Food Engineering logo
  • Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • PRODUCTS
  • TOPICS
  • EXCLUSIVES
  • MEDIA
  • FOOD MASTER
  • EVENTS
  • RESOURCES
  • EMAGAZINE
  • SIGN UP!
cart
facebook twitter linkedin youtube
  • NEWS
  • Latest Headlines
  • Manufacturing News
  • People & Industry News
  • Plant Openings
  • Recalls
  • Regulatory Watch
  • Supplier News
  • PRODUCTS
  • New Plant Products
  • New Retail Products
  • TOPICS
  • Alternative Protein
  • Automation
  • Cannabis
  • Cleaning | Sanitation
  • Fabulous Food Plants
  • Food Safety
  • Maintenance Strategies
  • OEE
  • Packaging
  • Sustainability
  • More
  • EXCLUSIVES
  • Plant Construction Survey
  • Plant of the Year
  • Sustainable Plant of the Year
  • State of Food Manufacturing
  • Top 100 Food & Beverage Companies
  • MEDIA
  • Podcasts
  • Videos
  • Webinars
  • White Papers
  • EVENTS
  • Food Automation & Manufacturing Symposium and Expo
  • Industry Events
  • RESOURCES
  • eNewsletter
  • Custom Content & Marketing Services
  • FE Store
  • Government Links
  • Industry Associations
  • Market Research
  • Classified Ads
  • EMAGAZINE
  • eMagazine
  • Archive Issue
  • Advertise
Food Engineering logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Food Engineering logo
  • NEWS
    • Latest Headlines
    • Manufacturing News
    • People & Industry News
    • Plant Openings
    • Recalls
    • Regulatory Watch
    • Supplier News
  • PRODUCTS
    • New Plant Products
    • New Retail Products
  • TOPICS
    • Alternative Protein
    • Automation
    • Cannabis
    • Cleaning | Sanitation
    • Fabulous Food Plants
    • Food Safety
    • Maintenance Strategies
    • OEE
    • Packaging
    • Sustainability
    • More
  • EXCLUSIVES
    • Plant Construction Survey
    • Plant of the Year
    • Sustainable Plant of the Year
    • State of Food Manufacturing
    • Top 100 Food & Beverage Companies
  • MEDIA
    • Podcasts
    • Videos
    • Webinars
    • White Papers
  • FOOD MASTER
  • EVENTS
    • Food Automation & Manufacturing Symposium and Expo
    • Industry Events
  • RESOURCES
    • eNewsletter
    • Custom Content & Marketing Services
    • FE Store
    • Government Links
    • Industry Associations
    • Market Research
    • Classified Ads
  • EMAGAZINE
    • eMagazine
    • Archive Issue
    • Advertise
  • SIGN UP!

Managing Software
Living and thriving with
the channel masters

March 8, 2004
Flexibility in both operations and systems is required to meet the demands of giant retailers.

Do you play by the rules? If you are or you want to be a supplier to any of the mass merchandisers or channel masters in our industry, chances are you do. Channel masters are the kingpins of our industry - the major players who, because of their size and buying power, can dictate how you participate in the market. They can be major retailers (Wal-Mart or Kroger), large distributors (SYSCO) or major food service operations (McDonalds).

More is more

Volume, of course, gives them their power. Wal-Mart, for example, is the single largest customer of Kraft, Campbell Soup, and RJR and sells 36% of all the dog food in the US. This kind of buying power enables channel masters to require that: orders be processed using certain technology; suppliers meet prices on paid and retail promotional programs; manufacturers pay for stock-outs or late shipments; and product is packaged and shipped according to their specifications.

Yet, as a food or beverage manufacturer, the volume these outlets offer represents a very real and significant opportunity. But this volume often allows them to determine how you do business with them, demanding various price points and product specifications. And, if you want your product to have a seat at the channel master's table, you'll abide by its rules.

Avoiding margin erosion

Margin erosion is the real impact of the channel master. While the volume opportunity offered by the channel master is great, the kingpin can also set pricing, product and service requirements. The channel master dictates these and other variables that make up revenue and cost and therefore margins. Often the result is margin erosion. Manufacturers can either accept or address margin erosion. Since volume, price, product and service requirements are set, manufacturers must reduce the cost of providing the product and services demanded.

Software advantages

To meet the channel master's increasing demands, food manufacturers must have the right systems and business processes in place. What are the characteristics of the "right system"? You'll need systems that offer operations flexibility to meet the ever-changing demands of the channel masters. For example, a channel master can demand a series of very short runs based upon packaging variations. If a channel master demands shipments on certain days, the plant must somehow juggle scheduling priorities, as well as logistics, to keep all of its customers happy. To avoid margin erosion, programs and systems must play a key role in identifying and analyzing cost reduction opportunities and providing business processes that will reduce the cost of products and service. Investments in procurement, production, warehousing and distribution are often required to maintain margins.

