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How Can Foodservice Distributors Keep Up with the Cheney Bros.?

By John Bek, Segment Leader, NetSuite Food and Beverage

The past few years have been active ones for the foodservice industry. In the most recent year alone, US Foods acquired All American Foods, F. Christiana and Toba Inc. Sysco got in on the game a year earlier, acquiring Brake Bros., North Star Seafood and Supplies on the Fly, while Cheney Bros. acquired Pate Dawson. For big companies like these, acquisitions are the main innovation strategy driving product portfolio growth. For smaller, midmarket distributors they represent something else entirely: a very real threat.

Midmarket distributors that for years were content to fight for a defined geography with similar-sized competitors are now finding their competitors are no longer so small. Suddenly, that family-owned broadliner down the road has the power of Sysco behind it and now has a vast array of resources to bring to the competition. Larger companies can negotiate preferred pricing, leverage giant supply chains and lean on significant IT investments to gain an advantage.

So what does that mean for small distributors? Far too many distributors have become complacent in the past decade, happy with their revenues and margins, leaning on technology solutions that were built before the internet even existed.

It’s with technology that the small and midsized distributor can close the gap. Older systems were often incomplete back then, and companies either made due or cobbled together disparate systems to meet their needs. And, when change was required, these system proved inflexible and difficult to change as the needs of business changed. They need to go.

The emergence of cloud computing has brought enterprise-class functionality to growing businesses at a fraction of the cost. In fact, because many of the midsized business’s larger competitors have sunk considerable investments into data centers, hardware and IT staff and are unwilling to move on from that sunk cost, smaller businesses have a unique advantage to leapfrog the big boys.

Indeed, there are a few specific areas where food service distribution software, delivered via the cloud, can give smaller distributors a leg up.

Omnichannel commerce. It’s not just retail consumers that are demanding a seamless experience no matter where they shop. B2B buyers have come to expect the same experience, regardless of channel, that they’re seeing across online and brick-and-mortar stores. Midsized foodservice distributors that can provide a single point of contact across online orders, EDI and in-person gain an immediate advantage over larger corporations struggling to combine all those data points from myriad systems and acquisitions.

Planning and forecasting. Small and midsize distributors can achieve huge efficiencies by modernizing their planning and forecasting. They need to move on from antiquated processes that require staff to print out a large report, evaluate it line by line, decide on every item and ultimately create a purchase order. An automated system that recognizes what’s on hand, what’s needed now and what will be needed soon can mean huge savings and better customer experiences.

Customer Relationship Management. Many of the legacy systems foodservice distributors rely on were built before the emergence of customer relationship management systems. That’s left them unable to automate many of the manual processes they continue to rely on. Hand-written notes, calls to the warehouse and a lack of visibility into customer history continue to plague the foodservice industry. Even distributors that have invested in a separate CRM system face difficulties integrating customer data with order information and financial transactions. Modern CRM systems give distributors a 360-degree view of customer data, while creating efficiencies and ultimately improving the customer experience.

To fully take advantage of these benefits and compete with the Syscos and US Foods. of the world, midsized foodservice distributors need to move on from the legacy systems that are costly to maintain and cripple their ability to change with the needs of their customers and their customers’ customers. They need a flexible, agile food service distribution software systems built on the cloud that can grow with their business and quickly adapt to change. Ideally, they will turn to a unified platform that brings together, financial, order, inventory and customer data. By optimizing processes and creating efficiencies with a cheaper, more functional solution, midsized distributors can begin to compete on price with their larger counterparts. Moreover, a unified view of their business provides the insights necessary to expand their own territories, product lines and customer segments without the expensive acquisitions their new competitors need to make.