Tips on how catering operators can cut procurement costs
Sponsored: Pelican, the Catering Procurement and Supply Chain Specialists, are well-placed to offer some pertinent advice
1. Consolidation of your purchasing spend
The first thing university caterers should do is to examine what they are buying, who they are buying it from and how the ordering and delivery process occurs. Perhaps surprisingly, some are unsure about these, partly because it varies in different parts of the organisation or on different sites.
Not surprisingly, in such circumstances one of the first money-saving steps that can be taken is to consolidate purchases so that better deals can be negotiated. This might include a formal tender process so that the university can get the right balance of service, quality and price. It can also provide good market comparisons as it organises purchasing from enough suppliers to know the typical price for most of the products they want to buy. This makes overpaying less likely because it is able to police over-pricing with better information.
2. Professional bespoke tender
Universities that seek the most competitive prices in the market should put their food purchases out for tender. A tendering exercise, carried out by procurement experts, will create a totally transparent and auditable process that will achieve the best market prices across all purchase categories, based on your specific needs.
The tender process also enables the university to include price hold periods within the supplier’s contract. This will allow the university to fix prices for a suitable time period, generating price stability.
A three months fixed price period is recommended for fresh produce, as this allows business operators to maintain price stability whilst also being able to take advantage of seasonal price variations (e.g. buying English salad in the summer when prices are low and supply high). Other food categories should be price fixed for six months. At the end of these price hold periods the in-house procurement team or procurement partner should measure any price movements proposed by suppliers to ensure that they are fully justified, fair and in line with the marketplace. They should also limit price increases to an absolute minimum and challenge proposed increases versus market movements.
3. Only buy products on the agreed list
University caterers need to ensure that all staff are aware which products they are able to order – i.e. buy products from the agreed contract list (using a closed list). Many organisations are charged more money because they are buying products outside of the agreed list. In many cases this can be the same product, but a different case size.
An automated system that checks products bought against the contract list is a valuable tool. Chefs often want to order special ingredients and it is always worth asking whether a good price for the extra items should be negotiated, particularly if they are to be ordered repeatedly. Using an easy to use online ordering system that can restrict the product list for staff who are placing orders is a great solution to minimise overspend on off-contract products.
4. Pay the correct price at all times
Many universities do not have the time, resources or systems in place to check each invoice product line against the agreed contract list. It is surprisingly common for an invoice price to be higher than the agreed one, mistakes which often go unnoticed unless there is a proper checking system in place.
Computerised systems that can automatically check each invoice against the agreed price to identify any inconsistencies would save businesses around 3% to 5% of the total spend on food and drink. Not to mention the time and resources if this task to be done manually.
5. Portion control, GP and waste
University caterers need to understand how much GP they are making on of each dish in order to adjust their recipe cost if needs be. Some systems will automatically work out the GP you are achieving, or alternatively, the desired GP can be entered and the retail price is calculated.
Online menu and stock management modules work together to provide accurate costing, stock usage, wastage and portion control and identify any areas where there is
a variance reported.
Pelican are Catering Procurement and Supply Chain Specialists – helping organisations to lower purchasing cost, increase their operational efficiencies, gain total visibility and control over their catering operation. For further info please visit www.pelicanprocurement.co.uk or www.PelicanPi.co.uk