Compete Using Strategic Sourcing To Achieve Goals

Foodservice purchasing experts focus on creating  a competitive advantage by sourcing products “outside of the box” typically created by standard supply-chain models. Ask any executive in major chain procurement what separates their performance from emerging chains, buying groups or distributor buyers and the answer may surprise you.

Their reply is likely to place saving money lower on the list.  After all distributors, suppliers and brokers always offer the best overall product solutions for the business, right?  On the other hand, we must consider that distributor account representative must maintain company earned income, brokers earn commissions selling products in the distributor' warehouse, staff buyers have limited sourcing and culinary experience, and GPO's (group purchasing organizations) partner with lead suppliers to earn money and offer  members a limited number of brand alternatives.    

For foodservice sourcing to be truly strategic, it must go outside of the supply-box created by these restrictions. A world-class process brings value to the organization in many ways including saving money; the foremost of which is establishing a direct relationship with suppliers that are committed and capable of contributing to profitable growth. 

Here are 5 strategic sourcing goals used by SPS in managing chain purchasing and providing chef services:

Goal #1: To reduce risk. The brave new foodservice world requires that buyers understand how to compete in the international marketplace for proteins and grains once available and affordable in the U.S.A. 

Building your menu based on being able to consistently buy certain imported seafood species and beef sub-primal cuts or chicken wings at affordable prices can be risky business. Strategic sourcing enables your company to sustain a continuity of supply, quality and price, even in the face of the unexpected markets and supply disruptions.    

Goal #2: To improve supplier performance. Reducing the delivered to distributor unit price on your order guide is nice, but meaningless if you don’t hold suppliers to formal product, specifications, and distributors to on-time and complete deliveries.  Not to mention quality defects or changes in product yield that affect your business.. Strategic sourcing is only truly successful when you can achieve a true cost reduction and improve distributor and supplier performance. 

Goal #3: To drive profits to the bottom-line.  Managing cost by controlling the landed cost of goods to your distributor the first step in the process. Transition from distributor or GPO controlled center-of-the-plate purchases and you can avoid the projected 3.5% food price increases through the end of the year.  Then, hire a professional to contract directly with strategically selected suppliers; then maintain high-performance standards by levering total purchases and managing future commodity costs.

Goal #4: To bring in innovations from the food supplier base. In today's competitive restaurant and hotel business you need a constant flow of new sources of supply and options to release the full capabilities of your culinary and purchasing team. Suppliers can be a great resource only if you are selecting qualified partners world-wide from “outside” the box build by many links in your supply-chain.  Start to recover your potential through sourcing and watch your Culinary-Purchasing team ROCK.

Goal #5: To support the organization's social responsibility goals. Today’s operators must support green, healthy, diversity and other social responsibilities; these principles can be incorporated in your strategic sourcing plan and services like SPS can help move your organization towards those goals. 

Discover the principles of the strategic purchasing process and start seeing immediate benefits. Empower your organization to exceed expectations by out-SOURCING and out-SELLING the competition.   

To Higher Profits!   Fred                                                                                                                                                                                                                                                   

Fred Favole is President of Strategic Purchasing Services (SPS) and Founder, Chef Support Services, a foodservice consulting firm specializing in outsourcing, culinary support, and spend management services. Fred at (912) 634-0030, email: Fred@Strategic Purchasing Services.com 

Strategic Sourcing Makes Menu Making Easier

How many times do you wish you had extra professional staff?

Chef Support is a unique program offered by America’s most experienced purchasing firm to address the product challenges faced by corporate chefs and menu professionals.

 

Our service provides real-time access to sourcing experts that use decades of foodservice experience to locate the exact product you need, while handling logistics from farm (or plant) to table.

 

Quickly locate a winning L.T.O. item, replace high cost protein suppliers, expand your CORE items bid list, select #1 product overstocks, or simply discover your next great supplier.

