When you are looking to sell to national and regional retailers, as well as on the internet, you need to be sure that you can meet the demands of retailers (volume) without putting any unnecessary stress on your business or its systems. If you can’t satisfy demand then retailers can pull out of deals, disappointed not in your product but in your management and promises. This can affect future opportunities by either removing the chance completely or the retailer demanding a lower price to stock your product.
If you’ve committed to meeting a particular stocking level or fulfillment window, then not meeting your retailer’s demands can annoy customers and damage your brand’s reputation – and this can also affect your business’ long-term prospects.
So here are some questions, and solutions, to determine whether or not you can handle the volume that retailers are demanding from you.
When you start out, this is likely to be low, but you should have run a couple of dry runs to determine the maximum quantity of your product that you can produce or source. This should be determined on a day-to-day basis as well as an overall weekly and monthly estimate.
Don’t look at each retailer individually, ensure that you analyze what they want combined. You should also assume there will be lost production at some point. This could be because of outages, damaged products, and maintenance of equipment, weather delays, and shortages of raw materials. Therefore, adjust your maximum capacity to 90-95% of the maximum production levels.
If you don’t have the current capacity, then you might need to buy/lease more equipment, increase your operating hours, or dual source your products.
Staff are vital to the success of your business, but you have to ensure that you have a skilled and experienced team to provide you with the capacity to produce, service, and ship your product. Staff can be hired or trained to take on the responsibilities that will help you meet the demand for your product, but you will need to consider the training and security of your product as well.
Many food products have secret recipes that are kept closely guarded. If you want to keep it secret, can you have production increased without damaging the security of your trade secrets? You might also have limited access to machinery and therefore, additional staff cannot be hired unless you start operating 24-hour operations with staff working in shifts.
This is important for two reasons. First, you need the storage area so that you can bring in the raw materials to create your product. Then you need the warehouse capacity so you can stockpile the finished products until you are ready to ship them to the retailers. Failing to meet either of these demands can mean you are disappointing your retailers and customers, as well as potentially increasing delivery costs to your retailers – limiting your profits or your production level.
When it is time to expand or move, be sure to consider storage areas and ensure there is room for current and future needs.
If you don’t have the delivery network that can quickly and effortlessly meet retailer’s needs, then you can have trouble. Both brick and mortar AND internet retailers use automated electronic systems to transmit your purchase orders and invoices. You need to have a strong EDI department or outsource to a reliable partner to ensure you can “talk” with your retail partners. Once you have the orders, you need to be sure to have the warehouse capacity and systems to pick, pack, label (USCC128 Shipping Labels) and ship inside tight shipping windows. Stock will sit in your warehouse and retailers will become annoyed if you can’t deliver on your obligations.
Always check your location and ensure that large vehicles can make it to and from your warehouse. Otherwise, you will need to look for ways to improve your infrastructure.
Your brand needs to be able to meet the demand from your retailers. If you can’t, you might find that retailers won’t even consider adding your product to their assortment. Ensuring you have the capacity and the ability to create and deliver your product are essential.
Can you meet current demands from your retailers? What do you need to improve?
Let us know in the comments below.