High-performance food procurement conducted in the face of rising commodity prices and limited supplies, requires the awesome daring of Indiana Jones with bid strategies and analysis that would be the envy of margin day traders.
You can use different approaches to offset the coming Q4-2012 price increases and try buy strategies that your distributor, broker or supplier won’t talk about.
-Start by paying attention to commodity markets (example: corn prices drive feed cost for chicken and cattle resulting in higher grow-out costs)
-Develop new sources of supply so you have options; and can outsmart the competition for better prices!
Know where you stand in the pecking order.
You can quickly determine that you are not in cue for great prices if the broker offers a rebate only program. You are after a price discount not a grocery coupon! Demand a discounted price (also called a deviated price; in other words, the price quoted to you in return for committed volume is lower than the suppliers published price and distributors landed cost.
Avoid awarding bids to the lowest bidder.
If the price term is the shortest, move on to the next lowest bidder. The critical end-of-year pricing or contracting period establishes your price base for 2013. Start thinking in terms of cost-avoidance versus immediate savings for the next 12-18 months and you’ll be ahead of the pack.
If you bundle purchases you must gain a price concession.
To stay even with the market (avoid price increases) make sure that if you add more products to the single source program, that you receive an immediate price concession or extend price term.
If the supplier that has all of your poultry, produce, beef business thinks he owns your business, deconstruct those purchase bundles and focus on reducing cost of the individual items to drive savings; then return to the best single source supplier in 6 months and ask for a long-term price to avoid the coming increases.
Don’t freak out if your current supplier jumps your price.
Do check the price history for the product and prepare for you next meeting with the supplier.
Remember, it’s typical for suppliers in tough markets to lean on current customers for price increases, while signing up new customers are "lower prices". Don't accept the increase too quickly, work to slow the negotiating process.
If time permits, schedule a "vendor day" and invite your distributor, specialty brokers and salesmen to present product; the supply community will quickly get word to your current supplier, who I guarantee will ask for a meeting.
Discover how you can switch from distributor label products to national brands to save money!
SPS clients quickly find out how much money they leave on the table when we conduct a distribution price assessment or complete a formal program bid.
Your objective is to work around the sheltered income programs that manufacturer’s offer to sellers. This can be accomplished by taking bids and comparing “like-to-like” items on a spreadsheet and by negotiating directly with the manufacturer for your own private label program. The savings will range from 5% on groceries to $.25 per pound on proteins.
To jump-start your power-buying program, I recommend extending pricing terms with current suppliers through Q1-2013. Then, during the next few months of the new year conduct strategic searches for new local suppliers with a significant retail presence willing to sell to food service.
To Higher Profits!
Fred
Fred M. Favole is Founder & President of Strategic Purchasing Services (SPS), America’s most experienced foodservice purchasing firm. Together with Ronald Bay, Managing Parnter, SPS services include: dept outsourcing, supplier & distribution bids, warehouse program audits and new product development. Fred's contact information: 912.634.0030, e-mail: favole@gate.net Ron can be reached at; R.Bay@SBCglobal.net, 636.527.3167
Insights takes you inside the world of professional food-service purchasing. The author prepares you for negotiation success, offering tips, tactics and strategies that guarantee bankable savings for your food service business. Never overpay again!
Saturday, August 11, 2012
Friday, August 3, 2012
How To Feast On The Import Boom!
For all of the professional buyer “food fanatics” out there, you can now buy a symphony of favors from worldwide sources that deliver exciting products to your foodservice organization. U.S. food imports soared to a record $108 billion last year; most of these products were purchased online, from gourmet groceries or specialty foodservice distributors.
Despite the fabulous market potential and variety of products available to today’s foodservice buyer, the great majority of restaurants chains do not import products or stretch their food imagination to find interesting foods and ingredients. Fortunately, you can shop the world markets online, or attend fancy food shows (San Francisco and New York shows are the best!) to globalize your recipes, sides and menu offerings.
Our firm imports products from the Middle East, Italy and Asia, for exciting new emerging chain clients that have a mission of bringing the delicious flavors of “home” to America. When you next visit Denver, stop by Alon Mor’s, “ Garbanzo Mediterranean Grill " You gotta love these guys!
