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This sets a high bar for produce category managers who must source the right supply and move it within its perishable timeframe to optimize turns, in-stock levels, and margins.
They need to identify and work closely with key suppliers in each category, conduct standard assortment reviews, and share better information. In turn, produce suppliers must work effectively within the retailer’s category management process, find ways to build upon the relationship, and use the category information to provide new insights and differentiated services.
“Suppliers must understand their major customers, how sophisticated they are, and how to best work with them,” suggests White. “Be very open about the investment you’re making as a supplier and what you want back,” he notes. Having such a conversation, he insists, is critical. “At the end of the day, you’re trying to sync up and be a better partner.”
The Role of Information
While the category management opportunity is appealing, the challenges of stocking and selling fresh produce require greater information capabilities and process sophistication for growers and distributors.
“Category management for produce has additional complexities due to the perishable nature of the products, and that the supply source changes quite often,” says Grinstead. “You have to manage the category from the time the product is grown, throughout the supply chain, past the register in the store, and even to the consumer. This involves significant sharing of information between numerous parties.”
And this means produce companies must become more adept at data management. Grinstead stresses the importance of capturing “serious amounts of data, good clean data” and putting dedicated resources in place to analyze it. The analysis will lead to decisions that assist retailers in meeting their objectives and help suppliers become more efficient and profitable.
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