In case you hadn't noticed, supply chains have been creaking all over the world. And, for food and drink businesses in particular, how you go about procuring your ingredients or products is something that should demand plenty of attention. The process for procurement, in simple terms, is threefold: you identify what you require, find the right suppliers, and then negotiate a deal that works for both parties.
We spoke to two people heavily involved in procuring at different levels. Abi Bhohi is founder of Moonji, a plant-based ice cream brand that sources its ingredients from across the UK, Sri Lanka and India, while Eddie du Preez is senior demand planner at healthcare and consumer packaged goods multinational Johnson & Johnson. They gave us their input on the fundamentals to keep in mind.
• Negotiating prices with suppliers is key – and usually, the larger the order, the more leverage you have. There's plenty of literature on offer around negotiation, but it's fundamental to make sure you are aware of all the suppliers that are out there. Look to renegotiate any contracts you have at least once a year.
• Weigh up the costs versus the benefits of each element that goes into your product or service, says Eddie. Then, remove anything that isn't essential and replace what you can with a better value alternative. If you're a food business, look at competitors' recipes to understand what goes into their products.
• Beware of the potential impact of any changes. Abi says, ‘I've had several experiences where I've changed suppliers and ordered a different coconut sugar and it completely changed the taste of the recipe.’
• Conduct regular analysis of your stock levels to mitigate the risks from shortages, bad weather or cruise liners blocking the Suez Canal. Inventory management software like Unleashed can help keep track of your supplies and warn you when you need to restock, says Eddie. For Moonji, Abi just uses a simple Excel spreadsheet to track when she needs to reorder ingredients.
• Set weekly reminders in your calendar to contact suppliers. This builds strong supplier relationships and can also help mitigate disaster, giving you advanced warnings of problems on their end. The trick is to always have a plan B for when things go wrong – as well as a plan C and plan D.
• Go through frequent compliance and regulatory checks. Eddie says this is particularly important if you sell or manufacture outside of your own country where the rules and regulations will be different. Useful tools from the Consumer Product Safety Commission in the US or legislation.gov.uk in the UK help check the rules and regs on a broad range of topics: from what's allowed in your ice cream to how much noise ice cream vans are allowed to make.
• Research your inputs or ingredients so they don't become a burden down the line. This can happen when prices rise or taxes are introduced by a governing body. In food and drink, taxes on alcohol or sugar are two that you might need to keep an eye on.
• Set your procurement policies down somewhere – whether that's only sourcing from ethically minded suppliers or organic-only farms. This can become another string to your bow and play a role in your messaging with your customer base.