When it comes to deciding when to improve your supplier relationships, we can turn to a well-known proverb: the best time is yesterday and the next best time is today.
I feel we are all increasingly familiar with the current avalanche of macro-economic challenges facing us all both as consumers and as businesses (they have also been well documented in our recent blogs Ukraine and the wider supply chain impacts & Compound benefits of cost control). What is becoming abundantly clear is that better procurement and more collaborative working is something that is becoming more crucial for businesses and can even help build in resilience into companies working in food service.
According to the latest Responsible Purchasing Observatory Barometer, 59% of purchasing departments have made improving supplier relationships an essential part of their responsible purchasing process. Historically if you were looking for a product or service you would consider a range of supplier options. You would then likely choose the offering that delivers the best quality and most competitive prices, at that point in time, or you may base your selection on suppliers that are local to you.
Whatever the deciding factor, once those suppliers are on board it is very easy to become complacent and to operate solely within those comfortable circles. Later down the line however, you may discover the agreement you have now, isn’t quite what it was when you first signed up to it. Suddenly, you’re regularly overspending and losing control of your costs.
As food scarcity and inflation continue to be problematic to secure supply chains, this can raise a number of uncomfortable challenges. Supplier trends we are observing currently within our client base include:
- Minimum order values are increasing
- Delivery days are being restricted
- Buyers are having to be more flexible with their suppliers to allow more frequent price changes
- Recipes are being reworked to accommodate the products their suppliers can deliver
- Delivery charges are being considered by suppliers
The reality is, businesses need to widen their supplier networks, both to expand their range of purchasing options, and to boost their powers of negotiation. Hard questions you need to face include: you break away from your usual suppliers and shop around more? Will the quality you receive be the same if you choose a less expensive supplier? What about food shortages, delivery times and supplier reliability? Should you consider more national suppliers that are more cost effective or operate a larger network of delivery drivers? These are all questions businesses are wrestling with right now.
Organisations can get far more out of the relationships they have with their suppliers by adopting fit for purpose technology. At Zupa we support our clients by expanding the purchasing range for businesses and providing them with full product purchasing lists in one place – and with live pricing. This means our clients always know the prices they are paying are up to date and can compare easily – and in real-time between their range of suppliers. Having access to this information also helps businesses to consolidate the products they buy. Just as importantly in these current times, they also get full insight of stock availability.
Maintaining robust supplier relationships is vital for future proofing your business and your suppliers will want to retain your business. If you are able to present your suppliers with a single source of truth (in terms of costs), there will be a much greater opportunity to negotiate, and you will have set a benchmark for communication and mutual cooperation for the future too.
Hospitality businesses can ill afford to leave any stone unturned when it comes to cost control, service quality and inventory management. We are witnessing first-hand the strength and resilience businesses build into their operations when they prioritise supplier relationships.
Image: Krakenimages, Unsplash