FOOD COMPANIES CUTTING COSTS TO STAY PROFITABLE
By Adnews Staff
Nearly three-quarters of Canada's top 75 food and beverage processors increased or maintained sales in 1994 from the year before, according to a survey done by Ernst & Young of Toronto. This was partly the result of stringent cost controls and improvements in the way they do business. The techniques used to control costs include private labeling, efficient consumer response, business process reengineering, outsourcing niche marketing and restructuring for a North American focus. With private label products produced for supermarket chains, manufacturers have lower marketing costs and listing fees and the potential for preferred supplier status over national brands. Efficient consumer response brings together retailers, manufacturers and suppliers to improve the total supply chain management system and slash total system costs. For example, continuous replenishment of product on store shelves reduces inventory carrying costs, improves cash flow and cuts down the number of times retailers are out of out-of-stock. Business process re-engineering involves streamlining business processes. Companies are contracting outside help for manufacturing, logistics and sales or else establishing joint ventures. They are also consolidating their Canadian and U.S. corporate offices to reduce overhead by sharing support services such as customer service call centres and finance and information technology services.