6 Best Practices for Improving Your Sourcing Strategy
Many restaurant chain operators have a manual process for sourcing new products, identifying new vendors or for evaluating market pricing levels. Manual processes not only drive extended sourcing timelines, but also prevent buyers from being proactive in their strategy.
Because the sourcing process is complex and time consuming, operators may only run sourcing events when looking for new suppliers to provide new products – at ArrowStream, we believe this causes chains to leave money on the table by not sourcing other high-spend items currently flowing through their supply chain. Through a continuous sourcing process there are strategies and best practices that most chains can deploy to save time and lower costs.
Here are 6 best practices to add to your sourcing strategy:
1. Establish a plan by creating a Sourcing Calendar
By having a calendar dedicated to sourcing, it allows operators to plan ahead and turn a manual sourcing process into a repeatable process. By being more proactive, you can give yourself plenty of lead time before a contract expires to assign internal resources to the sourcing event and to assess multiple suppliers. This is especially important if an incumbent supplier doesn’t retain your business, there is then enough time to get samples and approve a new vendor’s product.
2. Run a sourcing event to validate the best fit for your organization
Validate that your current supplier is the best fit for your organization, whether that’s based on price, quality or service. Although operators and suppliers work to establish trust, it’s still vital to verify that they are the best supplier for your organization and to test the market to ensure you’re getting a fair price, or the best quality or service.
3. Invite several suppliers to participate in sourcing events
When running a sourcing event, it’s important to invite numerous suppliers. This method will ensure you have enough competition to validate the suppliers that are the best fit for your organization. Finding new suppliers can be tough, so having access to a foodservice supplier database will not only save time, but ensure peace of mind that you’re inviting a verified supplier who works in the restaurant industry.
4. Round up non-contracted items
Put items that aren’t currently contracted under contract in order to create a standardized product for all restaurants and keep pricing consistent across the system. Studies have found that the largest savings from sourcing events don’t come from the “center of plate” items but rather the less critical items and can often yield large, unexpected savings simply since they have not been focused on.
5. Limit the number of bidding rounds
By running too many bidding rounds on a sourcing event, participating suppliers may feel like you’re trying to run the price down, which can damage the trust between the supplier and your organization. Instead, set a limit on the number of bidding rounds and focus on your goal for setting up the sourcing event, which may not always be to receive the lowest price.
6. Consider a sourcing tool tailored for the foodservice industry