The need for foodservice executives to be confident of the acquisition cost of goods remains one the keys to effective spend management. The Sarbanes-Oxley Act of 2002 was an over-reaction to a number companies, including Foodservice Distributors’ accounting scandals which have cost every foodservice brand, supplier and distributor thousands of hours of dollars in compliance costs.
Your foodservice organization decision to audit protects your company and investors and is the #1 reason why you need an independent distribution audit service. The external auditor does not have any ties to your purchasing department, suppliers, shareholders or distributors.
Reason #2: You are contractually entitled to audit distributor prices to assure compliance with contracts and pricing practices. The details of the audit are listed in your Master Distributor Agreement (MDA). The process helps ensure that your priced order guides correct and that vendor are charging accurate pricing in compliance with contracts. It’s trust but verify when it comes to pricing. To conduct a professional foodservice distributor audit requires expertise in purchasing, product specifications, vendor pricing methods & contracting, freight and re-distribution costs, and numerous distributor prices practices like inventory valuation.
Reason #3: Improve spend visibility. An Independent audit empowers your supply-chain program, and provides solutions to operations and buying staff as the results can be reviewed and programs proved reliable. Learn first hand how a "fresh-eyes" approach can be worth many times your investment in the audit service. To achieve pricing assurance, foodservice auditors also need to perform some detection work to test if prices and charges are appropriately supported.
Reason #4 Chain operators typically don’t examine all pricing details during a standard in-house audit. Concerns about profitability challenges the distributors the avoid pricing failures in times of severe market stress. It is true that the audit process examines invoice details, contract prices and distribution margins and exceptions, however, this can be a giant step towards discovering cost-savings solutions.
You already know that most accounting firms do not understand food service or have a working knowledge of products, designation categories, sheltered income, re-distribution costs, inventory valuation methods, and other distributor practices which can impact your delivered cost of goods.
Foodservice brands are re-thinking audits and spend management programs, and you should too. When you schedule an audit with our firm you gain the respect of the supply-distribution community, and you can use the information we provide to bring spend analytics to the next higher level of performance. When you start thinking of the the supply-chain in terms of a series of linked-costs from farm to plate, you can better understand the value of an external audit.
An Audit is a Decision as well as a Solution
Foodservice brands are re-thinking audits and spend management programs, and you should too. When you schedule an audit with our firm you gain the respect of the supply-distribution community, and you can use the information we provide to bring spend analytics to the next higher level of performance. When you start thinking of the the supply-chain in terms of a series of linked-costs from farm to plate, you can better understand the value of an external audit.
An Audit is a Decision as well as a Solution
Your company is responsible for contract compliance within you supply system to assure accuracy in pricing and distribution charges. However, product pricing, transportation and distribution systems make spend transactions complex, and behond the skills of your accounting firm. The most elaborate internal purchasing systems are not adequate, and mean nothing unless the base pricing and selling margins are verified through the audit examination and documentation process.
Next Steps
You are encourages to initiate a high quality professional internal and external audit and price-compliance program to assure that standard business practices are being followed. The role of our firm or any external audit service is to be sure, one of "assurance" and validation. However, you also want the service to be proactive in the dissemination of procurement-supply chain practices that can be incorporated into you program to reduce acquistion costs.
While an independment audit is not a replacement for a complete purchasing department assessment and spend profile, the audit report and information you receive will deliver a tremendous ROI for your investment in the service.
To Higher Profits!
Fred
Next Steps
You are encourages to initiate a high quality professional internal and external audit and price-compliance program to assure that standard business practices are being followed. The role of our firm or any external audit service is to be sure, one of "assurance" and validation. However, you also want the service to be proactive in the dissemination of procurement-supply chain practices that can be incorporated into you program to reduce acquistion costs.
While an independment audit is not a replacement for a complete purchasing department assessment and spend profile, the audit report and information you receive will deliver a tremendous ROI for your investment in the service.
To Higher Profits!
Fred
Fred M. Favole is Founder & President of Strategic Purchasing Services, a firm specializing in procurement supply-chain outsourcing, interim managment, risk assessments, and distribution program audits. Fred's contact information: p: 912.634.0030, e-mail: SP_Services@bellsouth.net. or connect on LinkedIN.
