In last month's column, I mentioned that one of my new favorite television shows is "The Profit" on CNBC. The program follows entrepreneur Marcus Lemonis as he considers investing in struggling small-business operations when he sees an opportunity to turn them around. Marcus focuses on three key areas (the "3 Ps") when considering a business investment: People, Process and Product. Last month, I covered people. This month, we will discuss process and product.>
Process involves every task your business must perform in order for a sales transaction to take place. This is simple to think through, in the abstract, but to get each and every part identified, singled out, and described -- and then to create a best practices manual that incorporates all of them -- is quite a daunting task, but very valuable.
In food manufacturing, there are organizations that have identified and benchmarked metrics to qualify a business as GMP (Good Manufacturing Practice) -- and HACCP (Hazard Analysis Critical Control Points) -- certified. In the meat, juice and dairy industries, these are mandatory certifications. In most other food categories, they are voluntary. Coffee falls under the voluntary category, but large buyers (retailers, government, etc.) require a supplier to be certified for consideration. Certifications remove as much risk as possible from biological, chemical and physical hazards.
We have recently undertaken this certification "process," and although most of the practices are common sense-based, identifying, quantifying, tracking and documenting them is quite a task. But we see it as a very worthwhile exercise that may improve efficiencies and lower our costs for such things as insurance.
Though these benefits may not translate to your operation, having a firm understanding and a documented blueprint of your day-to-day activities should help you improve hiring, training, overall efficiencies and maintenance expenses. In looking at your business process, mapping out every task involved in everyday transactions of an OCS or a vending operation -- from order taking to order processing, load-out, delivery, customer service, invoicing and sales bill payments to general maintenance -- is the first step.
From there, you must identify the best practice for each. In order to do this, although you may feel more than qualified to determine parameters, you might look to outside metrics, through consultants and such industry associations as the National Automatic Merchandising Association, for guidance.
NAMA should be recognized for its efforts to gather invaluable details through industry surveys. (That it does this is an excellent benefit to members. If you aren't presently a member, the available knowledge NAMA offers makes it worth considering joining.)
Once you have established targets for best practices in each facet of your everyday activities, you must make sure that measuring results against these targets becomes an ingrained part of your culture. From documenting each and every service call in order to identify problem equipment and locations to performing scheduled oil changes, every procedure will help improve all others, and over the course of time you will begin to reap the fruits of your efforts.
Having this plan in place will make it far easier to duplicate your operation elsewhere, should you desire to open up branches in nearby cities, or even franchise on a national basis.
The last of the three "Ps" is product. In past articles, I have discussed many aspects of coffee products. In analyzing your product, you must define and decide what is working, what is not working and what should be considered for addition to your line. In this instance, again, quantifying and measuring sales/product movement can play an integral part in helping you decide what is best for your business. Bringing in the latest, greatest new item might seem like a good idea at the time. But you need a game plan to establish that product with your clients, and to ensure your people are fully aware of and trained in its value. And without a plan, there is a good chance the product will lie fallow in the depths of your warehouse until it has outlasted its useful life. What is not moving? Why is it not moving? How can I get it to move better? These are the questions you should be asking. If there are no good answers to resolve the slow movement, then the only remaining answer is to remove the item from your offerings.
Conversely, a hot item should be identified, and marketed as fully as possible to all clients presently not using it. This is an easy incremental sale, as it has already proven to sell itself.
Business has gotten more efficient and yet more complicated, over the years; and even if you're an old veteran of the coffee wars, taking a fresh new look at People, Process and Product will serve your business well, and at the very least leave you with a solid blueprint for improved success, going forward.
May your cup be full, and the brew exquisite!
KEVIN DAW is president of Heritage Coffee Co. (London, ON, Canada), a private-label roaster serving the breaktime management industries. A 30-year veteran of OCS, water delivery and vending operations, he has concentrated on coffee roasting for the past two decades.