The topic of commitments came up recently while talking to a produce buyer friend of mine.
Specifically, we were speaking about the process that many chain buyers use when determining how much volume they will need to secure for an upcoming ad. It’s the best of all worlds: The produce managers commit to using “X” amount of a commodity, and the buyers commit to their suppliers with an estimate of needed produce.
Ah, if it were only this simple.
As a former chain buyer, I recall how erratic these store commitments from the stores could be.
For example, our stores once sent in their commitments for a spring strawberry ad. The berry total came to roughly two semitrailer loads. I knew from experience that just to fill the pipeline for the stores to have enough product to build their initial displays we would need at least four loads.
The initial two-load commitment ended up being a 15-load ad.
Why the disconnect? This was probably because of a severe case of the heebie-jeebies. In the past, the managers may have committed for 15 loads, but perhaps halfway into the ad, sales slumped. Maybe this was due to quality issues, or the price point wasn’t aggressive enough, or competition simultaneously featured strawberries.
As a result of one or more of these factors, the stores were shipped the excess because, after all, they committed to the volume. They may have had to resort to extremes with fire sales or costly dumps. Hence, after being stung like this wouldn’t any produce manager be gun-shy with commitments?
It needn’t be so. Good communication is vital in the buyer-produce manager relationship. The produce buyer function is in essence an expansion of what he or she used to do in the stores: manage an inventory and order enough to meet anticipated sales but not so much that it becomes shrink.
The trick is to be realistic in commitments. A good produce director will lay it out on the line for his managers. Consider what you sold in a previous ad in a similar situation, be it for a comparable time of year, with comparable quality and price point.
If the produce managers provide realistic estimates to the buyers ahead of time, the buyers can in turn secure ample quantities needed with the supplier (or multiple suppliers), find the right quality and negotiate the best pricing.
A buyer still has to be realistic, too, and relies on timing and sales history to make decisions so the produce managers can count on having their orders filled and delivered.
It all comes down to relying on each other, and accurate commitments can a great tool to drive sales and build gross-profits.
Armand Lobato works for the Idaho Potato Commission. His 30 years of experience in the produce business span a range of foodservice and retail positions.
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