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Joining a Food Buying Group, Good or Bad Idea?

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Joining a Food Buying Group, Good or Bad Idea?

How e-commerce can unwittingly erode profit margins

This article argues that;  In the days when cash / bartering were the only method of payment the purchaser knew the ‘value’ in what they were buying whereas today, with most transactions no ‘cash’ changes hands so there is less likelihood of the cost of an item being questioned.

In the year 1850 two cabbages for a pound of corn may have been acceptable to both parties but £55 for 3kg of Currants in 2012 doesn’t really seem good value does it?  Well that’s what one of our clients unwittlingly paid because they bought an item that they did not have a ‘negotiated price’ on and as such paid the list price.

Had the owner of the business been required to part with hard earned physical cash at the time of the transaction, (ie when the item was delivered and the chef signed for it) they would have realised they would have had to work a good few hours to earn the money to buy those currants to make their xmas cake.

What happened was;  the chef signed for it, the invoice got passed to a manager who was probably too busy to check each line on the invoice, they signed that it was ok to pay and it got logged onto the accounts system and paid electronically.

So, who’s fault was it that the currants cost more than the equivalent weight of Sirloin Steak?  The suppliers?  Yes, in part for having set the cost far too high?  The chef? Maybe, because he should have known better but to be fair he’s not been managed properly and asked to take ownership of the issue of costs? The manager, Yes, because he should have spotted the error but to be honest he has a million things to do. The accounts department? No, they were just doing their job.

Chances are the supplier wasn’t aware that they had the potential to upset the customer as the ‘system’ deals with prices.  The chef was too busy getting through his work to notice, the manager was getting bombarded with electronic information, emails, texts to do lists, accounts (and it wasn’t their cash anyway), HR etc etc etc and so didn’t notice.

This was just one example of many highly priced items one of the RCM Stock Auditors found on a recent visit to a new client.  Beers wines and spirits costs were re-negotiated and the client joined a buying group for food.  In joining a buying group you normally get substantial savings on dry and frozen goods and often meat, dairy and fresh veg.  The buying group monitor your invoices and deal with negotiations, they take a small percentage of the invoice value but a cost we feel is usually saved many times over due to professionals doing the job for you.

Let us ensure this is not happening to you. By carrying out regular stocktaking with on-site results, RCM Stocktaking can help protect  your profit  margins.

Contact us today

 

 

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About the Author:

Richard is the owner of RCM Stocktaking Solutions Ltd which provide Stock Auditing services to the licensed / restaurant / hospitality sector.