Channel master business is good. Everyone likes increased volume, but the impact of this business can be bad for the bottom line. A manufacturer must proactively increase its ability to satisfy the channel master's demands and continually search for cost reduction to maintain margins.

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • Global Organic Food & Beverage Market to Grow

    Global Organic Food & Beverage Market to Grow

    With a CAGR of 12.07%, Bonafide Research estimates this...
    People & Industry News
  • skilled MEP worker

    Predicting Food and Beverage Manufacturing Trends for 2024

    The two words that should be kept in mind are labor and...
    Automation
    By: Derrick Teal
  • cleaning and sanitation

    The basics of cleaning and sanitation in food plants

    Sanitation maintains or restores a state of cleanliness...
    Cleaning | Sanitation
    By: Richard F. Stier
Subscribe For Free!
  • eMagazine
  • eNewsletter
  • Online Registration
  • Manage My Preferences
  • Customer Service

OT Cybersecurity Vulnerabilities in Food Manufacturing Facilities

OT Cybersecurity Vulnerabilities in Food Manufacturing Facilities

Understanding Impacts of OT Cybersecurity Events in Food Manufacturing

Understanding Impacts of OT Cybersecurity Events in Food Manufacturing

Food Plant Openings and Expansions April 2025

Food Plant Openings and Expansions April 2025

FA&M 2025 in Rewind

FA&M 2025 in Rewind

More Videos

Popular Stories

Conagra Logo

Conagra Brands to Sell Chef Boyardee Brand to Hometown Food Company

Salt

FDA to Amend Standards of Identity to Include Salt Substitutes

Vilter IHP in plant

Industrial Heat Pumps: Sustainable Energy Solutions for Now and the Future

CHECK OUT OUR NEW ESSENTIAL TOPICS

Alternative ProteinAutomationCleaning/SanitationFabulous Food Plants

Food SafetyMaintenance StrategiesOEE

PackagingSustainability

Events

June 5, 2025

Mass Customization Driving Innovation in the Food and Beverage Industry

The food and beverage industry is at the nexus of transformative global manufacturing trends, driving a shift toward personalized, customer-centric solutions. 

June 5, 2025

How Cafe Spice Uses Automation to Propel Private Label

Learn about Cafe Spice’s new, state-of-the-art, highly automated manufacturing facility in Beacon, New York. 

View All Submit An Event

Products

Recent Advances in Ready-to-Eat Food Technology

Recent Advances in Ready-to-Eat Food Technology

See More Products

Plant of the Year

Related Articles

  • Managing Software: Marketing & production get in-sync with the demand-driven supply chain

    See More
  • Field Reports: Dairy plant masters the mix

    See More
  • Managing Software: Is the food industry ready for Product Life Cycle Management?

    See More
×

Elevate your expertise in food engineering with unparalleled insights and connections.

Get the latest industry updates tailored your way.

JOIN TODAY!
  • RESOURCES
    • Advertise
    • Contact Us
    • Food Master
    • Store
    • Want More
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • YouTube
    • X (Twitter)
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing

Food Engineering logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Food Engineering logo
  • NEWS
    • Latest Headlines
    • Manufacturing News
    • People & Industry News
    • Plant Openings
    • Recalls
    • Regulatory Watch
    • Supplier News
  • PRODUCTS
    • New Plant Products
    • New Retail Products
  • TOPICS
    • Alternative Protein
    • Automation
    • Cannabis
    • Cleaning | Sanitation
    • Fabulous Food Plants
    • Food Safety
    • Maintenance Strategies
    • OEE
    • Packaging
    • Sustainability
    • More
  • EXCLUSIVES
    • Plant Construction Survey
    • Plant of the Year
    • Sustainable Plant of the Year
    • State of Food Manufacturing
    • Top 100 Food & Beverage Companies
  • MEDIA
    • Podcasts
    • Videos
    • Webinars
    • White Papers
  • FOOD MASTER
  • EVENTS
    • Food Automation & Manufacturing Symposium and Expo
    • Industry Events
  • RESOURCES
    • eNewsletter
    • Custom Content & Marketing Services
    • FE Store
    • Government Links
    • Industry Associations
    • Market Research
    • Classified Ads
  • EMAGAZINE
    • eMagazine
    • Archive Issue
    • Advertise
  • SIGN UP!