If you’re new to the restaurant business, you’ve probably heard about strategic vendor management but aren’t exactly sure what it entails. Well-experienced business owners in the field know it’s absolutely critical for maximizing not just ROI but also the relationships and connections that make every day in a restaurant run smoothly.
What is vendor management, and which issues pose significant challenges if vendors aren’t properly managed? We’ve created this page to answer all your questions and provide guidance for optimal vendor management best practices.
What is Vendor Management?
Many restaurant owners, particularly those new to the field, struggle to understand vendor management and its importance to long-term success. Think of vendor management as the ultimate behind-the-scenes “hack” to streamline your entire operations. Some management tasks – such as managing your payroll or employee work schedules – are easy to recognize. But the vendor management process is an often-overlooked, under-appreciated aspect of running a restaurant.
Strategic vendor management maximizes the processes and relationships between your restaurant and your suppliers, vendors, and other procurement partners. Some vital elements of vendor management best practices include:
- Risk mitigation
- Food cost control
- Optimal customer service/product procurement
- Ultimately delivering great value – and an unforgettable dining experience – to your customers
How Subpar Strategic Vendor Management Can Harm Your Restaurant Operations
Are you using your vendor relationship management strategy, or is it using you? Poor vendor management processes negatively impact everything from customer service to your bottom line. Here are some challenges restaurant operators face without vendor management best practices in place:
- Supply chain issues. If operators aren’t adaptable, especially when major crises are occurring with the supply chain disruptions, procurement problems are sure to surface.
- Bad contracts. Contract negotiation is the bedrock of any well-run strategic vendor management system. Without solid data to illustrate your side of the story, it’s hard to leverage contracts in your favor.
- Haphazard scheduling. Unrealistic deadlines and delivery times are just two areas that negatively impact your vendor management process. And many issues are a domino effect situation; for example, without accurate accounting systems in place, it’s easy to misfire with deadlines and procurement.
- Unreliable relationships. For your strategic vendor management to really take off, you have to take the time to cultivate meaningful relationships. True vendor management should focus on both ends of the spectrum. From a restaurant owner’s perspective, that means their own business and their suppliers. When you don’t look at vendors as strategic partners in a mutually beneficial dynamic, your restaurant will never realize the true potential of strategic vendor management.
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The Benefits of a Streamlined Vendor Management System (VMS)
Some advantages of sound vendor management processes include:
- Complete financial picture. The restaurant financial cycle (spend, usage, ordering, inventory, analysis, etc.) requires full transparency to make the best possible business decisions. With the complete picture in place, it’s easier to evaluate and tweak your vendor relationships, which is necessary in today’s environment, thanks to the fluidity of commodity prices.
- Sound spending practices. Which vendors are helping, and which are hurting? It’s easier with a VMS that encourages weekly performance monitoring of cash management and other key analytics. RASI’s vendor spending tools put spending fluctuations in context, allowing superior management of single and multi-unit enterprises.
- Expansion of preferred vendor/supplier lists. With inflation, tightening credit, and other challenges for procurement specialists, it’s wise to have vendor management processes that thrive in a fluid, constantly changing environment. RASI assists with auditing and negotiating prime vendor agreements and performs market basket analyses on current suppliers. This program targets optimal deals and contracts from existing suppliers within a larger network – a win-win for you and your suppliers!
What are Vendor Management Best Practices?
The key to a well-run VMS begins with all the active participants using the system as intended. It’s difficult to gauge a strategic vendor management system as a singular entity; the important thing is for everyone to be comfortable using all the tools and applications as they should.
That said, here are some tips to ensure your vendor management structure works best:
- Document results regularly. As we mentioned above, data analytics establishes a firm foundation for your employees to understand which particular dynamics of vendor management need to be adjusted. We suggest weekly reporting to provide regular, consistent vendor management analytics.
- Customize contracts. The extra legwork and research pay off here. In order to optimize your contracts, come to the table with institutional knowledge of your spend performance. This way, you already have the data ready to create more profitable agreements moving forward.
- Foster relationships with vendors built on trust. Vendor management is, in many ways, a “meet me halfway” compromise. RASI’s world-class accounting solutions and other restaurant operational resources enable you to cement long-lasting, trusting relationships with all your key procurement associates – because you can always trust RASI to lead the way with on-point analytic tools accounting resources!
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Request a demo today and see how RASI can assist with all of your restaurant operational challenges, from strategic vendor management to cost control, accounting, and much more!