Shopping Around
Online procurement helps operators control costs and manage inventory
By Margaret Sheridan, Senior Editor -- Restaurants & Institutions, 3/1/2004
When Michael DeFilippo arrived at Memorial Sloan-Kettering Cancer Center in New York City five years ago, the assistant director of food and nutrition services inherited an established relationship. A single vendor supplied about 90% of all purchases, resulting in steadily escalating prices. A serious online shopper, DeFilippo used his PC and a procurement program to compare supplier prices, eventually trimming costs by 15%. “Anyone with basic computer skills can do it,’’ he insists.
Using specialized software and an Internet connection, DeFilippo compares quotes from dozens, even hundreds, of suppliers. “Vendors know that if I quit buying from them that I’ve found it elsewhere online for less,’’ he says.
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Today, he uses two broadline distributors but continues to check prices. He purchases food and equipment for a cafeteria that serves 3,000 people daily, a kitchen that produces 1,200 patient meals and a catering department that accounts for 400,000 meals annually. When shipments are delivered, DeFilippo cross-checks prices and quantity. If items are missing or damaged, online tracking makes the source of mistakes easy to locate.
When using vendor-provided software, he advises diligence and caution. “The challenge is maintaining inventory. When you use a vendor-provided system, suppliers control the content,” he adds. “A vendor can slip a new product next to the one you normally order. Delete items you don’t need to avoid confusion.’’
Single-vendor solution
A 10-year veteran of online purchasing, Julie Jones
of The Ohio State University Medical Center, Columbus,
remains
a student of technology. By staying abreast of
advances in procurement
software, Jones, associate director of food, nutrition
and
dietetics, is able to operate more efficiently
and manage costs by minimizing ordering errors and staffing
needs.
In 1999, she adopted a Windows-based system developed by a company that specializes in information technology for healthcare. Their food-management software incorporates all the hospital’s foodservice data and a vendor catalog of 1,000 items, customized for the medical center. Electronic orders are sent four times a week from Columbus to Phoenix, where they are processed. Jones says that working with one vendor not only is extremely efficient but also creates a solid professional relationship. “We’re down to one confirmation phone call to customer service per order,’’ says Jones, who elects to maintain the practice. “They know what we need and look out for us.’’
The system is designed to be user-friendly for all staffers and to minimize order errors by assigning distinct customer numbers to products such as produce, dry goods, fresh and frozen foods. Since introducing the software, Jones says stock-delivery complaints have dropped 75%. “Getting shipments to the right floor or hospital is critical,” she explains. “Due to the layout of the medical center, with three hospitals and central receiving area on one campus and a fourth hospital six miles away, distribution is a challenge. With online procurement, you eliminate guesswork and overcharges since you cross-check with hard copies of the invoice against the electronic order.”
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Fear factors
Getting 50 Great Wraps units online is Mark Kaplan’s
goal for 2004. The co-founder of Great Wraps Inc., an Atlanta-based
franchiser, has stipulated that the 20 new unit owners who
joined the company this winter must have computers and basic
tech skills. “The suppliers have the software and the
new franchisees are ready. But some of our veteran owners are
fearful of computers,” he says. Kaplan
hopes his tech-savvy new unit owners will
network with veteran franchisees.
Once installed, the software will enable him to better communicate with all 50 unit managers via electronic newsletters. “Though you give up some personal interaction, you are more in control of your business. And more confident. Technology empowers the little guy,’’ he adds.
When Doug Garner took over purchasing three years ago at Erickson Retirement Communities, Catonsville, Md., he brought 25 years’ experience in purchasing from the hospitality and healthcare industries. The senior director of dining services insisted that all purchasing and bill paying would be conducted online.
With an annual budget of $20 million for eight communities, Garner uses one prime vendor for 80% of electronic food purchases, with smallwares ordered online through a supplier that customizes an inventory of 500 items Erickson regularly uses. “From a nostalgic point, you miss talking to salespeople. But online purchasing is a bonus for vendors and customers. It cuts the paper shuffle, phone calls and mistakes.’’
Tapping vendors
Computer software can be a useful tool, but vendor relationships are valuable too. Their expertise, contacts and marketplace savvy help operators make smarter decisions, says Michael DeFilippo of Memorial Sloan-Kettering Cancer Center. The hospital’s transition from traditional patient service to room service last year required a major kitchen renovation and equipment update. DeFilippo relied on vendors for information and contacts. One sales representative suggested a kitchen design in use in a New York City hotel and invited DeFilippo to check it out in person. Another contact provided the name of an expert in kitchen layout and telephone numbers of satisfied clients. When DeFilippo was gathering sources for quotes on delivery, coordination and installation of equipment, those, too, came from reps and vendors, not from software programs.
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