Inside Food Business Operations | DeliDelights
Moving from telecommunications into the food business meant entering a very different operating environment.
The products were different. The customers were different. The supply chain was different. Even the pace and nature of many day-to-day decisions were different.
But after spending more time actually operating a food business, something became increasingly familiar.
Despite the differences between industries, many operational challenges eventually seem to come back to a few basic questions:
Do we have the information we need?
Does it reach the right people?
Does it arrive early enough?
And does it help us make the right decision?
The circumstances may be different, but the underlying challenge is often remarkably similar.
In Food, Small Decisions Happen Every Day
Food businesses make operational decisions constantly.
How much should we order?
When should we reorder?
Do we have enough stock for the coming days?
Will the supplier be able to deliver?
Should we increase inventory before a busy weekend or holiday?
What happens if an ingredient or product suddenly becomes unavailable?
Is demand increasing, or was last week's increase temporary?
These may seem like routine decisions.
But taken together, they can affect product availability, wastage, working capital, customer service, operating costs and ultimately profitability.
And many of these decisions depend on information coming from different parts of the business.
Information Is Only the Beginning
Consider a restaurant deciding whether to reorder an important ingredient.
The business may already have information about:
- current inventory,
- recent sales or usage,
- previous purchase quantities,
- supplier lead time,
- incoming deliveries,
- expected customer demand.
In many businesses, much of this information already exists.
The difficulty is that it may exist in different places.
Sales information may be in the POS.
Inventory may be in a spreadsheet or stock count.
Purchase orders may be maintained separately.
Supplier availability may be known only through a recent phone call or message.
An upcoming event or promotion that could increase demand may be known by management or marketing but not yet reflected in purchasing.
So the problem is not always:
“We don't have enough information.”
Sometimes the more important problem is:
“The information we have has not come together in time to support the decision we need to make.”
Four Things I Keep Coming Back To
The more I look at day-to-day food-business operations, the more I find myself returning to four things:
Information
What do we know?
What has been sold or used?
What remains in stock?
What has already been ordered?
What can our suppliers actually provide?
What changes in demand should we expect?
Without reliable information, even experienced people are forced to make decisions based largely on assumptions.
Coordination
Who needs to know?
A kitchen employee may notice that an ingredient is running low.
The stockroom may have information about actual inventory.
Purchasing may know when the next order is scheduled.
The supplier may know that a product will be unavailable.
Management may know that a promotion or event will increase demand.
Individually, each person may know something important.
The question is whether those pieces of information come together.
Timing
When does the information become useful?
Knowing that inventory is low after the stock has already run out is very different from knowing it three days earlier.
Knowing that a supplier cannot fulfill an order on the scheduled delivery date may allow the business to find an alternative—if that information arrives early enough.
In operations, information can be accurate and still arrive too late to be useful.
Decisions
What action should follow?
Information has limited operational value if it does not help someone decide what to do.
Should we reorder?
How much?
Should we order earlier?
Should we use another supplier?
Should we adjust production?
Should we temporarily change what we offer customers?
Ultimately, information should help improve a decision.
Technology Helps — But the Decision Comes First
When businesses encounter operational problems, it is natural to look for technology that might solve them.
Sometimes that is exactly what is needed.
But operating a business has made me increasingly interested in a different starting point.
Instead of beginning with:
“What system should we use?”
perhaps we should first ask:
“What decision are we trying to make better?”
Once that is clear, several other questions become easier to answer.
What information does that decision require?
Where does the information come from?
Who needs to receive it?
How frequently does it change?
How early do we need it?
And only then:
What process or technology could help?
This puts technology in its proper role—as an enabler of better operations rather than an objective by itself.
The Same Problem Can Look Different Depending on Where You Sit
One of the interesting things about food-business operations is that the same underlying issue can appear differently to different people.
To the kitchen, it may look like:
“We ran out of an ingredient.”
To purchasing:
“We ordered, but the supplier couldn't deliver.”
To inventory:
“The recorded quantity wasn't the same as the actual stock.”
To management:
“Why are we losing sales when we supposedly had enough inventory?”
Each statement may be correct from that person's perspective.
Understanding the underlying problem often requires connecting those perspectives.
This is why operational problems cannot always be solved by looking at only one activity in isolation.
Better Decisions Don't Always Require More Data
There is also a temptation to assume that better decisions require collecting more and more information.
Not necessarily.
Too much information can create another problem.
The objective should not be to give every person every piece of data generated by the business.
The objective should be to identify:
What information matters for this decision?
Who needs it?
When do they need it?
That may be far more useful than simply creating another report or dashboard.
Start With One Everyday Decision
For a food-business operator, a practical exercise may be to choose one recurring decision.
For example:
When should we reorder a particular item?
Then trace backwards.
What information do we currently use to make that decision?
Where does it come from?
Who provides it?
Is it current?
Does supplier lead time affect the decision?
Does expected demand affect it?
What happens when one of those assumptions changes?
And perhaps most importantly:
At what point do we usually realize that something has gone wrong?
If the answer is after an item has already run out, after an order is delayed, or after a customer cannot be served, there may be an opportunity to improve how information supports the decision.
Different Businesses, Similar Questions
Restaurants, cafés, caterers, hotels, food retailers, manufacturers and distributors operate differently.
Their processes, products and systems vary.
But many eventually confront the same fundamental challenge:
How do we turn what the business knows into better and more timely action?
That is why four words increasingly stand out to me when thinking about operations:
Information. Coordination. Timing. Decisions.
Technology can certainly help with all four.
But perhaps the starting point should always be the business itself:
What decision are we trying to make better—and what needs to happen for us to make it at the right time?
Author: Willie Manansala
DeliDelights: Inside Food Business Operations
This article is part of DeliDelights' Inside Food Business Operations series—practical observations about the everyday challenges of running food businesses, including inventory, purchasing, supply, fulfillment, information and decision-making.