It has been a trying year and a half. And while some industries have been hit harder than others, the food & beverage and food service industries are continuing to see challenges that will likely continue for months, if not years.
Among these challenges: According to Business Insider, four million Americans quit their jobs in April — a 20-year record — many of whom worked in the retail sector, which is in the middle of a massive labor shortage.
Moreover, food prices globally rose in May for the 12th month in a row, reaching a 40% year-over-year increase, according to the Food Processing Association, and is the largest month-to-month increase in more than a decade.
Amid these challenges and uncertainty, what can you do today to be best positioned for any eventuality? A good place to start is to consider your capital spending.
More specifically, consider the benefits of automation. Would it make financial sense to automate certain processes and roles to add efficiency and augment your staff (think automated order taking and filling). Automation projects like this may not have made sense five years ago with lower labor costs, but given the current market and improvements in technology, they may be better investments today.
If you know inputs like labor or food stuffs will increase in price then you need to protect your margins by saving cost and being more efficient in other areas. Consider aggressively pursuing cost-reduction projects across all areas of the business. For example, LED light upgrades will save on utilities — every successful cost reduction project is an insurance plan to your operating margin. How about expanding warehouse storage and purchasing in large quantities to reduce unit costs? Every option should be on the table for review.
To implement this strategy, ask your business owners to submit candidate Capex projects with comparable ROI models, and rank these projects for approval. If you’re still capital planning with spreadsheets or SharePoint, consider an investment in Finario — the first purpose-built enterprise capital planning software solution.
Combining capital planning, budgeting, Capex approvals, project forecasting and post-completion review within a single platform, Finario does more than just automate processes, apply more rigorous and consistent ROI criteria, and enable rule-based approval streams. It enables you to apply “What If?” analyses to see how specific approval decisions will impact your plan, forecasts, and other criteria by project portfolio, location, business unit and more.
With an integrated Capex system, creating project requests for budgeting and forecasting is not a once a year process. With Finario, project ideas can be entered at any time by any user. Project ideas can be moved to any time period, not just the current or next fiscal year; this is ideal because ideas should never be limited by a fiscal calendar. With management able to see all projects, active and pending, at any time and create a rolling forecast of Capex spend, you’ll be in the best position possible to make better decisions, quicker, that can help mitigate uncertainty and react opportunistically.
If you would like to schedule a demonstration of Finario, click here.