How procurement will help you survive the supply chain crisis in 2022

Experts predict that the current challenges faced by the supply chain is set to continue into the New Year, with some commentators even predicting that ‘normality’ will not resume until the summer of 2022.

Key challenges that will continue to impact business include:

  • The transport and driver shortage exacerbated by the sudden growth in online commerce and high turnover rate for long haul truckers at major trucking companies.
  • Lean teams and increased wages across industries and continents are causing significant shipping delays whilst companies are being forced to offer higher wages and sign-on bonuses to try to shore up their teams (thus, driving up costs across the board).
  • Which brings us to increases in pricing. With the supply chain in turmoil, labour deficits, raw material shortages and e-commerce businesses driving up demand are all leading to increased shipping and transportation prices. Inevitably, markets will be forced (or have already) to pass on these added costs to customers.

The good news is that 2022 should see some improvements for food supply chains. Although you should not expect a return to “normal,” procurement can help weather the storm.

Whilst procurement teams (particularly outsourced practitioners) are often seen by suppliers as the ‘enemy within’, a strong collaborative procurement function can help operators navigate their way through what is forecast to be a continuation of the “perfect storm” that the hospitality sector has endured over the past 18 months.

Enhance Hospitality recognise that strong supplier relationship management is critical in helping our customers emerge from the post-Covid world stronger and well positioned in the marketplace.  Our team work closely with suppliers to help mitigate the disruption our customers are faced with during these challenging times.

Here are just a few of the activities we are doing to enhance supplier relationships:

  • Develop and maintain quality SRM.
  • Check price increases against market data to ensure pricing mirrors the wider market.
  • Encourage flexibility within F&B teams to accept substitutes in the event of supply shortages.
  • Engage with suppliers in menu planning.
  • Agree to acceptable alternatives for key lines with suppliers and negotiate the best contract prices/terms for these key lines.
  • Prepare and place orders earlier than usual:
    • Enables suppliers to move stock from depot to depot where possible.
    • Allows time to source alternative products from existing or alternative supplier.

 

We are confident 2022 will bring relief to the hospitality sector, and look forward to building stronger supplier relationships that deliver the most value to our customers.