So, you walk into a Whole Foods supermarket, and around every turn are signs shouting “local” this, “local” that, “organic” these, and “organic” those. For many of us, we’ll look at the prices attached to those products and think, “Whew, that’s expensive,” and go for the conventional, familiar, as-seen-on-TV brand.

As chefs, our lives are easier if we seek out the “compliant” product attached to our preferred procurement plan, without maximizing the leverage we have to both influence the decision-makers at the procurement organization, or by reconsidering our obsession with margins (I’d rather have dollars any day).

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It’s easy to fool yourself into thinking that your organization is in tune with the needs of both your existing and potential customers—that your organization is going after every opportunity to gain market share by working existing clients, stealing customers from your competitors, or creating new demand. Slick advertising, touted corporate cultures, and presumed levels of quality mean nothing to a disgruntled consumer.

Often staff shortages in customer service and point of contact positions serve as corporate crutches during tough times to justify poor performance. I am rarely satisfied by my purchasing experiences and will only support companies that get it right. I am sharing a recent experience that I had with purchasing customized chocolate pieces to illustrate my point.

My client required a logoed chocolate piece for their awards dinner. They wanted to see a mock-up and get a price as soon as possible, so I called America’s largest and best known foodservice/restaurant chocolate design and customizing company. I was told it would take three days to do a simple computer-generated mock-up. That was not what I wanted to hear, so I called their competition, America’s number two chocolate design and customizing company. Within minutes, I had a mock-up and price. This was followed up with support to ensure I received and was happy with my purchase.

Over the Valentine’s weekend, I used company number two a second time. Guess what? I will use them again and again. They get it and have won my loyalty. Loyalty breeds future success at a very economical cost. The cost is usually as little as people doing what you are paying them to do and doing it well, 100 percent of the time.

There was a time not too long ago when you needed to be someone important to have a voice or to be heard. Times have surely changed.

With the advent of LinkedIn, Facebook, Twitter, and thousands of blogs, everyone has a voice these days. People from the “old school” like myself would probably consider watching paint dry more enjoyable than “tweeting.” However, it must be important to someone to know what you are doing every five minutes because this method of communication has really taken off. I can’t figure it out, but I’ve never claimed to be the sharpest tool in the shed or the tastiest French fry in the happy meal.

These forms of communication link millions every day. Information travels to and fro. Businesses make a living out of it. In shifting the focus to our industry, the idea of instant communication has the potential for great value.

Before making a purchase, you are able to read reviews from previous buyers. The same real-time feedback can help us in the hospitality procurement field. I will give you my own example.

As a participant in LinkedIn, I am a member of four industry groups, which are online discussion forums that connect people throughout the industry. If I want to get comments on the quality of a certain table, see who has comments on a certain brand of product, etc, the feedback is only a few keystrokes away. Granted, the online discussion forums are not scientific research. But they are forums for informational exchange. The information obtained on these forums is what marketing firms would spend large sums of money in trying to obtain through their own research. Online discussion forums can be a true procurement resource in your purchasing arsenal because they give a voice to the everyday buyer like you and me.

While you will probably not see me “tweeting” any time soon, you can rest assured I will use online discussion forums to help me be a better buyer.

My team is responsible for the procurement of many items at the hotel. When people hear the terms “Purchasing,” “Procurement,” and “Buyer,” they tend to think of food and beverage purchases. Some people are surprised when they learn that we also procure medical supplies, salon equipment, beauty supplies, health gear, etc. The majority of our items come through traditional procurement distribution channels. Other items are not always available through the traditional channels so we must look elsewhere. One of these avenues is online. I used the term web (as in the World Wide Web) above. It seemed to fit the blog title, but now I’ve dated myself. Maybe for my next blog I will talk about purchasing rotary phones?

From trinkets to Twinkies, Snickers to Snuggies (even the Leopard Skin Snuggies), the web has it all. On any given day, our team could be online multiple times purchasing needed items. Typically, online purchases are for unique and/or retail-type items. Many people make general assumptions about online purchases. Most may be true but not always:

Assumption: You can’t find deals online.
Reality: Not always true. We purchase flat screen TVs online. Not only can you find good pricing online, but some companies already have shipping built into the price. Companies from certain states do not charge tax when shipping to other states. Once you start purchasing a few televisions, the savings can add up.

