Interesting subject line don't you think? Well there are a number of ways to do this. You can do it the old school way of providing Great service and a consistent product to your customer,which is much harder than it sounds or from a pure business standpoint do you tackle it with a lean mean manufacturing machine, that is automated to the gills?
We currently have both in the U.S. but which model is better? You see the biggest bottle neck in a large coffee operation, or maybe I should rephrase that, as the biggest hurdle is flexibility, right? WRONG!!!!
What the large company's want are gigantic runs of the same product running through their air ducts, or bucket elevators and packaging the same product minute by minute. Is that a fair assessment? Well of course it is. It is like any manufacturing enviroment, the simpler and the same is always better!!!
So, what do the little guys do?
Well the answer is quite simple, they better find a niche, right? Because if you have company's out there that can bust out several 100's of 1000's of pounds of the same product daily, you are kind of up against it aren't you? Boy, what is that, at least 10 question marks so far...
Anyway, the way to maximize your profit is quite simple, and people complicate it, and it shouldn't be complicated. You do what you do, as well as you can do it and you find a customer base that makes you money. Laugh now. Take a big belly laugh. Now really stop........... and think about what I just said.
Is your company doing 100% what it does best to maximize your profit? Or are you just doing what its always done.. Think about it? 100%, that's a perfect number right, there is nothing better, you can't do better than 100%, an A+ is still 100%. Are you doing that? Of course not, who is?
So the best way for all of you small to medium sized firms is a simple answer. DE-Commoditize your products. Think about that for a moment. The single reason, or one of the big reasons company's lose customers is over pricing! I have been in this business 25 years and got kicked out of accounts for .10 cents a pound!! De-Commoditize your product.
Now what does that mean?
Well it means developing blends and pricing that won't effect your bottom line drastically from year to year. It means doing the necessary cupping and R&D that goes along with having a superior product and by the way, this doesn't have to be only for the small micro roasters, it can be done on a much larger scale. I have a model right now that could support a $200 million dollar business. If you take price out of the equation you have won. Let's face it, the commodity market is not a physical market anymore. The guys at Fidelity and J.P. Morgan are rolling up their sleeves in the morning and buying futures. That is not what a coffee company should be doing, in fact that's the last thing you should be doing. If you come up with a superior product at a margin that is massive isn't that the trick? After all, everything below that Gross Margin line is really insignificant. Ok, bust the insurance sales guys balls, cut your health care costs, blah, blah, blah........'
If you don't see that is the way to financial stability in this ever changing marketplace, you don't belong here.
That's all I have to say tonight, and i have given away a big golden nugget, but, and it is a big but, I have more ways and that's why you should hire me to help you. I will transform your business in a matter of months. But for now, heed my advice and adopt some of the thinking I have shared with you.
I want you to succeed! Coffee is my life, and I will always love the business aspect of it. Goodbye for now.
All the best,
Former Owner of Araban Coffee Co. & Beacon Hill Coffee Roasters
NOW an active consultant in the industry
@email@example.com or visit my Linkedin Profile and leave a comment!