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1. Are you in position to profit from the current imbalance in supply and demand?
The race is on to bring pounds of meat and poultry to market as a shortage in supply continues into 2015. Companies bringing the most pounds to market the earliest in this business cycle stand to profit the most. They should be able to gain market share and strengthen their balance sheets. If your company is going to be slower than competitors in increasing production, you'd better find other differential advantages.
2. As meat and poultry supplies catch up with demand in the next 12 to 18 months, how will your business strategy continue to work?
Now is the time to prepare for the coming downturn in profitability. As they say, the cure for high meat and poultry prices is high meat and poultry prices. The cure is already in effect and working. Similarly, the cure for low grain prices is low grain prices. Now, then, is the time to prepare for tighter margins. This could mean adjusting market focus or product mix. What’s more, lowering production costs during profitable periods is a smart move.
3. How are customers’ needs going to change between now and the end of 2015 or 2016?
Your customers might be focused on getting supply for now, but what will be their focus as supply catches up with demand? Poultry companies able to anticipate their customers’ future needs and work now to be in position to fill those needs are the companies that will survive and thrive. What customers most want are suppliers who propose well-thought-out new products and business solutions.
4. What strengths will you profit from in 2015 and 2016?
Where are you investing in your business today? If your investment is mostly, or solely, about gearing up productive capacity, you may be out of position by 2016. Do you have the right people with the needed talents in place for 2016? They need to be in position now, working on new products and solutions for next year and beyond. Also, are you already invested in technology for greater efficiency and/or production flexibility when margins narrow and customers become more selective?
5. What could disrupt your industry?
Game-changing events often are not foreseen but are known business factors. The age-old disruptor of the poultry business is the weather (influencing grain supply and prices, growing conditions for poultry flocks, transportation and market access, etc.). Another disruptor is disease. Avian influenza is rearing its head again in certain countries outside the U.S. Disease, however, knows no borders and can shut down global trade overnight. Then, there is the threat of pure old governmental tinkering. Might changes in biofuel mandates crop up in the next presidential season? Risk management is an essential part of strategy in the poultry business.