By directing efforts toward cost reduction and supply planning, chains can significantly impact profitability. Yet many companies operate without a senior procurement professional, or fail to see a clear relationship between cost reduction or cost avoidance and overall operating income growth! Their Kangaroo spend management style is to pocket any immediate savings, and then hop between suppliers seeking the next short term opportunity.
Most client companies that we consult with fall into this "bare bones" category. They are multi-unit organizations with low procurement staffing levels, that do not achieve even average savings because they have not developed a spend under management plan. This points out the need for greater balance between financial and culinary expectations to make a bottom-line impact.
Companies can improve effectiveness and achieve year-over-year savings through hard-dollar cost reductions without adding to staff by implementing strategic sourcing strategies, such as spend aggregation, and product rationalization to reach a balance between menu and financial objectives.
The leading chains have trimmed staff and achieve higher savings at the same time by raising the profile of purchasing, allowing other departments like culinary, marketing and operations to take advantage of the expertise of consultants or purchasing professionals. This approach allows emerging chains to level the playing field with the Fortune elite when they implement product selection practices more aligned with cutting-edge purchasing supply-chain management.
The companies that understand spend management have already transformed back-office purchasing functions into executive buying teams that not only hold the line on costs, but improve their organizations chances of staying profitable.
To Higher Profits!
Fred
Fred Favole is Founder / CEO of Strategic Purchasing Services (SPS), a consulting firm specializing in purchasing dept. outsourcing, interim management & distribution progam (MDA) audits. His contact information; 912.634.0030, e-mail:SPS@Gate.net Blog: http://www.purchasinginsights@blogspot.com
