HARRISBURG, Pa. -- The National Frozen Food Association here is soliciting funding for a study of the profitability of frozen foods.
One intention of the proposed study, titled "Activity Based Cost Management for Improved Understanding of Frozen Food Profitability," is to provide retailers with a stronger appreciation of the accurate cost/return of promoting frozen products, said NFFA officials.
In addition, the study would highlight specific win-win vendor practices and policies to improve efficiencies and profitability for manufacturers, retailers and brokers, NFFA said.
In a pamphlet distributed to inform its members of the planned research, NFFA said it hopes the research will help to determine the overall level of productivity of the frozen food category, and to compare category profitability of selected vendor and retailer practices and distribution methods.
The mailing, seeking contributions to support the study, was distributed in late January. Nevin Montgomery, NFFA's president, said although the association has already received some commitments, he doesn't expect most contributions to arrive until the end of this month.
"If it's going to happen, I would say we'll have the funding in place within the next two months. Then we'll proceed in getting things set up, hoping we'll have it done by the fall," Montgomery said.
The proposed study, which would be conducted by KPMG Peat Marwick, would be based on activity-based cost management, which has evolved into the pre-eminent management technique in understanding profitability. ABCM is the recommended measurement advocated by the Efficient Consumer Response study to establish a common language among trading partners.
"We're just trying to keep current on the terminology and methodology being used in the industry," Montgomery said.
NFFA plans to use a five-phase approach in the study. It includes performing an ABCM analysis of four selected retailers and wholesalers with previous ABCM experience.
The approach is designed to determine and highlight the activity cost differences between frozens department categories and other departments in the store. It then focuses on "activity cost drivers" -- performance measurements that link activity consumption to activity cost. Finally, specific activity costs will be linked to the product revenue streams to calculate product and channel profitability.