In addition to making sure that your café, bistro, hotel, cafeteria or food truck is the epitome of culinary hospitality, you will also be cash proofing your menu for future profits by offering authentic tasty cuisines such as; Lebanese, Indian, Greek, Korean, Japanese, and my all-time favorites, Mexican, Thai, and Italian.
One of the most important overlooked duties of the modern foodservice buyer has is to research markets for new products and develop strategic sourcing initiatives to support the success of their foodservice organizations.
Most restaurants feature menu cycles, promotional items, daily specials or the layout of the menu allows for the insertion of a new item. A curious buyer looks beyond the horizon of current menu items – this makes the work satisfying and challenging.
To Higher Profits!
Fred
Fred Favole is Founder & President of Strategic Purchasing Services, America’s most experienced purchasing firm, specializing in outsourcing, commodity management and new product development. His contact information: P: 912.634.0030, e-mail: ffavole@gmail.com or connect on Linked IN.
Despite the fabulous market potential and variety of products available to today’s foodservice buyer, the great majority of restaurants chains do not import products or stretch their food imagination to find interesting foods and ingredients. Fortunately, you can shop the world markets online, or attend fancy food shows (San Francisco and New York shows are the best!) to globalize your recipes, sides and menu offerings.
Our firm imports products from the Middle East, Italy and Asia, for exciting new emerging chain clients that have a mission of bringing the delicious flavors of “home” to America. When you next visit Denver, stop by Alon Mor’s, “ Garbanzo Mediterranean Grill " You gotta love these guys!
In addition to making sure that your café, bistro, hotel, cafeteria or food truck is the epitome of culinary hospitality, you will also be cash proofing your menu for future profits by offering authentic tasty cuisines such as; Lebanese, Indian, Greek, Korean, Japanese, and my all-time favorites, Mexican, Thai, and Italian.
One of the most important overlooked duties of the modern foodservice buyer has is to research markets for new products and develop strategic sourcing initiatives to support the success of their foodservice organizations.
Most restaurants feature menu cycles, promotional items, daily specials or the layout of the menu allows for the insertion of a new item. A curious buyer looks beyond the horizon of current menu items – this makes the work satisfying and challenging.
To Higher Profits!
Fred
Fred Favole is Founder & President of Strategic Purchasing Services, America’s most experienced purchasing firm, specializing in outsourcing, commodity management and new product development. His contact information: P: 912.634.0030, e-mail: ffavole@gmail.com or connect on Linked IN.
Saturday, July 21, 2012
Do You Value What You Buy?
Buying is a highly specialized job. Not just anyone can do it, many try.
Today's foodservice buyer must know not only a lot about the products he purchases, he must know the commodity markets, bid procedures, negotiating techniques, how proteins are processed, and the seasonal availability of all products (determines both price and quality).
The job involves planning, forecasting, organizing, and a good buyer never stops learning, always seeking to understand menu applications and to update knowledge. The lost technique of value analysis can improve your product selections and bottom-line profits.
The idea is to precisely define menu and purchasing needs and buy products that best satisfy them. Value is based on quality and price and is often expressed in a business formula dating back to when I started in foodservice. (btw-fresh Dino wings were my favorite, usually ordered 14DN Choice Avisaurus!)
It's Your Money - Here's the Formula!
V = Q/P. If the price (P) increases but quality (Q) doesn’t, value (V) is less. Of course, if Q increases but P does not, then V increases. The idea is that it’s important to judge value and you can’t do that if you don’t recognize value. You can learn to judge value by keeping records, checking the dumpster, consulting with peers, actually talking to waite staff and of course consulting with the operations and culinary group.
Value analysis can be product yield or case pack weight; for example, maybe you are not selling enough chili to warrant buying a #10 can, which means changing to a #303 at a slightly higher price, represents a better value.
Do you always require #1 tomatoes for back of the house prep/recipe items? Have you compared pickle slice counts (yield) from distributor label and brand products? Are you paying off your juice machine, custard maker, waffle irons, roll-towels dispensers and coffee equipment by adding to the price of the product?. Do the math and you may find that a one-time capital investment in equipment makes more sense.
Our consulting work with the non-appropriate funds, shared services military group in San Antonio proved there is a distinct savings advantage when buying proteins to eliminate bulk, weight, and waste.We moved from carcass and wholesale beef cuts (sub-primal) to boneless, well-trimmed meat, separated to meet specific cooking needs. Remember to neogitate bi-product credits for your purchase with the supplier.
