Distribution Cost as a % of Revenue
Distribution costs represent one the largest areas of expenditure for a food and beverage company. It’s imperative when working with perishable items that the shipment method has the correct environment and timeliness to get items on the shelf at their peak freshness. Some companies lower distribution costs by consolidating shipments, using integrated sales and fulfillment data, cross-docking and implementing 3PL.
- > 4%
- < 3%
“Improvements in sensor technology, robotics and [AI] have the potential to significantly improve food safety.”
— Kate Brown
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For food and beverage manufacturers and distributors, getting inventory turnover just right is imperative to profitability. The manufacturing of perishable items requires a more frequent turnover with the goal of producing the least amount of waste. Another important component to consider when defining inventory turnover goals is the gross margin on the sale of your products. Lower margins require higher stock turnover to meet revenue targets. Typically buying less product more frequently in the food and beverage space allows for better inventory turnover metrics and less waste.
- < 3 turns
- 6 turns
- 10 turns
- > 18 turns
Fill rate represents the percentage of your orders that are shipped in full and on time as a percentage of all your orders. This metric is essential to providing exceptional service to your retailers and maintaining positive customer satisfaction. You should always aim to have a 100% fill rate, however this can be a difficult balance in the food and beverage industry. Purchasing too much inventory ensures that you maintain a high fill rate, but leads to costly inventory loss, while too little inventory on hand leads to poor fill rates.
- < 94%
- > 97.8%
Cost as a %
Time to Close
Total IT Cost as
a % of Revenue
Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.
Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.
Best in Class
Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.
You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.