces of equipment perform over time. Understanding how a piece of foodservice equipment performs once it has been in the field for a while and how it interacts with other items in the kitchen can be invaluable for all members of the supply chain. “You can know your product in and out, but it is another perspective once the item has cooked 1,000 meals,” Kannawin says.

When purchasing a piece of equipment, the operator’s understanding is that the newly delivered item promises to address some of their business challenges. In order for that promise to become reality, however, the item needs to be properly installed and maintained. “Most warranty issues can be linked back to the way the product is installed. It would make so much sense to me to have the warranty service provider involved in the installation of the equipment,” Coleman says. “We see complete kitchens installed, and it is only then that they discover something won’t start or that when the staff turns everything on at once an electrical board blows or that a piece of equipment fails because it is too hot around it.”

And it is during those critical first months spent working with the item that the operator ultimately forms lasting perceptions of the brand. “Sure, we are the last one when it comes to service delivery, but for the next year, we are first in service delivery, working the front line,” Coleman says. “We are the eyes and ears of the factories. We have helped a lot of factories realize there is an issue with a piece of equipment, and as a result they are able to address it proactively across the country. Service agents are the missing link in communication at the point of failure.”

This point is not lost on Kannawin. “Many of the large manufacturers understand that the service guy spends more time with the end user than the sales guy does. And if you don’t have a good service guy, you are in trouble,” he says. “Our service guy here in Colorado is an invaluable resource to me.”

Oftentimes in the foodservice industry, the collaboration conversation tends to be a horizontal one that focuses on how to get the individual segments of the industry to work better together. What can be just as important, however, is fostering collaboration vertically by getting the members of the individual segments to work better together. “I am an advocate for collaboration, both horizontally and vertically,” Coleman says. “So much money gets wasted with companies stepping over each other. If we all had our defined roles, it would solve a lot of frustration and money. It is very hard to do right now because so many companies are in survival mode and are trying to latch on to any revenue stream they can.”

At the end of the day, however, collaborative efforts will feed off two key elements: trust and communication. “Collaboration best functions between companies when there is a sound level of trust and communication,” Coleman says. “This is the foundation because we are all working for the same thing: satisfied customers.”


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