There is an uncomfortable question asked by bosses every so often and especially addressed to the heads of produce operations: “What happened to the produce gross?” I’ve heard it on occasion and the subject is one of instant discomfort.
This interrogating question usually emerges right after upper management gets its first peek at the preliminary profit-and-loss statement for the period or quarter. It’s a given that answers are expected whenever the budget numbers are below what was planned and agreed on beforehand. After all, underachieved profits do not exactly give cause to pass out generous pay raises.
So, back to the question at hand — “What happened to the produce gross?” What answers do you usually come up with? The boss is waiting for an explanation.
There are possible explanations for underperforming produce grosses. Some are genuine and reasonable, some are mere excuses and then there are those that are just absurd, freaky and preposterous. I always tried to stay within the genuine and reasonable means whenever explaining causes for low grosses. It’s wiser to remain genuine with responses rather than make up fantasy-like excuses.
Throughout my career, I’ve witnessed many twisted alibis, cop-outs, diversions and distortions when hearing some people try to explain reasons for unsatisfactory grosses. Those were some of the most embarrassing fish stories ever displayed in front of management.
Here is a scenario that actually takes place in the real world today:
Boss: “Joe, what happened to the produce gross?”
Joe: “I don’t know.”
Boss: “You have to know. You’re running the produce operation. So, what happened?”
Joe: “Must have missed something on inventory.” (Note: this is usually a typical answer)
Boss: “Joe, we need a sound reason for missing the gross.”
Joe: “We had a number of produce managers on vacation.”
Joe went on and on giving silly answers such as his part-time employees don’t know what they’re doing, the customers mishandle the product, the prices are too high, there was a leak in the cooler ceiling and it damaged some product, and on and on.
Excuses, alibis and even argumentative styles are not appropriate when clarifying situations explaining reality. There are always logical and real reasons why something failed to make the grade, including produce gross profits.
The best way not to have your boss ask about the crummy produce gross is to prevent it from becoming crummy in the first place. That takes good productive planning of programs and performing projections that will reveal a view of early results.
Projections act as a guide that leads the operation down the right roads ahead. This takes research and analysis of all areas of the operation, including product costs, merchandising strategies at the store level, and especially control in preventing shrink waste loss.
Shrink is most probably the biggest reason for underperforming produce grosses and is the most troublesome issue when operating a produce program.
For instance, during the summer months when sensitive product such as soft fruit, berries, sweet corn, and local items are more extensively displayed, shrink can be a real problem.
Rising temperatures and humidity have stronger influences on how fast those delicate items respire. Special handling and care are essential during summer months.
Employees, especially part-time summer help, need to be aware of shrink. They need to be taught all about shrink and how it can be prevented in their handling of produce. Training can help reduce summer shrink by 12-18 percent or more.
I visited a major supermarket in the South this summer and noted that peaches were on the front page of the ad flyer at a red-hot price. When I approached the massive display, it was very evident that there were nectarines also mixed in with the peaches. I spotted the nectarines in a regular section on another table priced at a much higher retail.
I asked the clerk who was replenishing the peaches why he was placing nectarines on the same display with peaches? He replied, “These are peaches, aren’t they?” I then told him to ask his produce manager that question, but was informed that he was off that day.
That’s the reality out there in the trenches. It’s taking place every day as we go about our busy days sitting behind desks trying to write those fish story excuses in explaining crummy grosses for the boss.
On a side note, I can’t help wondering whether that produce manager will include the nectarine and peach fiasco as one of the reasons for poor gross profit results?
Ron Pelger is the president and CEO of RonProCon, a consulting firm for the produce industry, and the chairperson of FreshXperts LLC, a consortium of produce professionals. He can be reached by phone at 775/853-7056 or by email at email@example.com, or check his details on freshxperts.com for more information.