 

Together, working with Chef Support Services (CSS) you will quickly transform the sourcing process into a flexible, powerful and profitable culinary resource. When you select products “outside-of-the-supply-box” without the boundaries imposed by distributors, GPO's, brokers, buyers or sales representatives, you unleash the true potential of your talent and menu. 

 

Menu Making Made Easier  w/ No-Out-Of Pocket Expense.

Contact us to see how we can help you!

 

Office: 912-634-0030

Fax: 912-634-0031

Email:  info@strategicpurchasingservices.com 

Fred Favole, CPO (912) 399-1427

Dan Patterson, VP Services (678) 315-2389

Catherine Gruber , Manager (912) 623-0030

                                                                                                                                                                     

Wine Selection Tips From The Foodservice Golden Age

Only in the last few years have I started to appreciate what the legend of Creighton Churchill  ( "The World of Wines " &  " A Notebook For the Wines of France" ) has meant to the foodservice industry.  He is a forgotten pioneer in the art of wine selection and promotion.   

During my brief encounters with Creighton in the mid-1970's, during the heyday of the airline industry (Jumbo 747s, piano bars, 1st class wine tasting, carved roast beef, King crab and  wonderful deadhead flights from JFK to Paris or Puerto Rico ).   We were both always high;  I worked for American Airlines and was sky-high, and he was high on life and wine.  Creighton was on a mission to bring quality wine to the masses in a New York elitist sort of way, and I was a rookie F&B purchasing agent with a $115 million budget. 

Experience teaches us that potholes, or in my case “air-pockets” are to be avoided when buying and selling alcoholic beverages.  While this blog is not a story about drinking causalities, before suggesting to you how to select a wine for your table or business, it would be best if you would draw a glass of your favorite port or chardonnay, as I share a few tips and quips.      

1. Foodservice purchasing agents should not buy everything they sample.
2. Never play golf for money with a liquor salesmen
3. Deny that you have an extra set of keys to the liquor storeroom
4. Do subscribe to Food & Wine Magazine and The Wine Spectator
5. Attend the “ Pune Wine Tasting Festival ” at least once in your life.
6. Read "The Noble Grape",  by Andre L. Simone, before your visa to India expires or they outsource your job.  
7. Surprise your employees with a Hydrometer test (for alcohol contents)
8. Never buy anything but quality brands of liquors and wines (regardless of the price or free trip to Las Vegas)
9. Respect liquor controls from the Feds down through the state, county, police, health department and especially your wife.

I have always respected hotel and retail F&B executives like Don Stanczak (Interstate Hotels & Resorts) and Kevin Garvin (Neiman Marcus).  Our consulting firm has been blessed having had a business relationship with both. Their leadership and buying savvy regarding the selection of fine wines and spirits leaves a lasting impression. 

Just like my first mentor, Creighton, both Kevin and Don used to say that they could tell their managers or Chefs  “how to buy liquor and wine in five minutes – but teaching them what to buy would take five years.”

The art of tasting, however, can be leaned more quickly than selection, and this can be a very enjoyable process, especially when wine is perfectly matched with great cuisine. 

Here are the basics of wine tasting:    

• Look     (bright, clear, free of sediment, color),
• Smell   (bouquet, aroma, identify grape, nuttiness),
• Taste   (dry, sweet, fortified, “pluckiness” or tannin )

If you are new to wine selection and spirits purchasing, take a few years to watch and listen to the experts, learn how to spit professionally and try not to fall down along the journey.

To Higher Profits,
Fred

Fred Favole is President of Strategic Purchasing Services (SPS), America's most experienced purchasing firm specializing in outsourcing, and cost reduction services.  Contact Information: p: 912-634-0030, email: Fred@ StrategicPurchasingServices.com

Foodservice Purchasing Best Practices, 2

There is no doubt in my mind that thinking about MONEY first in purchasing staffing and product decisions is dangerous to the bottom-line health of your foodservice organization. Any CEO today needs to call on an armory of resources  to remain competitive and risk free; and, there must be a basis of knowledge and thinking "outside the box" to achieve measurable savings results. 

