It’s easy to see why transportation operators concerned about mounting losses and low prices may need to seek out a bowl of warm soup. But they may find it more comforting to look at the supply chain behind the soup before digging in.
After all, Campbell Soup posted some pretty, well, uncanny numbers last week, expanding its profit nearly 15 percent to $304 million in its fiscal first quarter. Campbell did that even though revenue fell 2.1 percent, with sales declining across a wide range of its iconic brands, challenging the conventional wisdom that consumers are rushing to low-cost comfort foods in hard economic times.
So what was the recipe for improved earnings? For Campbell, it was the combination of lower costs and greater efficiency that came from an intensive and lengthy improvement in the company’s supply chain. That effort began before the downturn, and it’s continued throughout a period in which many companies have reined in investment, trading in the potential for future benefits for simple, clear cash preservation.
But the report from Campbell and other companies suggests many businesses are willing to look beyond the immediate financial horizon, and that the benefits might be closer than you think.
For Campbell, the productivity has come through supply chain technology, which has provided the company with far greater visibility into the goods moving through its supply chain and greater control of how those goods are moving.
“Cost reductions from our supply chain productivity improvements contributed to our gross margin percentage, outstripping inflation for the quarter,” company Chief Financial Officer B. Craig Owens said in a conference call with investment analysts, according to a transcript provided by Seeking Alpha. “We’re showing benefits from the work and supply chain supported by our improved systems infrastructure now that SAP implementation is essentially complete in North America.”
That was the latest sign that although there’s plenty of financial pain to go around in this downturn, the world of supply chain technology is seeing something of a renaissance as many shippers look to do more than simply take a dull knife to costs.
Supply chain software provider Manhattan Associates this month reported its profit more than doubled to a record level in the third quarter, and the company said it broke a drought in new contracts with three new licensing deals worth more than $1 million apiece.
Closer to transportation and logistics operators, companies such as INTTRA and GT Nexus recorded important customer additions in recent weeks, suggesting the search for efficiency through technology doesn’t stop with shippers.
But for shippers, true supply chain efficiency begins within their own businesses, which is why Campbell Soup has invested in aligning everything from sales forecasting to transportation planning.
Of course, Campbell Soup certainly has been helped by a few trends beyond its control.
Sales of condensed soup remain strong, the company said, and “condensed is the best value proposition. You get the same number of servings; you just add your own water instead of us shipping it to you.”
It’s a great value proposition for everyone but the carrier, that is.
Paul Page is editorial director of The Journal of Commerce. He can be contacted at 202-355-1170, or at firstname.lastname@example.org.