Dive Brief:
- Rocky Mountain Chocolate Factory aims to spur fresher inventory at its franchisees' stores by limiting potential shipping costs, interim CEO Jeffrey Geygan said on a July 16 earnings call.
- For the quarter that ended May 31, the chocolate maker waived all freight charges for franchisees and licensees' orders, Geygan said. On June 1, it shifted to a flat monthly fee program for freight delivery to stores.
- "We believe this plan will encourage more frequent store orders and provide a more consistent and higher quality in-store experience for consumers," Geygan said.
Dive Insight:
Rocky Mountain Chocolate Factory adopted the freight pricing tweaks because stores weren't ordering often enough to ensure inventory was as fresh as possible.
The company encourages franchisees and store managers to order quantities they can expect to sell within two to four weeks, per its annual financial report. Prior to the freight charge waiver, many franchisees' order frequency slowed from every two weeks to every four weeks, Geygan said. In a few cases, stores ordered every six weeks.
"By waiving the fee, we encouraged all franchisees to order on a more frequent basis, which would be every two weeks, and we can see that as evidenced through our ERP and POS systems," Geygan said.
Rocky Mountain Chocolate Factory's push to shift franchisee ordering behavior is one of many supply chain tweaks the company has instituted as it looks to get its financial performance back on track.
The company's launch of a new ERP system in January, which enabled the integration of all the company's core functions, is enhancing its visibility into inventory, procurement and manufacturing operational performance, Geygan said.
Rocky Mountain Chocolate Factory also recently hired Luis Burgos, who previously held leadership roles at Kimberly-Clark and U.S. Cotton, to spearhead all manufacturing and logistics activities as VP of operations.
"He comes to us with Six Sigma, lean manufacturing and continuous improvement certifications and tremendous experience," Geygan said.
Additionally, the company is preparing to make food delivery platform availability a requirement for operating a store "wherever feasible," Geygan said. A presence on delivery apps will improve store revenue and capture new customers for many Rocky Mountain Chocolate Factory locations, he added.
"We're advancing toward a modern e-commerce experience that complements our in-store environment," the interim CEO said.
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