Secondly, there is a dimension of foodservice purchasing that directly links to profitability that is less measurable, but known to top professionals as the difference between acceptable and exceptional spend performance. My firm meets chain clients where they are and proceeds from there to build stakeholder value to achieve the best financial outcome over time. 
             

Here is my quick list for getting started:

High-Performance Foodservice Best Practices

1. Develop a Supply Chain Purchasing strategy in alignment with the organizations' menu, growth plans and profitability goals. 
2. Focus on the ability to connect product specifications, menu item with equipment and ideal price points. Shift your thinking from linear ( that's the Chef's job, the owner said so or the buyer makes the decision) to supply network partnerships.
3. Simplify processes, controls, and procedures - measure the results
4. Instill Total Cost of Ownership mindset and metrics from Chef to Purchasing and Operations; maintain shareholder value. 
5. Establish key Suppliers, while Improving Strategic Sourcing (beyond regional and distributor financial "walls".  
6. Focus on spend management: visibility, speed of change and accuracy of pricing – invest in resource. 
7. Correctly organize the supply chain function and recruit professionals with correct skills or outsource the process to achieve even higher performance
8. Focus on menu line item profitability to improve cash flow

To Higher Profits,
Fred

Fred Favole is President of Strategic Purchasing Services (SPS), the foodservice industry's most experienced and accomplished firm specializing in department outsourcing, strategic sourcing projects and spend analytics.  Ask Fred or Ron Bay about a solution for your business. Fred@ StrategicPurchasingServices. com, HQ Office: 912.634.0030 St.Louis Office: 636.527.3167 

Do you think about the MONEY first as Key To Better Buying?

Every food service buyer has their own “formula” for achieving the optimum from suppliers and improving end-to-end total product costs. 

However, few emerging chain organizations are able to perform a proficient analysis to benchmark costs or project  long term pricing success.

For the most part, the alignment of distributor/supplier/buyer distorts true product cost and plagues chains that work hard to leverage purchasing power. When a product selection is made from the distributor’s stock inventory and the prices are controlled by the distributor, the failure of the chain to obtain the lowest available price is usually attributable to not being involved in the negotiation process. 

How can chains expect to compete with industry leaders without an understanding of the basic “farm to plate” cost of ownership process. What’s trending today is the use of third party group services offering volume discounts and rebate recovery.

However, these services were not intended to replace centralized procurement.  Too many organizations sign-up because they want "free money" or to relieve the over-worked (multi-tasking) executive handling the purchasing responsibilities part-time.  These services can actual add to the acquisition cost of goods because they prevent the chain from developing direct supply relationships.  

Does it make sense to trade $100,000. In salary and benefits, plus 30 food basis points, when a professional outsourcing firm like SPS or experienced purchasing staff can generate, on average,  7% savings contribution year after year?  

Additionally, the structure of the relationship between the rebate service and end-user chain does not foster the highly flexible buying processes with fast reactions to commodity market changes and seasonal buying opportunities..the proven hallmark of world-class procurement.  

It is not the mission of BuyersEdge, Entegra, Foodbuy, and VGM Client Rewards to develop your current or future supply partnerships, plan sourcing initiatives or manage high-volume commodity contracts.   

It is, however, the responsibility of your purchasing executive and specialized firms like Strategic Purchasing (SPS) to develop current and future suppliers and position them to provide the highest performance at the optimum cost levels for your business. 

You can start by thinking about the money last not first.  Start by following proven industry best-practices in building and managing your purchasing supply-chain. 

To Higher Profits!

                                                                                                                            Fred 

Fred Favole is President of America’s most experienced purchasing firm for operators who have no internal procurement department and chains wishing to outsource the function for greater savings and overhead reduction.  Contact Information: 
Email:  Fred@StrategicPurchasingServices.com   Office: (912) 634-0030