13 Most Common Restaurant Supply Chain Challenges You Can Avoid With These Best Practice Solutions [Infographic]

You ever think about how efficient restaurant supply chain management is a lot like good oral hygiene? You have a system in place; you keep on top of things and, with an occasional tune-up, it’s pearly whites all the way to the bank.

Slip up, though… and it’s root canal time.

Now, a root canal is painful… but that pain is nothing compared to the pain that wallops you over the head when you mess up your ordering and you need to explain the revenue loss to your higher-ups. That’s sheer agony.

So what do you say…. want to avoid that particular throbbing headache?

If you’ve answered ‘yes’ to that question (correct answer, btw… top marks for you), you’re in luck.

This post is chock-full of restaurant supply chain best practices that you can implement right now. They’ll help you avoid the ghastly mistakes your competitors are doing (that are costing them cold, hard cash).

There are 13 of them on the list, each solving a specific restaurant supply chain challenge. Implementing them will help you create a better system, resulting in:

• creating more value for your operation (higher purchasing power + lower food costs).
• making sure that the supply side of things syncs up with your demand.
• taking all the necessary steps to keep the health of your customers top-of-mind.

And while you might not have the bandwidth to implement all these (and, if you do, kudos to you), picking up a few and running with them will help your bottom line.

Which ones will you go for? (I dive into all of them individually below the infographic.)

Okay, let’s optimise your F&B supply chain. First up: suppliers.

#1 Build Good Vendor Relationships

The number #1 supply chain mistake I see restaurateurs doing is ignoring vendor relationships.

It doesn’t matter how big your operation is, it’s always people at the other end of your emails and phone calls. And people respond to three things: honesty, transparency, and respect. Work those into your every vendor interaction, and you will get better deals.

There are a few more things that you can do to cement your ‘favourite customer’ status:

• communicate like a boss – share the important stuff with your vendor — your needs, timelines, schedules, and systems. Ask them to do the same. This way, you’ll easily identify potential gaps, and can work on a solution to bridge them.
  
• pay your bills on time – vendors have their own bills to pay, too. And that vendor rep that’s been bending over backwards to accommodate you won’t be inclined to do that in the future. Not if they have to chase after payments each and every month.
  
• work through conflicts – have an open conversation with your vendor about how you’ll deal with potential hiccups. To ignore them is to repeat them.

#2 Value Consistency Above Lower Prices

What good is a 20% lower price tag if the delivery truck pulls up at your loading dock at 11AM?

If that truck was carrying any essentials, your lunch hour is shot.

When picking a vendor, your #1 consideration should be the right quality of ingredients. But your number #2 consideration should always be… can they deliver on time, every time?

If they can’t — if the delivery is hit and miss — you’re better off without that vendor.

#3 Insist On Being Kept in the Loop (Quality, Quantity & Bottlenecks)

To keep a tight grip on your restaurant’s supply chain, accurate and timely data is essential.

When deciding between vendors, go with the one that is willing and able to be upfront about the state of their inventory and schedules.

They need to be able to tell you three things (reasonably) in advance:

• when they anticipate lower quantities (that might not meet your demand).
• when quality might not be up to par (and could result in substitutes).
• when internal issues (lack of drivers, trucks, malfunctions) could impact deliveries

If you can get this information a few days in advance, great — you can easily plug any potential inventory holes. Without that information, though, you’re left scrambling on the day (and you can’t do much then).

#4 Contract Out Those ‘Not-Centre-of-the-Plate’ Items

If you’re working from the same playbook as 90% of big operation managers, your focus is on ‘big money’ items… meats, dairy, and produce. And that’s okay, because, with those, slight variations in the price can make a substantial bottom-line impact.

But do you pay the same kind of attention to the not-centre-of-the-plate ingredients?

Things like canned goods. Broths. Pasta. How about we go even more granular — do you pay attention to your oils? Your spices? Your condiments?

Not really, right?

Well, you should because that’s where small tweaks can result in substantial wins.

How you order these non-critical items (which are always critical, btw) can result in big savings. Shaving off $30 per month per outlet on mayo orders doesn’t seem like much… until you realise that you’re ordering for 100+ outlets. Then it makes a difference.

Apicbase’s Analytics module can help you identify how much room you have for improvement here. Once you’ve found those items that you’re not thinking about but are burning through, you can start optimising their ordering process (getting them from a single vendor, putting them under a contract, and similar).

#5 Dial-In Your Demand Forecast

Efficient supply chain management for restaurants comes down to data and planning. This means recognising demand patterns across all your outlets and working them into how you organise your supply chain.

