Purchasing managers group continues to grow stronger

Nation's Restaurant News, June 15, 1992 by Patt Patterson

There are an uncounted number of meetings that take place in conjunction with the National Restaurant Association's Restaurant, Association's Restaurant, Hotel-Motel Show in Chicago each year. Other associations, such as the International Foodservice Manufacturers Association and the Foodservice Consultants Society International, get together during the week preceding the restaurant show.

The NRA itself holds a number of meetings. The one I attended May 14 and 15, before the Saturday opening of the 73rd annual National Restaurant Show, was the NRA's Foodservice Purchasing Managers Executive Study Group. This group, which has been growing steadily over the past several years, is the only national organization for those in foodservice buying.

In past columns I have interviewed the chairmen of FPM and have followed the group's certification program for foodservice purchasing managers. The CFPM program is the result of their desire to raise the professional standards of that segment of the industry. It's not an| easy process to complete.

To start with, the buyer must join the National Association of Purchasing Management and pass that organization's certification program. Then, armed with a CPM, the buyer must complete a course of study and pass an examination for CFPM. Not only that, but both must be renewed periodically, which requires additional study. The semiannual meeting this May counted toward that continuing education requirement.

One feature of the meeting this May was a series of concurrent roundtables on a wide range of purchasing concerns. They were free-form, unstructured sessions, with the only formality a chairman who kept some order in the discussion. They covered packaging procurement; meat: beef and pork; canned and frozen fruit and vegetables; dairy and beverages; uniforms and cleaning supplies; fats, oils and seafood; poultry and produce.

The roundtable participants focused on the procedures and techniques of each purchasing area. For example, in buying packaging they noted the increase in long-contracting and the use of formula pricing although the caveat that the buyer must be able to audit the formula is essential. Volume, the participants agreed, plays a large part in the operator's costs. The general consensus seemed to be that suppliers' costs are identified in other products and should be with packaging to allow more effective negotiation.

The meat roundtable stressed the importance of good suppliers. It recommended a reduction in suppliers and a move to "partnering" with them. Information was a valuable service from suppliers, which extends to timely information on markets and forecasting future supply availability and price movement. All participants felt pressure from their managements to "beat the market," but the crux of the matter was how to accurately define market prices. The value of long-term contracts is a fixed price for stable food costs.

Another side of the purchasing coin was considered in the canned and frozen fruits and vegetables roundtable. Go with multiple suppliers for security seemed to be the general rule. Bid on long-term contracts, annual if possible, with downside protection where you can get it. The advantage of the operation's having its own private label to take back some of the "sheltered income" was also explored.

For dairy and beverages, there seemed to be a wide range of approaches. Some chains are attempting to consolidate all of their beverage supply in the hands of their major full-time distributor to cut handling and delivery costs. When working with a dairy on fluid milk products, annual contracts are sought by most participants. Many find dairy suppliers willing to share the risk of long-term contracting.

For uniforms most firms ask for annual bids. But what do you do with the inventory of old ones when you change uniforms? No pat answers were given. Laundry is a problem for many operators. "They sneak in other charges," one participant noted.

As for cleaning supplies, the general trend seems to be to contracting on a three-year basis. Cost allocation is a problem. Some link it to costs per plate. In the case of a cruise ship, cleaning supplies are often evaluated on a cost per passenger.

Health concerns of patrons have affected the specification and purchase of fats and oils. A big question is the estimated useful life of frying fats. Some chains insist upon special formulations; others use regular labels of national manufacturers. Buying from local distributor stocks is used with remote stores in some chains. Monthly bidding is the rule rather than the exception.

For seafood the participants agreed that the customers' perception of freshness is a major factor. Yield vs. cost is a major consideration of most buyers. "There has to be consistency seen by the patron from one visit to another," one participant said. Another noted that the price of salmon was held to a consistent level year-round by buying wild and farmed fish as supplies fluctuate.

Most buyers purchase poultry on an annual contract basis at a fixed price although there are some who get monthly bids and even some who operate on weekly and even daily pricing. There were almost as many buying techniques as there were participants at that roundtable.