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How Can Restaurants Benefit from Supplier Relationship Management?

Updated: Apr 26, 2023

Restaurants depend on their relationship with suppliers to achieve success – is your business leveraging Supplier Relationship Management?

Running a business depends on the relationships that you build: your customers, your franchisees, your suppliers. Every solid relationship is built upon three aspects: mutual benefit, consistency, and trust. When the foundation of a relationship is ruptured, business is halted. In return, transparency and open communication will strengthen the relationship between you and your supplier, allowing for the success of both companies.

Supplier Relationship Management (SRM) is a methodology built around your suppliers’ strengths and capabilities, and how they play into the larger spectrum of both of your businesses. It shares similarities to Customer Relationship Management, but instead pivots on the interactions between your restaurant group and a supplier. Contract negotiation, purchasing, logistics, delivery, and more all fall under the umbrella of SRM.

Does My Restaurant Need Supplier Relationship Management?

One of the biggest food service contracting mistakes that businesses make is not contracting for their required goods and services, or building out poorly structured contracts. Whether this comes from a lack of experience or knowledge, it becomes increasingly important for restaurants to manage their supply chain as they grow – failing to do so can put businesses at a competitive disadvantage.

Contract management is a critical part of running your business, and should be actively managed throughout its lifecycle to ensure that ample time is given to measure forecasted savings and whether developing new contracts would be more beneficial for your company.

In short, your contract relationships need to be constantly evaluated to reduce your Total Cost of Ownership.

The Basics of Supplier Relationship Management

Supplier Relationship Management is built on the tenant that the relationship between supplier and restaurant group is mutual. Suppliers depend on customers (restaurants) to provide goods to in order to maintain their business. Restaurants need these resources in order to feed customers. If one link in this chain suffers a shutdown, the other takes on increased risk. After all, what is a restaurant if it doesn’t serve food? Both businesses share a strategic alliance.

Supplier Relationship Management is broken down into three components:

· Segmentation – Where suppliers fall against profitability and risk exposure

· Strategy Development – How internal resources are distributed and how plans are met to meet business needs

· Execution

By determining each supplier’s contribution to your success, strategies can be developed to improve their performance, and in turn, your restaurant group’s continued success.

· Reducing costs

· Supply chain continuity

· Mitigating supply chain risk

· Increasing responsiveness

· Pricing visibility

Taking Stock of Risk in the Wake of the Pandemic

In a report by Jabil, 7 out of 10 companies reported disruptions in their supply chain. Nowhere is this more apparent than in food manufacturing. Early in the pandemic, food processing facilities, deemed an essential business, were struck first and hardest by COVID-19 – without adequate distancing within facilities, factories had to shut down temporarily to halt the spread among staff.

As production delivery and delays cascaded, businesses across every industry have been forced to hike their prices. Without the ability to seat customers indoors, restaurants have been hit particularly hard. Relying on third-party vendors to deliver food, revenue has been depleted across the board.

As vaccine distribution becomes widely available, restaurant groups must examine their contracts more carefully than ever to ensure that every dime spent is contributing to their growth. SRM provides these businesses with the resources and tools that they need to ensure this.

Thankfully, contract management for restaurants doesn’t have to be a challenge. By seeking out contract management from professionals like Purchasing Partners, you can rest assured that your organization is well-contracted.

Purchasing Partners: Leaders in Contract Management for Restaurants

Is now the best time for reviewing your contracts and ensuring that your organization maintains a competitive advantage in a post-pandemic economy? Purchasing Partners can help. Every member of our team comes with extensive food service industry experience at every level, from the corporate level to front and back of house. With a broad network of distributor and supplier relationships, we can help your organization save money and form trusted networks.

Contact us for a free consultation today.

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