August 30, 2018
Weather the Next Economic Storm with Strategic Planning
Those of us in the meat industry usually don’t have the luxury of taking time to contemplate our next move. Prior to joining Midan, I lived in the bullpen of a beef processing facility as well as regularly negotiated sales from my office on four wheels and my other office in the sky. From moving boxes to foodservice and filling containers destined for international ports, my “strategic plan” usually consisted of fulfilling orders one week at a time. The gratification of selling product consumes you and you constantly see-saw between being stressed and being on an adrenaline high to sell that next container NOW. Because at the end of the day, you are only as good as your last sale. For most of us, to hit the pause button and sit in a room to strategically map out the next sales cycle or the next six to 12 months is absurd. Who’s got time for that?
Hey, we all know the holidays rule the sales cycle. If you know your core customers’ merchandising set for the quarter and you know your supply numbers and are priced just right, what more do we need to talk about?
But it’s exactly that “in the moment” thinking that leaves us more vulnerable; it doesn’t take long for what’s happening on the horizon to show up on our doorstep. You might already be feeling the ripple effects, but a perfect storm of market conditions is erupting in the meat industry. The growing surplus of beef and pork is starting to compress margins, with pork especially facing a glut of massive proportions this fall. To add fuel to the fire, retaliatory international tariffs are closing off our vital pork export markets in Mexico and China. We are already getting a glimpse of the potentially crippling effects of record pork production that has no place to go: the August 27 issue of Cattle Buyers Weekly reports that in the eight weeks since June 22, national base carcass prices dropped from an average of $81.68 per cwt (a high for the year) to $55.78 per cwt and were $23.90 per cwt below last year’s.
While this is going to be a bumpy ride for the meat industry, especially the pork side, it’s not surprising. Our business has always been at the mercy of the next drought, global policy change or economic downturn – pick one. But knowing that we are sure to face conditions out of our control only makes the case stronger for thinking strategically and planning ahead.
Successful meat marketing takes a “big picture” approach that considers multiple aspects of your business. It’s worth taking the time you’re convinced you can’t spare to develop a strategic roadmap that outlines long-term goals and contingency plans; otherwise, you’re much more susceptible to getting burned by the whims of an ever-changing market.
Think about the parts of your business that need attention beyond your next meat shipment: facility upgrades, product line expansion or diversification, succession planning, partnering opportunities? Whether you are planning to close a plant, rebrand a product or enter a new market, you must be intentional about next steps and consider how each move affects the whole, all while keeping an eye on risk factors.
You know how to move meat in a perfect world; you’ve been doing it for a long time. But to maintain momentum when unforeseen market conditions strike, a strong strategic plan with well-thought-out contingencies will position you to seize opportunities and excel when others are scrambling.
What can you be doing now to stay one step ahead of the next storm?