vendor-selection criteria overall value understand how methods used to select a vendor affect an...
TRANSCRIPT
• Vendor-Selection Criteria• Overall Value
• Understand how methods used to select a vendor affect an F&B operation’s cost of sales.
• Develop selection criteria based on the operation’s needs.
• Ability to investigate potential suppliers and assess their overall fit into the operation.
• Discuss the implications of various pricing systems, ordering procedures, and credit terms.
• Describe perceived value and its relation to product quality.
• Describe the difference between AP price and EP cost.
• When “hiring” a vendor:– Review multiple applicants– Interview several candidates
• National chains provide purchasing support– Still must buy some items locally
• Some vendors have exclusive rights: your choice is to take it or leave it
• References• Compatibility/Chemistry• Size of the Firm• Location• Delivery Schedule• Storage Availability
• Free Samples• Social Responsibility• Lead Time• Returns Policy• Minimum Order Requirements• Purveyor’s Experience
• Technological Capability• Ordering Procedures• Reciprocal Buying• Willingness to Barter• Cooperation in Bid Procedures• Long-Term Contracts
• Credit Terms• Cost-Plus Purchasing• One-Stop Shipping• Standing Orders• Vendor’s Consulting Support
• References– Join organizations to meet other buyers• National Restaurant Association NRA (local
chapter)• American Culinary Federation (ACF) (local
chapter)– Ask about vendors in the area
• References (cont.)– Ask for references from vendors and call them!• Is the vendor fair, honest?• Are drivers easy to work with?• Are deliveries made on time? • How are credits handled?• Will the vendor make emergency deliveries?
• Compatibility/Chemistry– Note positive or negative vibes– Are you comfortable with the person?– Hopefully this is a long-term relationship
• Size of the Firm– Large firms• Adequate inventories• Ability to meet your needs• May be impersonal
– Small or specialty vendors• May not have large inventories• More personal service• May cost in the long run in stockouts and
shortages
• Location– The closer the better• Staff members may need to pick up items• Will-call or cash and carry buying will be easier• Ideal world – between your home and the
restaurant
• Delivery Schedule– May not always have a choice as to time• Ensure that a knowledgeable person is
available to receive delivery– Don’t use a purveyor who uses third-party
shippers
• Storage Availability– Sometimes available after a big order– Stockless purchase play – pay for the order but
receive it in small amounts
• Free Samples– Good for trying new products– May make some managers nervous – Super Bowl tickets aren’t “free samples”
• Social Responsibility– Do manufacturer’s employees receive a living
wage?– Does the vendor buy from minority- or women-
owned firms?
• Lead Time– Time between order and arrival of shipment• The shorter the better–Lets you make better ordering decisions–Saves you money in the long-run–Helps keep inventories at manageable level
• Returns Policy– Is it a hassle to get a credit to your account?– Must you pay a fee for the goods to be picked up?– Is there a restocking fee?– Best when the driver gives you a credit slip right
on the spot
• Minimum Order Requirements– Meeting the minimum order requirement• May qualify you for free delivery• May give you will-call privileges• May be more than you can do – so find another
vendor
• Purveyor’s Experience– Do you want to be a new purveyor’s guinea pig?– Financial stability is an issue here– Look for a good track record when seeking a
vendor
• Technological Capability– Accessible online?• Product availability• New products• Recipes• Current promotions
– Still need face-to-face contact• Trends• Gossip
• Ordering Procedures– Online is preferable– Avoid complicated ordering systems
• Reciprocal Buying– “I buy from you if you buy from me”• Not a good idea• Break even arrangement at best• Often supplier will take you for granted and you
will lose services
• Willingness to Barter– Tradeouts• Is vendor a member of a barter group? • A $500 dinner may only cost you $200• Food vendors don’t usually trade• Advertising account executives like these kinds
of trades
• Cooperation in Bid Procedures– Request for Quote• Good to shop around occasionally• Current vendor may be responsive• Current vendor may be secretive and not
respond• Online systems provide information
immediately
• Long-term Contracts– Some vendors may not commit to long-term
prices or product availability– Most vendors want large buying commitments
before committing to long-term contracts
• Credit Terms– Ask about• Financing• Discounts–Cash on delivery–Prompt payments–Payment in advance
• Deposits for equipment and packaging • Credit Period
Vendor-Selection Criteria
• Cost-Plus Purchasing– Definition: purveyor’s cost plus negotiated
percentage markup– Buyers have a love/hate relationship with this
process– Vendors don’t like cost-plus – they take on more
risk
• One-Stop Shopping– Also known as: sole-source, prime-vendor,
preferred-provider or single-source procurement– Easy for the purchaser– May cost more but result in labor savings
• Standing Orders– Driver leaves enough product to bring you up to
par stock– Typical items: dairy products, bread, soft drinks– Remember to watch the drivers
• Vendor’s Consulting Support– Source of product information– Networking source– When buying equipment, vendor may
help with health and/or building permits
• Value – cost of the product plus additional supplier services
• Edible portion (EP) cost—servable or usable cost
• As-purchased (AP) price—price of product on delivery
• Better to pay higher AP if it results in lower EP
• It’s really up to you• Most buyers want– Consistent product quality– Supplier services– AP price
• Look for consistency, dependability, loyalty and trust