Product margins that are already tight are being squeezed even more due to promotional activities. This creates extra ‘back-office’ demand within organisations; both from an administrative point of view in ensuring invoice values are correct, payment and cash-flows are not affected, and within the supply chain function, making sure service level agreements are still met whilst retaining cost efficient stock holdings, especially around short-life products.
The reality is that the only variable that the SME supplier does control is the cost side of the margin equation. This is further challenged by the increasing global cost of raw ingredients across many food & beverage categories. As a result, maintaining margins is a result of lowering cost through effective and integrated processes and systems.