Here are three ways you can leverage on-point demand forecasting to optimise your restaurant’s supply chain:

1. If you can map out your quantities in advance, you can approach your vendors sooner rather than later. Also, you’re able to negotiate better terms because you can commit to larger purchases.
   
2. You can also keep an eye out on your storage capacity and prepare for increased product intake at specific locations (f.e. by installing an additional cooler). This helps you keep food waste at a minimum.
   
3. If you’re operating from a central distribution location (meaning you take in deliveries and ship them out to your outlets), an accurate demand forecast lets you plan your deliveries with greater accuracy.

And no, you don’t need to be a math wiz to tap into your historical data and create sales forecasts. Using F&B management software (Ahem… Apicbase) makes it really easy to do all this on an outlet level so you get the level of detail you need for accurate predictions.

#6 Connect the Dots With a Platform Solution

Managing the supply chain of a large foodservice operation is tricky business. But, it becomes an exercise in cat-herding the moment you have to do it by working in disparate and disconnected systems.

One system for all the outlets in city #1…

… one system for all the outlets in region #2…

… one inventory system for all your fast casuals

You’ll get nowhere this way.

Large operations no longer have the luxury of working with legacy or point systems — there’s simply too much data that needs to be collected and synthesised for accurate decision-making.

That’s why you should move on to a cloud-based platform management solution for your F&B operation.

The built-in 360° view of your entire operation will help you make better supply chain decisions. Need to see your overall inventory levels? They’re right there in the dashboard. How about inventory for a specific outlet? It’s just a few clicks away. All the promotions you’re currently running? Click right there and voila — it’s all there.

With an F&B management platform, you get to be agile and accurate — and never have to chase down the data (sales history, stock levels, food cost, supplier details) that you need to do your job well.

#7 Periodically Review Your Vendors, Contracts & Invoices

Performance reviews are annoying.

They’re complicated. They take time. They result in extra work and strained relationships.

But…

They’re also what helps you to separate the wheat from the chaff.

Regardless of how much you don’t like doing them, you need to make time to go through these three things every six months or so:

• vendor evaluations – you’re scoring your vendors on three things: quality, price, and delivery. The best score they can get is tens across the board (10/10/10). Every slip up (a late delivery, a price hike-up, wrong quality delivered) lowers this score. That’s why you should keep track of these things (even though you’re dealing with them immediately). Ditch those vendors that underperform.
  
• contract evaluations – when you first sign on with a vendor, you can bet you’re getting a worse deal than their long-standing customers. So as soon as your first contract runs out, put on your poker face and start bargaining. By this point, you should already have some kind of a relationship going on, so it’s going to be easier to negotiate better prices.
  
• invoice validation – I suggest doing this at least once a month, ideally before the invoice is paid. The goal is to validate that what appears on the invoice is what was delivered in terms of quantity and quality. Additionally, check to verify if all the discounts, rebates, approvals, and corrections have been applied.

#8 Implement a Centralised Ordering System

The biggest supply chain management mistake I see restaurant operators doing is tackling orders for each of their locations separately.

This is just all kinds of wrong because:

1. you’re creating data silos that prevent you from seeing the bigger picture.
2. coding mistakes can result in problems with applied discounts.
3. you’re likely over-ordering and driving up your food costs through waste.

Supply chain management in large foodservice operations has to be centralised because that’s the only way to make sure that you’re working with the right data. And data is paramount here — if your data is off, you can chuck your systems out the window since all you’re doing is blindly guessing and hoping for the best.

#9 Make Sure You’re Storing Everything Properly

Create and standardise storage procedures across your operations to reduce waste and keep your customers healthy.

Here are three things to keep in mind:

• ample storage space for each food category (according to regulations — frozen goods in freezers, chilled products in coolers, root vegetables in cold, well-ventilated storerooms).
• products are immediately put away, and nothing stays out for ‘just five minutes’ because the receiving crew is overwhelmed. Remember — if it’s sitting on the dock, it’s going bad.
• Storage spaces are maintained, regularly cleaned and easy to access — everything can be checked and counted at a glance; products are rotated based on FIFO principles.

If you’re in charge of a large foodservice operation, make sure that you provide all your team members with regular training and brush-ups on how to handle product receiving and storage. Occasionally do spot checks to identify gaps and to encourage your staff not to cut corners.

#10 Insist On Purchasing Compliance

Running a cosy little mom and pop diner down at the boardwalk, and you’ve just run out of olive oil? By all means, have someone nip out to the store down the street and buy a bottle.

Who cares, right?

However, operating a ‘run-out-to-the-store-when-something-is-running-low’ policy in a foodservice operation with dozens of outlets.

That’s a recipe for disaster.

