It’s a new year, full of new opportunities and challenges. Among your life-improving resolutions to lose weight, learn Spanish, and take up meditation, you can add reassessing your supplier network. Time to see who was naughty and who was nice in 2022. 

Firstly, you must remember your suppliers, whether a local farmer or a multinational conglomerate, are for profit businesses. They exist to make money and are entitled to do so. They too have employees and rent to pay. This fact doesn’t rule out the possibility of building a mutually beneficial relationship.

How Do I Make My Supplier a Partner?

Suppliers will never truly be a partner unless they invest in your business, but they do have a vested interest in your success. If you are not profitable, you cannot pay them. The busier you are, the more they get to sell you. In other words, your suppliers want you to succeed. Read on to learn how to best navigate the unsure waters of varied interests. 

Understand the Needs of Your Supplier

  • Pay your bills on time.

Your supplier needs to be able to count on payment as you need to be able to count on product Communicate if you are running late.

  • Be consistent in ordering.

If you purchase regularly, your supplier can better manage inventory which helps both of you. Communicate menu changes and significant business changes that you expect.

  • Improve your drop size with your supplier.

There is a cost to deliver that is fairly consistent. The higher quantity of product suppliers deliver, the more they can make on each delivery. This means that they can also lower prices because they are delivering more efficiently.

  • Reduce the number of delivery days in a week.

Speaking of efficiency, the number of deliveries per week can improve relationships with suppliers. According to this text from Penn State, “If the foodservice operation is large enough, the supplier may be willing to make frequent deliveries, but will usually pass added expenses on to the buyer as the price for the buyer’s inefficiency.” We all like the idea of six day delivery but in most cases, the product is not any fresher. The more perishable a product, the greater frequency required. Therefore combine orders of your dry and hard goods into fewer deliveries. 

Follow the Rules for Buying Well

  • Capture the best deals. 

Work with suppliers and distributors to find mutual wins. With vendor expertise, you can leverage focus items, limited-time products, and unbranded products to secure better pricing and set your operation up for success. 

  • Never share a price with a supplier.

It is common for customers to share competitors’ pricing with suppliers when trying to secure a lower price. However, this doesn’t work in the big game. The last supplier you call will likely have the lowest bid–but not necessarily the lowest price. You don’t know where the bottom is using this strategy. Instead, try this phrase –

“Give me your best price–the price at which you’re willing to lose the business if you need to go lower.”

By doing this, you get a single bid and don’t waste time going back and forth. As the supplier becomes used to not being able to haggle, they will become more aggressive with their bids. For more practical strategies, be sure to check out Top 5 Purchasing Strategies to Save with Suppliers.

  • Consider various SKUs and specs. 

Suppliers have different economics and offerings based on SKU and spec. You will have a better understanding of what is possible by viewing multiple suppliers. However, you must remember the point above–Do not reveal too much. 

  • Know you don’t know what you don’t know.

Suppliers have different buying power for different items. Based on their portfolio of products and customers, one company may truly have an advantage over another in the cost of the product. It’s then your job to mitigate their markup.

Learn, Learn, Learn

There are many available resources to help you understand what is happening in the world–factors that are currently or soon will impact costs. Granted, between Covid and inflation, historic trends have been difficult to follow. Still, information is power. Here are some ways to amass your own: 

  • Review seasonal charts for availability.
  • Know supply and demand as this is always a factor in pricing.
  • Monitor market reports.

Most suppliers offer market reports on their websites. These typically cover all categories of commodities.

  • Monitor world events.

Even if you only run one or two properties, world events such as weather and war can play havoc on a marketplace. Most of these events take time to affect your market, but by expecting what may happen you can have a plan in place when they do. Operate ahead.

  • Understand the market. 

Even with all these factors in play, there will still be times when prices rise due to greed rather than market conditions. Check out this example from The New York Times: 

“A year ago, a bag of potato chips at the grocery store cost an average of $5.05. These days, that bag costs $6.05. A dozen eggs that could have been picked up for $1.83 now average $2.90. A two-liter bottle of soda that cost $1.78 will now set you back $2.17.

Something else is also much higher: corporate profits.

In mid-October, PepsiCo, whose prices for its drinks and chips were up 17 percent in the latest quarter from year-earlier levels, reported that its third-quarter profit grew more than 20 percent. Likewise, Coca-Cola reported profit up 14 percent from a year earlier, thanks in large part to price increases.”

Keeping your finger on the pulse of all things procurement will give you the best chance of successfully navigating the field, sprinting toward your allies and dodging any landmines that might be in your way. If you find yourself looking for new suppliers, be sure to check out the list of vendors Craftable integrates with here. 

Ready for Saving 

By implementing these strategies, operators can boost their purchasing systems and ensure success in the new year. And there’s more where that came from! For individualized guidance, book a 15-minute consultation with Craftable and define actionable improvements to lower your spend across all purchases, free of charge. Start saving today.