As the future of agri food companies strongly relies on the way they handle the most pressing challenges in our global food system, it is a large challenge for the management of agri food companies to steer their businesses towards a bright future. Having access to reliable and up-to-date company and market data helps agri food companies objectify discussions and ensure that improvement potential is not being left untapped. This page explains which KPIs and performance indicators provide business management teams within agri food companies with the right insights to steer their business towards a bright future and how you can use external data to your advantage.
The global food system is under pressure due to increasing demand and the need for sustainability, forcing companies to become more efficient and transparent. How can you successfully guide your company through the uncertainties of today’s business climate?
Due to this fast-changing global food system, agri food companies no longer have the luxury of making business decisions based on experience or gut feeling (source). Whether you can seize the opportunities that these times bring, will depend more and more on if you are able to make the right decisions at the right time. Companies that can bring speed, accuracy, and agility into their decision-making process win the game. To be able to do that, superior data insights on profitability, efficiency and growth are of vital importance.
To successfully use these insights, it is important to make data a structural part of your processes. It must become a permanent part of making strategic decisions within the organization. To weave data into your business processes, you need to have access to data insights at all times.
But structural data insights, how do you get them? Collecting and analyzing data takes a lot of time. Yet that is often the first thing companies do: apoint in-house data analysts. The difficulty, however, lies not in analyzing the data, but in projecting these insights onto your business processes. That is where your attention should go. By outsourcing data collection and analysis and spending your time on making the translation to your business processes, your data strategy will truly pay off.
Studies increasingly show that due to the lack of traditional agri food companies to leverage data, they are losing ground. In fact, traditional food companies are outperformed by 5-10x in % growth by new and smaller players (AT Kearney, Heartland Research, 2017).
However, it is still not too late to get ahead of the competition. But with all that data being accessible nowadays, where do you focus on? Successful companies structure their data around the four strategic lenses as drawn up by McKinsey:
Operating model lens — Do I understand our own performance and allocate resources optimally?
Financial lens — How is my financial performance against peers?
Market lens — Am I playing in profitable markets that will deliver growth?
Competitive advantage lens - What does it take to win from my competitors?
Structuring your KPIs and performance indicators around these strategic questions helps agri food companies to signal risks early on and identify improvement potential. For every lense, concrete KPIs are available to measure your performance. To do so, you need access to external data which you can then connect to your internal data points to benchmark your performance. To get the right insights, you generally need an understanding of the following metrics:
Revenue growth in %
Revenue growth per FTE
Costs per FTE
As already mentioned above, having insight into your competitor’s performance is vital to seize business opportunities and get a clear view of your company’s position in the market. A common objection to conducting a competitive analysis is that companies feel that their business is unique and not comparable to others.
Nothing is less accurate. A competitor analysis provides companies with an objective measure of their business, by comparing their performance with that of similar companies. You cannot judge your performance by just looking at yourself. Compare it to a race that you run on your own, without a stopwatch: how do you know if you've done well when you cross the finish line?
To put it simply, a competitor analysis allows you to see in what areas you are doing well as a company, and where you should focus on improvement. It provides an objective framework for your goals, so you can maintain or obtain a competitive advantage.
Some critical situations when you can use the knowledge gained from competitor analysis to your advantage:
Budget session: knowing what your competitors are doing and how they are performing helps you to set goals for next year. Data will support you in discussions on topics like, how high should our growth rate be to maintain or grow our market share? And what profit margin level should be attainable?
Strategy session: understanding how you perform in the market compared to your competitors allows you to check whether your current strategy is still the right one or whether you can seize opportunities. The right data insights will help you answer questions like: how are we doing relative to competitors on key KPIs? Why is there a difference? And what is the strategic outlook on our business performance?
Advisory board meetings: understanding your company's performance relative to competitors helps you back up and objectify the strategic decisions you plan to make to the advisory board.