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I made it, you take it: Basic Advice in Food Logistics

Posted by: Jeanne Eisenhaure | Posted on: May 14, 2017 | 0 Comments

The Kitchen Coop I made it You Take itSo many food entrepreneurs spend so much time perfecting their recipe that once its perfect they feel like moments later, a million people will be begging to eat some. Unfortunately, those million people are likely not circled around the stainless steel work table of your beautiful production kitchen. Somehow, one has to get the product from where it is made to where it is eaten. This month we cover the basic means by which food makers move their product to food takers.

For the purpose of this overview, there are two critical activities associated with logistics: the physical movement of goods, and the fiscal movement of information and money. Getting the product to the outlet is only half the work. Getting paid for the product is the other. An effective logistics strategy must consider the company’s capabilities for both cycles: order to delivery, and delivery to collection.

 

Transportation Logistics

For the consumer packaged food product, the primary outlets will be supermarkets. However, along the way to selling at higher velocities through chain stores, young food companies should learn the basic of logistics while working with more forgiving, helpful, and smaller independent markets. Specialty stores, small local markets, and even coffee shops are good initial outlets for products where the buyer and seller might both be the owner who can provide feedback from consumers back to you, the producer. Smaller markets are also more likely to support your small business by: forgiving of irregularities in delivery schedule; being willing to pay quickly; and often having fewer of the charge-backs and hidden costs of doing business that larger entities impose. To reach these stores, it may be initially OK to do your own deliveries. However, this is only valuable if while making those deliveries that you can conduct research and build a bond with the retailer. If you are just dropping off your product, then you are missing a great opportunity to gather intelligence while your product is new, your company is young and others are very willing to provide guidance.

 

Once the amount of time making deliveries exceeds the value derived from retailer bonding and up selling, it will be time to move on to someone else, either an employee or a delivery service. Some local distributors will deliver for a fee less than normal distributor rates, especially if they are already delivering to your destinations. The best way to find such a resource is to ask your retailers with whom they like working, and talking with each of those to find the best overlap with your retailer map. And yes, from the time you start doing your own deliveries until the pins blot out the page, you should maintain a map of all your outlets. It will make it easier for all future distributor conversations. Saving locations in a Google Map works great. The map will help you chart out the most efficient route to take amongst your deliveries. Ganging them up by area seems obvious, but it gets harder to maintain when retailers start making demands.  Having a route with some regularity might help you and your retailer adjust to a schedule rather than require a bunch of impromptu, urgent requests that are harder to decline in the absence of structure. Maybe read up on The Hidden Costs of Food & Beverage Distribution previously published on our blog.

 

 

Financial Logistics

More important that working out your route from store to store is working out your invoicing from order to order. The volume of transactions can quickly overwhelm a new company. As you develop your product, develop your processes for billing, tracking payments, tracking deductions and discounts, as well. Setup QuickBooks to handle these items and common transactions. Sit down with your bookkeeper to document how each of these are going to be handled. Write a procedure for how to setup and document each so nothing falls through the cracks. As you move into larger retailers through larger distributors, charge-backs and other small charge will become a serious set of issues.

Need support managing your food businesses logistics? Contact The Kitchen Coop to learn how we can help, info@the-kitchen-coop.com 303-330-0295.

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