Strategic Planning
"Insyte Consulting's strategic planning process provided both focus and alignment among our management team. We now have a shared vision for our future and are confident that Perry's will remain an independent manufacturer in Western New York."
Bob Denning, President
Chris Van Cleve and Bill Bidlemann load pallets after filling operation.
Firm Benefits
- Company well positioned for growth & market expansion
- Management team effectively implemented major strategic action plans despite a 67% increase in industry-wide dairy costs during 2007
- Several new contract manufacturing accounts were landed & negotiations are proceeding with others
- Landed a high-profile, Fortune 500 manufacturer for private-label business in export markets enabling the company to realize increased capacity utilization and cost absorption
- Upgraded package goods line to consumer friendly, two-piece, resealable "sqrounds"
- Added several new flavors to consumer packaged goods line
- Geographically expanded into the Pittsburg area retail market
- > $8 million in capital expenditures in onsite warehousing, production equipment & new tanking/ packaging equipment
- Reduced offsite rentals and related transportation costs
Perry's Ice Cream Co., Inc. manufactures frozen dairy products, including bulk ice cream, novelties and ice cream packaged for consumer, hospitality and institutional markets. In addition, the company also produces frozen dairy products on a private label basis. Perry's Ice Cream, the #1 brand in the Western New York Region, also competes on a much smaller scale across the balance of Upstate New York, Pennsylvania and other Mid-Atlantic areas.
Founded in 1918, the 4th generation family-owned company now employs 300 people, including about 115 UAW production workers. Manufacturing operations are conducted on a three shift basis within a modern, well-maintained facility of nearly 120,000 square feet in Akron, New York. Annual production capacity has grown to over 15 million gallons across Perry's eight production lines.
Situation
Despite strong local brand recognition and a reputation for a broad range of high-quality products, overall sales had remained stable in recent years. The company also faced a number of other serious issues, many of which were attributable to the industry and consolidation. The bulk of Perry's Ice Cream sales were concentrated within a limited number of key accounts in the retail food industry. The balance of the business was sold into smaller retail chains, convenience stores, schools, restaurants and roadside stands. The loss of a single, major retail account would have a significant impact on the company's profitability.
Significant consolidation has been occurring for the last 10-20 years within the ice cream industry. At one time over 3,000 local/regional manufacturers effectively competed across the U.S. However, because of the consolidation trend, there are currently less than 300 local producers. As a result, Perry's Ice Cream now competes against much larger, multi-national companies like Nestle and Unilever, who cost effectively market major brands like Haagen Daz®, Breyer's® and Edy's®.
The intensely competitive environment was further exacerbated by the promotional nature of the business. At the retail level, ice cream is typically purchased by the consumer when it is on sale. The retail chains use these products as a traffic generator in the frozen food aisles. Consequently, significant pressure is put on the manufacturers to support store promotions at the cost of further margin degradation.
Lastly, the management team of Perry's Ice Cream recognized the need to diversify the business base in order to help offset some of the seasonality of the April-October peak sales period.
Solution
Insyte Consulting was contracted to work with Perry's Ice Cream on a strategic planning project intended to address the above issues. The objective was to establish a plan for growth and profitably and bring strategic focus, alignment and a formal implementation process to the company. The overall corporate strategy would be the foundation on which a set of aligned and detailed marketing, operating and financial plans could also be formulated.
Utilizing a team approach, the joint Insyte Consulting-Perry's Ice Cream team met in facilitated meetings. The half-day sessions were held weekly over the several month duration of the project.
During the team meetings, work focused upon affirming the company's vision including mission, core values and an envisioned future. Corporate key performance measures were identified and strategic goals supported by objectives and action plans were developed, as well as a process to execute, track and periodically update the strategic plan. A communication process was also developed to inform employees of the strategic plan and its results.
A SWOT and most valued product analyses were completed as part of the above process. Extensive emphasis was placed on the analysis and understanding of products and distribution channels and the role that each played within the overall profit potential and future direction of the company. As a result of this interactive analysis and evaluation, several key strategic decisions were subsequently made:
- The product line focus would be placed on bulk and packaged goods rather than novelty products. This would enable the company to better leverage its core competencies and provide the foundation for sustained, profitable growth.
- The company would increase its focus on securing additional contract manufacturing business, both nationally and internationally. Although this channel had been long utilized, a more deliberate approach would be taken in order to significantly expand this segment of the business. Even though margins are generally lower for this segment, it represents substantial volume potential and offers some protection for cost recovery due to rising dairy costs.
- The consumer package goods line has been upgraded from the traditional brick to a consumer friendly, two-piece, resealable "sqround". The new package was recognized with the Smart Marketing Award for best package redesign in the ice cream category for 2008 by the International Dairy Foods Association.
- Lean manufacturing concepts were introduced into the operational areas for the purpose of increasing throughput, accelerating inventory turns and providing better, faster response to customers.
Results
As a result of the planning process, Perry's Ice Cream is well positioned for growth and market expansion. Over the last 1-2 years the management team has effectively implemented the action plans and strategic investments, despite a 67% increase in industry-wide dairy and commodity costs during 2007. Several new contract manufacturing accounts were landed and negotiations are proceeding with others. Because of the investments, the company recently landed a high-profile, Fortune 500 manufacturer for private-label business in export markets, particularly Europe and South America. This has enabled the company to realize increased capacity utilization and cost absorption.
The consumer packaged goods line has been switched to the "sqrounds" packaging design. This change was also complemented with the addition of several new flavors. In terms of geographic expansion, Perry's Ice Cream has begun to penetrate the retail market in the Pittsburgh area with plans for other major markets in the future.
As a result of the disciplined planning process Perry's Ice Cream has made over $8 million in capital expenditures in onsite warehousing (significantly reduced offsite rentals and associated rising transportation costs), production equipment and new tanking/packaging equipment. The company has effectively accessed funding sources through Empire State Development for the above investments, the Buffalo & Erie County Regional Development Corporation for operational support and other incentives through the Erie County IDA.
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