The Future of the Food Industry Forum
Strategic Insights
June 2-3, 2002
Agenda (.pdf)
"Benefits Based Value Chain"
Overview
A cross-section of food industry leaders met on June 2nd and 3rd, at a Forum arranged by The Food Industry Center at the University of Minnesota. A total of 30 attendees representing major Food Manufacturers, Retailers, Restaurateurs, Industry Associations, Government Regulators, Labor and the Academic Community discussed the issues and challenges confronting the industry, and what it will take to be successful in the future.Out of this forum, there appeared to be one very central issue that to one extent or another has implications for nearly every sector, organization and employee in the food industry. That issue is how to compete effectively in the face of the "Value Chain" focus that has re-shaped the industry during the '90s. Value chain management, largely lead by Wal-Mart has resulted in massive gains in efficiency, and lower prices for the consumer. It has reshaped the competitive landscape and has resulted in razor thin margins and competitors scrambling for a means of differentiating themselves on dimensions other than price. Resulting from this discussion a new concept emerged that the Center coined "Benefit Based Value Chain".
A Benefit Based Value Chain reflects the next evolution in competitive strategy. The basic principle involves a better understanding of the market place, the granularity of consumer attitudes and needs, and the positioning of products and services to meet those needs. Examples of how this could be done are exhibited by a handful of retailers (e.g. Ukrops, Wegmans, Lunds, Byerlys, Kowolski's) who have created meaningful "brands" for themselves in the minds of consumers. As a result they operate on a different plain than the price based competition. Recognizing that Americans pay less for food as a percent of income than any other country in the world, it stands to reason that if the food products, retail stores, and restaurant menus deliver consumers benefit that enhance their lifestyle, sales and profit margins of firms could grow. And, food delivers a multiplicity of benefits. In addition to nourishment, food is a means of enjoyment, entertainment, medication, and an expression of love and friendship. Food experiences that deliver these benefits, result in significant value delivered to consumers.
Although the topics covered in the forum were fairly comprehensive, covering the industry's functional disciplines, the discussion consistently focused on the need to identify ways to benefit consumers and drive value in the industry. This tended to be an underlying theme whether the topic at hand was blurring of channels, new technologies, ethics, or information management. But perhaps this should not be surprising since identifying a value added business proposition really reflects the core mission of any organization. A strong connection between value and ethics was expressed. An organization earns and retains its integrity as it delivers higher value to consumers. As it treats employees with respect and creates upwardly mobile career ladders, the economic and social structure of the community is strengthened.
For summaries of the dissusions in each of the sessions, go to the Spring 2002 Newsletter.
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