The lost art of using value analysis and technical purchasing can improve product selections and back-of-the house efficiency. It’s true that the process can really occupy more time than operations or culinary staff can devout. That’s why you should allow your purchasing staff the time to bring a systematic "value" approach to your business.
To Higher Profits!
Fred
Fred Favole is Founder & President of Strategic Purchasing Services, a firm specializing in chain & group purchasing outsourcing, staff support, distribution bids and strategic product development. He can be reached at: P: 912.634.0030, email: favole@gate.net or Follow Fred's Blog at: htts://purchasinginsights.blogspot.com
Today's foodservice buyer must know not only a lot about the products he purchases, he must know the commodity markets, bid procedures, negotiating techniques, how proteins are processed, and the seasonal availability of all products (determines both price and quality).
The job involves planning, forecasting, organizing, and a good buyer never stops learning, always seeking to understand menu applications and to update knowledge. The lost technique of value analysis can improve your product selections and bottom-line profits.
The idea is to precisely define menu and purchasing needs and buy products that best satisfy them. Value is based on quality and price and is often expressed in a business formula dating back to when I started in foodservice. (btw-fresh Dino wings were my favorite, usually ordered 14DN Choice Avisaurus!)
It's Your Money - Here's the Formula!
V = Q/P. If the price (P) increases but quality (Q) doesn’t, value (V) is less. Of course, if Q increases but P does not, then V increases. The idea is that it’s important to judge value and you can’t do that if you don’t recognize value. You can learn to judge value by keeping records, checking the dumpster, consulting with peers, actually talking to waite staff and of course consulting with the operations and culinary group.
Value analysis can be product yield or case pack weight; for example, maybe you are not selling enough chili to warrant buying a #10 can, which means changing to a #303 at a slightly higher price, represents a better value.
Do you always require #1 tomatoes for back of the house prep/recipe items? Have you compared pickle slice counts (yield) from distributor label and brand products? Are you paying off your juice machine, custard maker, waffle irons, roll-towels dispensers and coffee equipment by adding to the price of the product?. Do the math and you may find that a one-time capital investment in equipment makes more sense.
Our consulting work with the non-appropriate funds, shared services military group in San Antonio proved there is a distinct savings advantage when buying proteins to eliminate bulk, weight, and waste.We moved from carcass and wholesale beef cuts (sub-primal) to boneless, well-trimmed meat, separated to meet specific cooking needs. Remember to neogitate bi-product credits for your purchase with the supplier.
The lost art of using value analysis and technical purchasing can improve product selections and back-of-the house efficiency. It’s true that the process can really occupy more time than operations or culinary staff can devout. That’s why you should allow your purchasing staff the time to bring a systematic "value" approach to your business.
To Higher Profits!
Fred
Fred Favole is Founder & President of Strategic Purchasing Services, a firm specializing in chain & group purchasing outsourcing, staff support, distribution bids and strategic product development. He can be reached at: P: 912.634.0030, email: favole@gate.net or Follow Fred's Blog at: htts://purchasinginsights.blogspot.com
Sunday, July 8, 2012
Take The "Farm to Fork" Truth Pledge
Restaurant customers are interested in knowing where their food comes from, with an emphasis on allergens, product purity and origin tracking. They ask your staff everyday,
“ What’s in your food ? ”
SPS' mission is to become the leader in purchasing outsourcing and support to emerging chains by going beyond the typical savings and supply efficiency model.
We pledge a “farm to fork” food transparency for the products and ingredients that we purchase throughout the global supply-chain.
I believe that my profession (foodservice purchasing) is responsible to the culinary team, investors, owners, management and to the customer. That we are called to do more than manage food safety scares and chase distributor case credits for defective products.
Join us by declaring that everyone in the supply-chain must respond to the customers desire to know what they are being served. Take the "farm to fork" pledge today and pass it along!
To Truth in Food & Ingredients !
Fred
Fred Favole is Founder & President of Strategic Purchasing Services (SPS) a firm specializing in purchasing department outsourcing, product development and distribution program audits. Contact: P: 912-634-0030, email: ffavole@gmail.com
“ What’s in your food ? ”
SPS' mission is to become the leader in purchasing outsourcing and support to emerging chains by going beyond the typical savings and supply efficiency model.
