IN THE TRENCHES: Smart companies focus on controllable forces
by Ron Pelger | August 30, 2009
Scenario No. 1: Customers were moving along quickly in a local supermarket, eager to get home. Hostile weather was beginning to threaten the area with a massive thunderstorm and high winds predicted. Meanwhile, the produce department was loaded with product on all displays and ready for a big sales weekend. Later that evening, several inches of rain caused flooding and crippled the town. In the ensuing week, the produce department lost a substantial amount of sales and experienced a huge shrink in product.
Scenario No. 2: : A major supermarket chain decided to cut back on a portion of its advertising as part of a cost-cutting initiative. The produce manager in one of its stores was on vacation. Poor display conditions were evident throughout the department, with product was not fresh and priced much higher than the competition's. Total produce sales for the week in this store ran substantially behind last year.
Where does the blame lay for the lost sales in each of these scenarios? A business does not run on automatic pilot. People push the buttons and pull the switches. But two "forces" actually dominate all businesses: uncontrollable forces and controllable forces.
The two scenarios reveal examples of both uncontrollable and controllable forces. In the first example, stormy weather and flooding are to blame for lagging sales during that week. Because it is not possible to manage the weather, this could be considered an uncontrollable external force since the supermarket management could not influence the storm by stopping the heavy rainfall.
The second scenario demonstrates four areas that a company has full control over and could have acted upon to prevent sales from slipping. The reduction in advertising, overall poor condition of the produce department, tired product and high prices all could be considered controllable internal forces. Every one of these examples was a contributor to the sales deficit caused by inattentive day-to-day responsibilities within the company.
Leading forces at work: A company controls its own destiny by managing the business it operates within the guidelines it sets toward success. Those guidelines are usually in the form of a business plan that includes all the specific sections accompanied by job responsibilities of individual management people. It is imperative that those who carry the operating responsibilities have full knowledge of the forces that separate internal and external control. Here are just a few of the leading forces that play important roles in the business world.
External forces: (uncontrollable)
Customers -- They shop wherever they choose and buy what they want. You can't physically pull people off the street into your place of business. Competition - It operates its own programs and sets its own retails. Each rival company runs its own business as it chooses.
Economy-stock market -- Its pace is based on business progress, consumer behavior and other worldly conditions.
Weather -- We can predict, but cannot control the weather. Warm sunny days allow customers to easily get to places of business and spend money. Stormy weather keeps them and their wallets at home.
Technology -- New modern high-tech programs, equipment and material forces change. It will always be on the rise and businesses cannot stop it. Government - All laws, regulations and rules must be followed. There are no options to do otherwise.
Wars and terrorism -- It is painful, dangerous, damaging and alters business in many different ways. It is especially accompanied by decreased sales.
Internal forces: (controllable)
Advertising and marketing -- Wise program spending will entice consumers to increase their shopping desires.
Prices -- Retails make a difference in deciding where customers will shop.
Budgets -- Companies make operating decisions based on specific financial budgets. Spending or cutting costs can control a big part of the sales results.
Merchandising -- Increased sales come from product presentation and stocking levels. Conservative displays reduce sales, while aggressive displays boost sales.
Cleanliness and sanitation -- Poorly maintained packing plants, warehouses, offices and stores send customers elsewhere.
New products -- Creating new product lines and packaging ideas stimulates incremental sales volume.
Shopping environment -- Business interiors and shopping surroundings make a difference in customer buying moods. Shopping ease and good service are part of the ambience customers desire.
Food safety -- Growing, packing, manufacturing, shipping, warehousing and retailing of all foods need to be kept wholesome and safe for consumers. Fresh, in-date products are the responsibility of suppliers and retailers.
There are many additional forces to consider other than those listed above. Be concerned about all of the internal areas under your control. If you do that the majority of the time, it will contribute greatly toward your success. Since you cannot control external forces, don't waste time worrying about them. It's really up to a company to manage itself by paying strict attention to all of the internal areas that can be managed and organized. No one else is going to do it. Again, every company controls its own destiny.
(Ron Pelger is the owner of RONPROCON, a consulting firm for the produce industry, and a member of the FreshXperts consortium of produce professionals. He can be reached by phone at 775/853-7056, by e-mail at email@example.com or check his web site at www.power-produce.com.)