Procurement 101Food & Beverage: Avoid a Supply Chain Horror Story With Adequate Procurement Software

Last Updated: 14 May, 2020

With the food and beverage industry constantly evolving, it’s essential for businesses in this field to maintain up to date procurement departments in order to stay ahead. This translates to solid customer service, the key to success in such an industry. For example, what happens to a business when they can’t meet customer expectations due to a mishap in their supply chain? Not only will an issue as such turn a customer away from conducting future business, but word of mouth also spreads causing further harm. Below we’ve gathered a few supply chain horror stories experienced in the food and beverage industry that could be avoided with the proper procurement software.

 

Unable to Adapt to New Suppliers

When your supply comes from international suppliers, it’s crucial to have an adequate system in place that reduces any potential of error. Erin Andrews, Founder of Indi Chocolate, discusses the struggles she experienced with deliveries and production in her chocolate factory.

“Sourcing great tasting beans to make chocolate is no easy task. Cacao grows along the same swatch around the equator (20º north and south) where coffee grows, but generally at a lower altitude. Bumpy dirt roads through the rain forest, if they even exist, make getting to farms and beans out difficult at best.

“Being an artisan chocolate maker with a chocolate factory behind glass for all to see in Seattle’s iconic Pike Place Market makes deliveries and production even trickier. 

“Since storage space is limited and expensive in Pike Place Market, finding a way to receive smaller quantities just in time is necessary. Smaller and more frequent shipments are more expensive.

“I thought I had come across a nearly foolproof way to get better control of our supply chain by partnering with a larger artisan chocolate maker who could afford to bring in containers of beans at a time. They had the storage space to keep our beans until we were ready for the next shipment. This was both convenient and less expensive than directly shipping smaller quantities around the world. A win-win for both companies when we went in on bean buying together as well as for the cacao farmers we were working with.

“We were getting our beans delivered timely on a pallet jack that could be maneuvered so the beans are stored right next to where they get roasted. It was easy, convenient, more cost-effective and set up well ergonomically.

“It was a great solution until we got a phone call that the larger company we were working with was going out of business and selling the property where our beans were being sold. All of a sudden, we were getting all of the beans at once.  And to top it off, when the shipment arrived, the bags weren’t properly sealed and we literally spilled the beans as they were being unloaded from the truck in front of our chocolate factory as the crowds walked by.

“We did our best to patch the open bags, secure the bags on the pallets and move the beans towards our factory. The beans seemed to be overflowing everywhere and we needed to start making chocolate quickly. 

“Not only did we have a lot of beans all at once, but we also did not have the variety of bean origins (and thus types of chocolate bars) we normally have. 

“We have been making a lot of chocolate with these beans and have reduced the number of different origins we have in stock. As a result of all the beans coming at once, we’ve had fewer cacao sourcing trips until we have the capacity to bring in more beans again.

“We’ll be relooking at our supply chain again to figure out how to solve these same problems once again.

“With the travel restrictions from COVID-19, having a bit of time before we need to source more cacao beans isn’t the worst scenario.”

In a situation such as this, the implementation of up-to-date procurement software could have made this transition much smoother. As cocoa specifically is already in short supply, it is crucial to reduce any opportunity for waste and to keep operations streamlined.

 

Breakdown in the Communication System

The lack of effective collaboration across a supply chain creates opportunities for product mishaps including goods arriving late, items spoiling in transit, products being rejected, or otherwise. Jamie McConnell, Owner at Banditos shares his struggles with vendor communication. 

“The biggest supply chain challenge for me is the breakdown in the communication system from ordering to delivery, which has only been escalated by the effects of COVID-19.

“I place multiple orders a week, month, and year, and there have been many times where orders were accepted, yet issues arose upon delivery. This has left us to fix problems on the fly that could have been addressed during that window. For example, if the supplier had notified me that they could not get me ground beef on Friday morning as promised, then I could make alternate plans to get some and have it at the restaurant before service.

“Finding this information out late at 4 PM when our 1 PM order finally arrives as we are going into service leaves us minimal ability to rectify this issue. Alternate suppliers can no longer deliver because it’s too late. Food distributors are no longer open. There is no way to fix the problem until the next delivery day, which is sometimes a couple of days later, and could also risk our items being delivered late again.” 

Companies that continue to operate without a proper procurement system in place are likely to struggle with issues such as overspending, wasted time, and poor quality suppliers, which lead to a dip in their momentum. Increased communication will create a better environment for staff and customers alike.

 

Limited Stock Options Available

It can be stressful for restaurant owners when their inventory doesn’t arrive on time or options are limited. When you’re lacking inventory, this might cause requests and POs to be duplicated, contributing to a cycle of wasted time, wasted money, and wasted products. Matt Louden, Co-owner at Prohibition Public House provided insight on his own inventory struggles.

“With our specific liquor licence, we are legally not allowed to carry or stock any alcohol that our provider does not offer. Unfortunately, there have been many instances where they have had limited stock options available, or the items we needed were not available at all. This is an issue for a couple of reasons. First, it limits the creative approaches we can take with our mixology — We simply don’t have legal access to purchase some of the really cool botanical spirits and ingredients on the market. Also, if you don’t have the proper stock to make a specific cocktail for your guests that you do offer, you cannot sell that drink at all.”

When you face restrictions from your supplier, this not only leads to a lack of variety for your customers but also creates uncertainty within your supply chain. With a streamlined procurement process in place, your business will gain a competitive advantage and further reach consumer expectations. 

 

While you may be struggling with an unreliable or inconsistent supply chain, this doesn’t have to be the case. The appropriate procurement software such as ours at Tradogram gives business owners in the food and beverage industry access to increased transparency, communication, and confidence across their supply chain. If you’re ready to say goodbye to wasted time and inventory, spoiled or rejected products, duplicate orders, and more, contact us at Tradogram today and we will deliver a solution catered to your individual needs. 

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