Assumption: We pay the same price online as anyone ordering the same product from their home.
Reality: Again, not always true. Didn’t you see some of my previous blog posts? Purchasing Power = Purchasing Power. If your operation is purchasing multiple units, then price breaks are typically built in. Also, if you call the online company, they are sometimes willing to give you additional discounts to boot.

Assumption: You cannot find quality products online.
Reality: What is it with all of these assumptions? Just hold on a second, my friend. A number of manufacturers that produce products for wholesale distribution channels also produce products for retail distribution channels. While there are plenty of examples of residential grade products online, there are also plenty of commercial grade options available. Some manufacturers make identical items. In some cases, one item just happens to get better looking paint and a pretty label so they can sell it through retail channels.

Assumption: When I buy products online, they are either discontinued or become obsolete.
Reality: I should have quit while I was ahead. I’m sorry to say that this assumption and reality are typically the same. Online sites are retail driven. This means that product availability changes with the seasons. A style of shirt you purchased in the spring will probably be unavailable in the fall. This is a battle we deal with constantly since our outlets love to purchase retail apparel for their uniforms. A computer you purchased this year has probably been replaced by a newer version (or two) the following year.

In summary, there are deals to be found for your operations on the web, so use it as a tool in your arsenal when shopping for needed items.

Many months ago, I discussed the idea of prepared foods. Of course a number of the diehards laughed it off. Some of these people would never consider offering a menu item that wasn’t completely prepared in house. Fast forward to the not-so-prosperous times of 2009. A number of these same people are now either out of work or are hanging on by their fingernails.

Did you know that the hottest selling items for most produce distributors are pre-cut fruits and vegetables such as diced onions, diced celery, carrot batons, Mirepoix, the Holy Trinity (maybe my Cajun friends could explain that one), and fruit salsas? While these items are more expensive than their unfabricated cousins, the savings to you, the operator, is in the labor. I could give you mathematical examples but I’m trying to get the basics across. Remember in previous posts how I discussed paying your premium grill cook to do the job you hired him/her for (grilling)? It is a lot more efficient for a distributor to spread their labor costs over the fabrication of 10 pallets of onions versus your labor to fabricate one case of onions in your operation.

The moral of the story: Times like these dictate that operators must evaluate all options to keep their operations running. In another blog someone brought up a great point about pricing discounts. If you think that half-priced meals will be the saving grace so you don’t have to consider cost controlling options, I would ask you to put yourself in the guest’s shoes. If you pay $25 for a filet (including an appetizer, intermezzo, dessert, drink, balloons, coupons, spa treatments, a new car, and whatever other gimmicks people are doing to get you in the door) this year, would you pay $50 for that same basic filet next year? Look at all of your options.

I recently had the privilege of attending and presenting at the University of Florida Institute of Food & Agriculture Sciences Small Farms Alternative Enterprises Conference (http://smallfarms.ifas.ufl.edu/floridasmallfarmsconference/index.htm). This event brought together small farmers, green market organizers, educators, extension agents, farm business suppliers, and some industry chefs from all over the state. The opening address was given was given by the Florida Commissioner of Agriculture and Consumer Services, Charles H. Bronson (not to be confused with the actor).

Over these two days of discussions, I was amazed to see the passion people had for sustaining small farms. Some discussions focused on local food systems. Others were discussing organics. Local and grass-fed beef were touched upon in some of the other sessions. I kept asking myself if our industry really understands the extent of this passion. People on small lots of land putting so much energy into stone fruits, berries, corn, and lettuces, to name a few. It was amazing to taste local food that was grown for eating versus food created for traveling (chefs who are already on board with local foods know exactly what I am talking about).

The reason for the title is that I now think it is our turn to be apart of this. We should seek out local fresh products. We should try to create seasonal menus. We should get to know the people who are producing our food. If you are not sold by the passion of the people growing the foods, I hope you will listen to your patrons. Each day, they are becoming more knowledgeable on what they eat. They are already a few steps ahead of you. Farmers’ markets continue to grow, the Food Network is providing more information, and people are generally interested in what goes into their bodies.