And I’m not just talking about financial ruin (although off-contract purchasing can be anywhere between 15 and 100% more expensive than contracted purchases). I’m talking about the fact that you’re relinquishing traceability, control, and brand consistency.

As much as we all love buying local, there are inherent problems there when we’re talking about huge orders…

… you can’t get the quantities you need…

… consistency is shoddy…

… it’s sometimes impossible to get the data you need to have (allergen information or nutritional values).

That’s why you should stick to large, contracted, and vetted vendors (if they’re the only ones who can tick all those ‘quantity-consistency-information’ boxes).

Of course, these one-off purchases might still happen (running out of deep fryer oil is never an option). When they do, they need to be recorded and communicated up the chain of command so that you can check (and prepare) for potential compliance problems.

#11 Double Down on Food Safety

This one strikes at the core of one of the basic responsibilities of restaurant supply chain management — keeping your customers healthy and safe.

And (again) how well you do this depends on your systems.

But here’s the thing — your system is only as infallible as the systems connected to it. This is another supply chain management mistake I see restaurants do often. They focus on themselves when, in fact, they depend on everyone else up the chain.

This is why you need to make sure that everyone you’re working with has a Quality Management System set up — from those ‘farm to table’ producers you’re partnering with to your broadline vendors. This system should cover everything from onboarding new products and quality assessments to guidelines for potential product recalls.

Document and periodically review your QM system so you can identify and plug holes in time (the regulator will inspect this… and more often than you’d like).

#12 Think About Sustainability & Social Responsibility

Here’s a truth — big business is always focusing on bottom lines and dollar amounts.

And here’s another one — going green doesn’t necessarily mean that a business will lose money.

But…

It’s difficult to talk about sustainability and green responsibility in the context of the restaurant supply chain, especially if you run a large operation.

You need large quantities, product traceability, and oodles of producer-supplied information. Buying local is rarely an option, which is what you should do to reduce your supply chain’s carbon footprint. Fast food supply chains are particularly tricky because the focus here is exclusively on tamping down on food costs.

Still, while we wait for the supply chains of the world to catch up, there are several things that you can implement that will plant you on the going-green track:

• connect with local green food supply chains – these are popping up all over the world. Small producers are connecting to expand their offering and become more appealing to large operations. You might not be able to source products from an organisation like this, but if you have several locations near one of them, this could be an option.
  
• where possible, partner with large local producers – let’s say you have a few outlets in Scotland. Partnering with a large local beef producer will considerably shorten your supply chain (as opposed to buying Argentinian beef), and it might also have more financial sense.
  
• switch to cooking only what’s in season – if possible, switch up your menus a couple of times per year to focus on in-season ingredients. This way, you’re reducing your contribution to shipping pollution. And it’s cheaper.

Incorporating sustainable supply chain practices into your foodservice operation will require a bit of flexibility (and will likely increase your costs).

It might look like a hassle, but remember two things:

1. more than 73% of millennials are willing to pay more for green products, and;
2. they’re getting increasingly more comfortable at punishing brands that fall short.

Also, keep in mind that promotions – we’ll discuss them in the next best practice – can intensify the Bullwhip Effect.

The bullwhip effect is a phenomenon in which your forecasts create wild inventory swings across the supply chain. If you’re going for sustainability and social responsibility, minimise these swings by planning your promotions meticulously (and not going overboard with them). 

#13 Be Smart About Your Promotions & Specials

All specials and promotions can potentially put pressure on your inventory.

Yes, you can put a time limit on them, but it’s not really in your best interest to run out your main ingredient on day #2. Turning customers away (or forcing them to order something else at full price) will leave a bad taste in their mouth… and a nasty review on your Yelp page.

So if you’re running a promotion, go up your supply chain and figure out if you’ll be able to meet the demand if it busts through your forecasted figures:

• check product levels with your prime vendor (reserve in advance if possible);
• talk to other vendors to get a feeling for their quantities and quality; 
• control those specials and promotions (run them on specific days, or similar).

Squash Your Restaurant Supply Chain Challenges With Apicbase

Remember what I said about those pearly whites?

It takes five minutes every day to keep them ***blinging*** in the sunlight. That’s exactly how long it will take you to pick one of these restaurant supply chain best practices and double-check if you’re doing it right.

Go through them one by one to see what you can fine-tune to get your vendor relations, procurement processes, and inventory management up to scratch.

But… before you do all that…

Why not make your life a little easier first?

• Apicbase makes ordering for 100+ outlets feel like ordering for one single outlet.
• Apicbase leverages par level reminders and assistive ordering to do the work for you. 
• Apicbase gives you back control over your processes by centralising EVERYTHING.

Need more reasons?

Schedule your Apicbase product tour today.