Rocky Mountain Chocolate Factory announced a plan to save $1.2 million annually by working on warehousing, transportation, and manufacturing improvements. This initiative is part of the businesses’ plan to accelerate growth and profitability after seeing a $1.9 million net loss in Q4, which ended Feb 28.
The plan includes writing off $600,000 in obsolete inventory and cutting less-popular SKUs, which allows the company to save costs by reducing third-party storage locations. Another initiative is reducing waste. In the past, 6% of their products had defects or needed reworking. Their goal is to reduce this to less than 1% over the next three to five years.
Rocky Mountain also plans to simplify their manufacturing. Products with more variability typically add bottlenecks to their operations, and their plan is to move their manufacturing to third parties, so it can implement a leaner operating model.
The chocolate maker is also increasing their delivery frequency. This helps locations reduce the amount of inventory they need to store, and ensures product freshness. Rocky Mountain is instructing franchisees and store managers to order products they expect to sell within two to four weeks.
The last part of the plan involves boosting e-commerce sales, from the current 2% of revenue to 10%. They will outsource logistics for online orders to take advantage of the technology and efficiencies of distribution centers without the need for heavy investments to get them up and running.
1. Chocolate maker to streamline warehousing, transportation in cost savings push, Supply Chain Dive, June 2, 2023. Accessed June 13, 2023.