I would hope that the idea of eating locally and sustainably is not a passing fad. With the passion of our producers and consumers, I doubt that it will be. Now it’s your turn to step up to the plate.

The idea with a group purchasing organization (GPO) is quite simple. You pull together many organizations to give them purchasing power they would not be able to gain on their own. In any business, purchasing volume is where the negotiating power is.

Stuart Sherman is president of S. Sherman Associates, based in Phoenix, Arizona. He took some time out of his busy schedule to answer questions for us about his company and what it does.

Q. Can you give me a little history on S. Sherman Associates?
A. The Company was begun in 1977 with our first major client, Summa Corporation in Las Vegas.

Q. How many employees do you have? Do you have people who specialize in certain areas?
A. We have a total of 7 associates at this time. While each of the associates wears many hats, each one focuses on key areas (i.e., invoice auditing, food analysis, labor and process, etc).

Q. Who is your client base?
A. Our client base is centered in the 4- and 5-star hotel industry. We are now taking on a few upscale restaurant operators.

Q. Where are your clients located?
A. Our clients, past and present, are in more than 16 countries.

Q. When organizations retain you, what services do you provide? How does your process work?
A. In a nutshell, it is our primary goal to reduce food costs and improve the P&L for the F&B operations including labor through stable and auditable purchase programs and internal process re-engineering.

Q. What are some of the purchasing opportunities that you help your clients capitalize on?
A. Over the past 33 years, we have developed and implemented programs with manufacturers and distributors to establish simple and reliable specification and delivery programs to assure the receipt of goods of consistent specifications necessary for the delivery of end-user products at good and fair pricing built on an auditable and negotiated mark-up structure, most of which are based on the underlying commodity costs and formulas thereof.

Q. Would organizations from small restaurants to multi-billion dollar operations realize any benefit working with an organization such as yours?
A. Of course. But we usually do not work with clients who purchase less than one million dollars in food per location per year. This is meant to insure our supply partners a certain level of efficient operation and cost/profit ratio.

Q. I am sure that you sometimes get resistance when working with clients. What are some of the common things organizations and individuals within the organization resist when you make your recommendations?
A. To facilitate great results, there must be great change. That change takes place in numerous ways, including labor, processes, and menu evaluation. These all involve personalities, and these personalities have “ownership.” Ownership often evolves ego, and egos get bruised in the implementation of the changes.

Q. In this business, you really cannot guarantee much. However, do you have an average percentage your company saves on food cost for new clients?
A. Over the past 33 years, we seem to average 2 to 5 point reductions in the F&B P&L. Our mean average would be around 10 percent.

Q. Would you have any recommendations for organizations that are thinking about retaining an organization such as yours?
A. Chaos! You must have great change to get great results. Doing the same thing over and over only assures the same result.

Stuart’s organization is one of many available to help operations achieve improved results. Some hospitality operations have achieved great results by going down this path. Variables such as the size of your operation, chain affiliation, proximity to vendors, and willingness to make changes impact any potential results. Ultimately, your organization must do its diligence to see if a group purchasing organization could add value to your operation.

Many hotels use a control system for requisitioning food, beverages, and supplies from a central inventory.  The steward may be responsible for both purchasing and stock control. Some operations split these responsibilities, depending on volume, and use more than one person. There is a tendency to overkill this valuable control tool.

The manufacturing approach to inventory control offers a great comparison to the hospitality industry. It is common for manufacturers to classify stock items as A, B, or C items.  The A items are high-volume, big-impact items that make up 70 to 80% of purchasing volume. Most B items are lower volume items that tend to have a high cost per unit. The C group is typically the low-volume, low-impact, lower-cost-per-unit items. 

I find that too much time is spent controlling the C items in our hospitality industry. Many operations spend the same energy documenting these minor items as they do with a case of lobster tails. Since time is money, the time spent documenting transfers of toothpicks, ground nutmeg, and other similar items is rarely justified by the benefit.  If possible, a small open storage area could be setup to handle many of these low-impact inventory components.

On inventory day, the frozen lobster tails may be off by 2 cases.  If the control team is lost in a jungle of too many transfer sheets with too many entries, the time needed to solve the shortage may not be spent. Hotels often stock more than 2,000 unique food, beverage and supply items.  I urge you to try the manufacturer’s approach and focus on the A items.