We pledge a “farm to fork” food transparency for the products and ingredients that we purchase throughout the global supply-chain.
I believe that my profession (foodservice purchasing) is responsible to the culinary team, investors, owners, management and to the customer. That we are called to do more than manage food safety scares and chase distributor case credits for defective products.
Join us by declaring that everyone in the supply-chain must respond to the customers desire to know what they are being served. Take the "farm to fork" pledge today and pass it along!
To Truth in Food & Ingredients !
Fred
Fred Favole is Founder & President of Strategic Purchasing Services (SPS) a firm specializing in purchasing department outsourcing, product development and distribution program audits. Contact: P: 912-634-0030, email: ffavole@gmail.com
Sunday, July 1, 2012
Fight The Court Ruling - add foodservice purchasing skills
When working in foodservice chain procurement there are a few different skills that you should have to survive amidst the changing work environment. There’s nothing simple when it comes to change that affects you, and now that times are harder, your failure to secure new skills, on your own, can be taxing and without appeal, 'cause you may have to leave the industry after going before the courts.
- negotiation skills you need to expand your card scan file with new vendor contacts and improve your negotiation skills with business units within your organization. Remember, when the next wave of downsizing hits, every Concept Development Officer, VP of F&B and tenured Executive Chef will think they can take over the purchasing function by "multi-tasking" to greatness!
Your playing field is the court of superintendence, where accomplishments can only be second guessed, if they are not documented.
- communication skills you need to know how to build and manage relationships and be clear in your communications, or the articulation bug will stop "buck-naked" on your desk. The new foodservice work environment, in my opinion, seems to be about people taking credit for others accomplishments.
If you can actually get an executive to make a decision, you cover your tail, because if anything does go wrong, you will face the court of presupposition (aka "second guessing")
-organizational skills – you already need to follow food commodity markets, contract expiration dates, and critical product inventory. Now you must expand your skills and track distributor price-compliance, the price change impact on line item profits, and remember to keep a cost savings log!
The plain fact is you set the boss’s expectation bar too high by doing a great job, while others who contribute nothing have more face time and more influence. This forces you to prove your worth in the vulgar court of opinion.
If you are not strong in all of these areas go out and strengthen your individual skills so you don’t get blind sided by court decisions that tax your ability to work on skills, while subordinating your right to deliver great performance. .
To Higher Profits!
Fred
Fred Favole is Founder & President of Strategic Purchasing Services (SPS), America's most experienced consulting firm specializing in purchasing department outsourcing and cost-reduction services for foodservice organizations. Contact Information: P. 912.634.0030 email: favole@gate.net
- negotiation skills you need to expand your card scan file with new vendor contacts and improve your negotiation skills with business units within your organization. Remember, when the next wave of downsizing hits, every Concept Development Officer, VP of F&B and tenured Executive Chef will think they can take over the purchasing function by "multi-tasking" to greatness!
Your playing field is the court of superintendence, where accomplishments can only be second guessed, if they are not documented.
- communication skills you need to know how to build and manage relationships and be clear in your communications, or the articulation bug will stop "buck-naked" on your desk. The new foodservice work environment, in my opinion, seems to be about people taking credit for others accomplishments.
If you can actually get an executive to make a decision, you cover your tail, because if anything does go wrong, you will face the court of presupposition (aka "second guessing")
-organizational skills – you already need to follow food commodity markets, contract expiration dates, and critical product inventory. Now you must expand your skills and track distributor price-compliance, the price change impact on line item profits, and remember to keep a cost savings log!
The plain fact is you set the boss’s expectation bar too high by doing a great job, while others who contribute nothing have more face time and more influence. This forces you to prove your worth in the vulgar court of opinion.
If you are not strong in all of these areas go out and strengthen your individual skills so you don’t get blind sided by court decisions that tax your ability to work on skills, while subordinating your right to deliver great performance. .
To Higher Profits!
Fred
Fred Favole is Founder & President of Strategic Purchasing Services (SPS), America's most experienced consulting firm specializing in purchasing department outsourcing and cost-reduction services for foodservice organizations. Contact Information: P. 912.634.0030 email: favole@gate.net
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