Originally printed in the September 2019 issue of Produce Business.
After the hustle and bustle of the summer selling season, as well as the preparations for its last major holiday, Labor Day, it is good to do a review on the progress of your operation.
The successful produce executive goes beyond analytics and takes this time to examine all facets to ensure the department is on target, and has performed as intended.
The first step in the review process is to examine the key data points. These are some of the easiest parts to assess — as you can check on your sales, gross profit and profitability. You are evaluated on the same criteria every week by management. By taking an analytical approach to determine if the results are in line with your original strategy and projections, you will have the time to correct any unfavorable trends. Taking a deep dive into this hard data can help reveal additional sources of performance, or lack thereof, in other parts that may not be readily available or obvious from simple data analysis.
The second step is to examine the key inputs within the overall operation to help answer some of the questions your initial analysis found need attention. Start by examining labor statistics:
- Are you on target for labor hours used in your departments?
- Is a ratio of hours used per sales dollar on target or off projection?
- Are there, in terms of department readiness, signs that show whether the labor component is on target or helping to slow your operation? In this area you can also look at the effect your merchandising plans are having on variations in labor hours within the departments.
- Are there certain promotional activities that create a need for more actual man hours than projected?
- Are the man hours being fully utilized to generate the results needed, or are they being wasted on unnecessary tasks?
- Are the tasks being assigned properly to maximize the effectiveness of the labor hours?
After reviewing the state of your operation in September, you can plan to correct and/or improve on any areas that need attention. The good news is that you still have nearly four months to change the trajectory.
By doing this detailed analysis, you may be able to find areas where corrections can be made to improve financial results and efficiency.
The third step is to scrutinize your shrink or disappearance losses. You can begin by examining your warehouse receiving records to ensure the quality you purchased is being received correctly, stored correctly, properly rotated and shipped quickly to the stores. When you have determined that it is in good shape, you can begin to look at store results. The key aspect of any shrink control is in the beginning — when the product is ordered. Are there any indications over-ordering occurred to any degree throughout your store network? This is always an area that can greatly affect your financial results and needs to be addressed as soon as possible. Is the product being received, handled and stored properly in the back room to protect and ensure its quality?
The fourth step is to look at your promotional activity and display strategy to determine if these might be the cause of additional shrink. Are the display sizes and placement, as well as the selection of promotional items, creating a situation where more product than necessary is on display and could be contributing to the shrink number? This analysis will help you maintain the profitability as well as the salability of all the produce in your operation.
After reviewing the state of your operation in September, you can plan to correct and/or improve on any areas that need attention. The good news is that you still have nearly four months to change the trajectory. And there’s a bonus in the form of two “food-heavy” holidays to help get back on track in any sub-par areas.
The key takeaway here is: don’t continue on your merry way without knowing how all the key areas are really performing. You cannot afford to assume that simply because sales are good and you’re meeting profit targets that everything is going well within your operation.
Many promising produce operations have been derailed by not performing such an analysis and getting a true reading on where it stands while there’s still time to make adjustments. The time needed to perform this analysis is a small price to pay for the peace of mind that comes with knowing the operation is in good shape, and that it carries strong momentum into the balance of the year.
Don Harris is a 41-year veteran of the produce industry, with most of that time spent in retail. He worked in every aspect of the industry, from “field-to-fork” in both the conventional and organic arenas. Harris is presently consulting. Comments can be directed to [email protected].
