It’s no secret that today’s food and beverage industry is competitive. With rising costs and more food vendors popping up with innovative products, manufacturers must focus on finding supply chain efficiencies that save money and constantly find ways to penetrate the market and reach new customers. That’s why foodservice redistribution companies have gained popularity over the past few years. Foodservice redistribution bridges the gap between the needs of food vendors and food distributors, offering distinctive advantages for each to help them operate in a manner that is most beneficial for them and providing solutions for the challenges the differing needs of food vendors and food distributors create. Here are ten benefits for food vendors working with a leading food service redistributor like Honor Foods.
1. Reducing Freight Costs By Limiting LTL Trucking
When food vendors work with food distributors, they often rely heavily on LTL trucking as the mode of transport. Food distributors often look to purchase in smaller quantities, while food vendors like to sell in large quantities. LTL trucking is usually the result, with manufacturers having ten orders on one truck, all going to different places. It is no secret that LTL trucking is often the most expensive mode, which is not beneficial for the food vendor or the food distributor. Instead, by working with a leading food redistributor like Honor Foods, purchase from food vendors in bulk. We have food vendors deliver by the truckload, then sell multiple items to distributors from numerous vendors to fit their needs, cutting down on the LTL trucking costs for both parties. In addition, at Honor Foods, we have a great partnership with our sister company Trinity Logistics which can help broker any freight needs for us and our Partners.
2. Simplifying The Receivables Process
Along with the increased transportation costs the need for LTL trucking creates, it also creates inefficiencies in the receivables process. Having to bill ten customers with orders on an LTL truck takes more time than billing just one and creates additional receivable costs that could be avoided. Having to bill an increased number of customers for a single LTL truck also increases the risk of potential receivables issues, including short payments, damage claims, refused items, and unearned cash discounts taken. Working with a leading foodservice redistributor removes many receivable headaches and costs. These savings often largely offset the cost offered to the redistributor as part of the redistribution allowance.
3. Introducing New Items
Introducing new items to the market can be challenging even for established, trusted food suppliers. There is no secret that this is a hot button with brokers and direct sales reps. It is not uncommon for significant financial incentives/penalties to be tied into the broker’s ability to introduce new items. Distributors are hesitant about buying new items until demand is there. Risk is always associated with introducing a new product until it has been tested in the market. Therefore, getting distributors and end users on board is difficult due to the space and monetary commitment. Brokers or direct sales reps often have to make the sale twice on new items. They have to sell it to a major end-user and then sell it to a distributor to bring the item in. The distributor doesn’t want to slot it and buy a minimum quantity to speculate on. Working with a leading food service redistributor helps mitigate the risks for food distributors and opens opportunities for food vendors. By using food redistribution, food vendors can use the redistributor’s relationship with food distributors to convince them to try new products in a low-commitment way. This can include offering food demos or selling quantities as low as one case. Food distributors are much more willing to try something new when little to no risk is involved until it has been proven in the market.
4. Access To Additional Unknown Customers
Another advantage for trusted food suppliers who use a leading foodservice redistributor is the access to additional unknown customers. Because of the large quantity minimums and long lead times food vendors operate with, it limits what distributors have access to their products. Food distributors need to be able to store large quantities of products or have several end users to distribute them to, and for many, that isn’t the case. Working with a redistributor, a frozen and dry food supplier, and even a dairy food supplier can reach small to midsize distributors and, therefore, their end users. This opens up new doors for food vendors to reach new customers that may not be on their radar. There is a considerable advantage to food vendors being able to reach these restaurants before they grow and creating brand loyalty with their products before they scale.
5. Reduced Credit Risk
Working with a leading foodservice redistributor reduces credit risk. For one, there are more flexible billing options. Secondly, it is a lot easier to trust a leading foodservice redistributor with an experienced accounting Team and test accounting procedures is going to pay the bill promptly with minimal hassle. It makes it much simpler and less risky to deliver large quantities to one established company than multiple small loads to various places.
6. Simplified Logistics
Logistics by nature is complex, so any opportunity to simplify the process is helpful, which is what working with a leading foodservice redistributor does.
Aside from the financial benefits of delivering truckload quantities versus LTL quantities, there are also logistical advantages. It is much easier to plan routes. It is easier to establish a delivery schedule. It makes the warehousing operations more straightforward and more efficient. It takes a driver less time to complete a route going one place than several. That increases the amount of loads that can be delivered and can help with turn times. Logistics by nature is complex, so any opportunity to simplify the process is helpful, which is what working with a leading foodservice redistributor does.
