The margin between success and failure in the food industry can be razor thin. Processors are constantly being forced to rethink and retool. One success story in this area is Premium Brands, Inc., of Richmond, British Columbia.
Premium Brands emerged from a management buyout of Fletcher’s Fine Foods Ltd. and is now a holding company of affiliate food processors in Western Canada and the Pacific Northwest. Fletcher’s was a packing house and meat processor for more than half a century.
“We were essentially in the commodities market where our ability to succeed was greatly impacted by global price fluctuations and events,” said George Paleologou, president of Premium Brands. “We wanted to gain greater control of our destiny.” So Paleologou and his team implemented a three-pronged transformation strategy to:
- Transition from low-end commodities to high-end deli and specialty meats
- Get closer to the customer
- Exploit information technology.
The company sold two slaughterhouses and acquired branded premium specialty companies. Grimm’s Fine Foods, maker of delicatessen meats and sausages, was the first. Harvest Meats, purveyor of quality sausages, was next. McSweeney’s, the number one meat snack brand in Western Canada, and several smaller companies followed. This transitioned Premium Brands from a low-end, low margin meat packing business into a premium specialty products business that provided better and more consistent margins.
To get closer to its customers, the company created a distribution network with a centralized warehouse and a fleet of trucks for direct store and home delivery.
The use of information technology (IT) was central to the transformation of the company. “We used IT to integrate the new operations; we wanted one common platform for our entire business,” Paleologou says. “We needed a system that could provide centralized visibility to current operations and be extended to other businesses as we grew.”
Premium Brands implemented iRenaissance from Ross Systems, including financials, inventory control, sales order processing, purchase order processing, accounts payable, maintenance management and fixed assets. This was augmented by peripheral systems integrated to the Ross ERP System.
According to John Christiaens, director of information technology, “The new system addresses a host of business processes. It has positively touched nearly every critical aspect of the business— from costs, to revenues, to profits.”
Product shelf life is very important to Premium Brand’s success. “If it doesn’t sell in the specified time, we pull it off the shelf and dispose of it at our expense,” Christiaens said. “The system helps us allocate product from the warehouse to ensure the best rotation,” he added. Shipping 39,000 sales units or 252,000 kilos daily makes this a sizeable task. The company is on track to slash returns by 50 percent adding 2-3% to the bottom-line.
“Real-time sales order processing coupled with inventory control has yielded visibility to stock fleet trucks. Drivers now fill new customer orders on the spot,” Christiaens said. Mobile computers, uploaded nightly, process field orders. The system provides the visibility for each sales representative to know the total customer profile to get top dollar without discounting inventory.
“The same is true on the purchasing side,” Christiaens points out. “Because purchasing is centralized, we’re able to negotiate better discounts and rebates from our suppliers. We’re able to gain standardization and have visibility to all operations, enabling us to manage costs and make better decisions.”
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