Efficiency and Innovation
The Ties that Bind: Two Key Restaurant Operation Trends
For supply chain management, the New Year typically signals an upbeat forecast with optimistic predictions for the year ahead. Yet for 2009, a difficult and uncertain economic environment remains, making it difficult for chain operators to be enthusiastic or confident about what the year has in store.
According to the most recent National Restaurant Association’s (NRA) Restaurant Performance Index, 43 percent of restaurant operators expect their sales volume in six months to be lower than the volume during the same period a year earlier. Additionally, the NRA’s most recent Expectations Index stood at 97.6. While up 0.6 percent from September’s record-low level, it still remains below the Index’s benchmark of 100.
Undoubtedly, these tough economic times are weighing on operators everywhere, making it hard to determine the best way to drive store traffic, build customer satisfaction and reduce costs. Finding solutions that enable businesses to be more efficient while supporting innovation is more important than ever.
Yet, figuring out which comes first—the chicken (innovation) or the egg (efficiency) is something all operators have to tackle. Will innovation drive greater efficiencies or will greater efficiency give businesses the room and revenue needed to innovate? No matter how you look at it, one thing is certain: 2009 is a year that businesses will have difficulty surviving without both—so operators are paying close attention to how they manage their supply chain and the technology that supports it as a means to address both trends.
ArrowStream’s most recent Market Outlook survey findings support the fact that supply chain management’s initiatives are based on finding a new level of business efficiency to help achieve revenue-driving innovation. The top two priorities slated for 2009 are: forecasting accuracy and effective promotions management, and inventory management with fluid product movement.
Promotions like Limited Time Offers (LTOs), new menu items and delivery service are just some of the innovative solutions operators are considering for driving store traffic and attracting new customers. But these come with a price. Large investments in marketing, product development, production, inventory and distribution are risky should demand forecasts prove to be in error—sometimes leaving millions in revenue on the line. And while commodity prices have seen some decline in the last quarter of 2008, the financial turmoil and global recession still weigh heavily on demand, making this a top margin pressure concern.
Technology as a Solution
So how can operators address these issues? Technology.
Implementing solutions that provide data to drive more accurate forecasts and mitigate investment risks are best practices that will help address both innovation and efficiency. Operators want and need accurate, dependable and automated visibility into inventory and product movement as well as integrated technology as a means to communicate more effectively across the supply chain. Having this capability drives down costs, creates greater efficiencies and promotes customer satisfaction—something that will be beneficial even when the economy turns around.
Relying on software to integrate and synchronize data across the entire supply chain mitigates investment risk and helps to forecast more correctly, in turn, effectively managing innovative promotions. Ultimately, organizations that have greater visibility of supply chain data across suppliers and distributors will be able to implement programs more successfully, reduce days in the supply chain process and ensure all parties are on the same page—allowing everyone to make informed decisions.
At the end of the day, however you cook it up, both elements—innovation and efficiency--are clearly going to be essential for success in 2009. Finding the solution and order that works for your business is really up to you, but having technologies in place that support the outcome will be vital.