Who doesn’t want more people trying to sell your product for you? That is precisely what food redistribution companies do. Selling your product and having an extensive food product catalog with quality products is just as beneficial to them as it is to you. Therefore they have their own sales Team, in addition to your sales Team, responsible for getting to know your product and selling that to their customers. This includes customers that maybe purchase other products from them but has never purchased your brand before. This is a new opportunity for you. In addition, their sales Team is always looking for new customers, which benefits you. By having this knowledgeable sales Team, they can offer product demos and share information with people you otherwise wouldn’t be able to reach, helping your business grow.
7. Additional Sales Support
Who doesn’t want more people trying to sell your product for you? That is precisely what food redistribution companies do. Selling your product and having an extensive food product catalog with quality products is just as beneficial to them as it is to you. Therefore they have their own sales Team, in addition to your sales Team, responsible for getting to know your product and selling that to their customers. This includes customers that maybe purchase other products from them but has never purchased your brand before. This is a new opportunity for you. In addition, their sales Team is always looking for new customers, which benefits you. By having this knowledgeable sales Team, they can offer product demos and share information with people you otherwise wouldn’t be able to reach, helping your business grow.
8. Outsourced Management Of Small, High-Cost-To-Serve Customer Orders
By working with a leading foodservice redistributor, food vendors can outsource the management of small, high-cost-to-serve customer orders. For every Partner, there is a cost-to-serve, which varies by the size of the Partner you are working with. As a food vendor, it can be hard to strike a balance. While the cost-to-serve is lower with larger customers that have frequent, large quantities and a customer base they deliver to consistently, food vendors can’t rely on them alone and have a successful business. It is necessary to work with up-and-coming Partners and their market base to avoid missing opportunities. What if one of them will one day serve the new national chain, and they won’t work with you because you refused to serve them when they were smaller? It isn’t a food business move, but you also have to be operationally cost-efficient as a business. Using foodservice redistribution companies can help strike that balance. It allows growing Partners to still have access to your products, but it takes the operational costs off of you. Using foodservice redistribution companies enables you to focus on the low-cost-to-serve customers, which is the category of leading foodservice redistribution companies. It lets them handle the high- cost-to-serve customers in a more efficient way that they excel.
9. IT Infrastructure With Advanced Reporting
There is great value in data and reporting, especially in the foodservice industry. This data can help predict trends, giving food vendors time to innovate and judge what products the market wants. By working with a leading food redistributor like Honor Foods, you can access their IT infrastructure and advanced reporting capabilities. This can show you what new markets you are hitting, help with demand planning, increase efficiencies in shipping, and more. While many larger food vendors have their own advanced IT infrastructure, tapping into that of a redistributor offers you a different set of data from new markets and a greater product mix.
10. Leading Foodservice Redistributors Operate as an Extension of the Packer
Distributors often play one packer of the other in the same category to get the best deal. Because distributors have limited storage capability, it often limits how many types of a specific product category they can offer the end user, forcing them to decide between products and therefore making that decision for the end users they work with. This limits market penetration for food vendors. Foodservice redistribution companies work entirely differently. Instead of pinning food vendors against each other, they try to build Partnerships with as many trusted food suppliers as possible. They aim to offer an extensive food product catalog. Because of the relationship trusted leading foodservice redistributors such as Honor Foods have with distributors of all sizes, they can easily get new products in their hands through food demos and low commitment, low quantity orders. Therefore, they operate as an extension of the packer, working to market products, introduce them to new distributors, and ultimately get them into the hands of end users. Foodservice redistribution companies are committed to growing the food vendor’s business long-term because doing so is mutually beneficial.
Conclusion
Working with a leading foodservice redistributor helps food manufacturers grow, reach new markets, and reduce costs and headaches. With the increasing costs of distribution causing increases in minimums and adding to lead times, food redistribution companies are bridging the gap between trusted food suppliers and food distributors by building mutually beneficial Partnerships.
Learn more about how Honor Foods, a leading foodservice redistributor, can help dairy food suppliers and frozen and dry food suppliers grow, create efficiencies, and reduce costs.
Honor Foods, a Burris Logistics Company, was founded in 1949 as a redistributor of center-of-the-plate foods. Since then, Honor Foods has grown into the Mid-Atlantic region’s premier provider of frozen, refrigerated, dry, and dairy products, representing more than 300 brand-name food suppliers and carrying more than 3,000 in-stock items. Honor Foods brands R.W. Zant and Sunny Morning provide additional beef and dairy expertise on the West Coast and in the southeast. In addition, our exclusive house brands — Colony Lane and Valley Fresh, have a well-earned reputation for top quality and value at competitive prices.
Great products and prices are just part of the Honor Foods value-add. We pride ourselves in having a Team of dedicated professionals who manage each partnership. Our commitment to your business needs is what makes us unique.
