Common Issues & Your Ideas

January 09, 2012

Written by: Fred Favole

Below is a blog submission from national foodservice purchasing expert Fred Favole. The purpose of providing it to localfoodservice.com, which has a high concentration of independents is to show that even LLOs (large leverage operators) face the same confusing myriad of problems when implementing foodservice purchasing programs.  It is also meant to help you think about your purchasing in a strategic rather than reactive manner. So take heart, even the bigs face top line pressure and the independents are not alone.

Clearly, outsourcing an operations, field management or menu costing mess is never advisable. However, the nature of food purchasing is that you can quickly achieve something that you can’t afford to achieve internally.

It’s possible to develop and implement a spend management solution for emerging chains in less than 18 months, with immediate contributions to the bottom-line of 5% or more. If the organization operates in multiple markets and has never developed a high-performance procurement process, the savings will be greater.

Focus on defining the areas you want to hand to a qualified consultant and really don’t do well in-house. Here are the top 5 functions that should be assigned to procurement that are typically assigned to busy multi-tasking executives:

   Vendor Qualification & Strategic Sourcing (Chef/Culinary/Owner)
   Distribution Warehouse Audits (MDA) (VP Finance)
   Freight / Logistics (Chef or not assigned)
   Bid Management / Commodity Contracting (Owner/ VP Ops / Chef)
   Increase “spend-under-management” (CEO/COO or not assigned)

During the initial clean-up process, the outsourcing firm will uncover hidden savings and look at tactics to create power-buying opportunities for your organization where there is none at the moment.

Effective and successful procurement needs to be positioned at the heart of your foodservice business, as part of your senior executive team or with their full support - otherwise you run the risk of developing a purchasing mess with prices controlled by the local market and initiatives based only on broker, distributor and manufacturer  relationships.

As top-line growth is hard to come by in the current economic climate, the opportunity to hold the line or reduce food acquisition cost through outsourcing is simply too good to ignore.

To Higher Profits!

Fred Favole is President of Strategic Purchasing Services (SPS), an industry leading consulting firm specializing in purchasing outsourcing, interim management and cost-reduction services. His contact information; e-mail: SPS@Gate.net, Office: 912.634.0030. Blog: https//purchasinginsights.blogspot.com


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'Wait Til You Hear This One'

You haven't heard it all until you've worked a career in food service.

There's the daily drama that plays out.

One plot leading to the next, and every twist and turn leading to another tale of human interaction centered around our need to provide sustenance, sometimes at a profit!

We encourage all food service professionals from all sectors of the business to contribute their war stories from the front lines of food service. Through communication we can explore our common interests and seek solutions together.