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National Restaurant Association - Supply chain integral to brands’ success, CEOs say

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Supply chain integral to brands’ success, CEOs say

Now more than ever before, restaurant companies are recognizing that their supply chains are integral to their businesses’ success, a panel of celebrated CEOs told the National Restaurant Association’s attendees at its recent Supply Chain Management Executive Study Group meeting in Chicago.

“Supply chain is a new and emerging area,” said Doug Brooks, chairman and CEO of casual-dining company Brinker International. “It used to be known as ‘the purchasing guys,’ and not necessarily recognized as something at the forefront of a brand. But the fact is, supply chain is responsible for sourcing everything from raw materials to doing contract provisions. They handle everything you need for your restaurants and make sure you never run out or run long. Your supply chain is the key to a successful operation.”

Brooks, who along with Jon Luther, former chairman and CEO of Dunkin Brands told attendees at the May 16-17 meeting that supply chain is often “still seen as a support activity, but it is coming out of the shadows.”

At Brinker, he said, his own view of the supply chain’s importance came in 2008, at the height of the economic crash.

“We knew we had to do something very different,” he said. “It was a very challenging time and we knew we had to change. It was time for Plan B.”

With his company’s stock trading at around $3.57 a share in November 2008, he said he knew the business had to be run differently. That change came in the form of David Parsley, Brinker’s senior vice president of supply chain management. With Parsley on board, Brooks said the company turned its attention toward focusing on new equipment, technology and products.

“It was an important leadership time for us,” he said. “In 2009 we brought in some new leaders and put in some new strategies and change started happening.”

He added that Parsley “had a much more robust way of thinking about things than just purchasing things cheaply. He really has developed and transformed us into a world class supply chain team that is versatile and multi-disciplined.”

Brooks noted that the company adopted Parsley’s Pillars of Supply Chain way of thinking that included: 1.) a focus on quality assurance and a commitment to food safety; 2.) a continuity of supply; and 3.) cost management.

“David blew up the thinking that to get lower prices you had to settle for lower quality,” he said. “We started letting our partners come up with creative solutions that didn’t result in lower quality, but saved us money.”

Four years later, he noted, even though the economy is still challenging, Brinker’s stock is trading at approximately $41 a share.

“We’re up 1,000 percent,” he said. “That proves a company can really change.”

Jon Luther, who earlier this month retired as chairman of Dunkin Brands, said some of the biggest challenges the industry faces are supply chain and technology.

“It is critical to know that what enables Dunkin Donuts to have 17,000 stores around the world is a strong supply chain, not only in the U.S., but globally,” he said. “Two-thirds of our profits come from international [business] so it’s a pretty complicated supply chain. When I first came to Dunkin Brands 10 years ago, we realized our supply chain infrastructure did not support growth. Another thing was we were a coffee concept disguised as a doughnut shop. We had to understand that doughnuts were less viable and re-engineer our menu structure to make us A.M. viable. So we reorganized around our supply chain and marketing followed: America Runs on Dunkin.”

Luther noted that today Dunkin’s supply chain chief, Scott Murphy, is integral to the company and the supply chain “is so critical to our growth. We couldn’t have gotten to over 10,000 stores without our supply chain’s growth.”

He advised attendees to “put your ears out and listen. Supply chain is composed of some of the most dedicated professionals in your operations. Listen to them and you will change the scope of your business.”

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