Inflation, inflation, inflation. It’s all anyone is talking about these days. Conversations are sparked at the gas pumps, in grocery store lines and while families review bills. It’s at the front of everyone’s mind, from the consumer to the employee and business owner. With inflation reaching a 41-year high in April, CNN Business quoted many chief investment officers and economists as projecting inflation sticking around for the remainder of this year and some of next.
While we don’t have a silver bullet, we’re proactively taking steps to help mitigate inflation as best we can.
Foodbuy, our group purchasing organization and subsidiary of Compass Group, manages our supply chain partnerships and all procurement. By pairing opportunity analysis with powerful reporting tools, we proactively ease supply chain disruptions on behalf of our clients. Despite recent inflation, Foodbuy negotiators continue to leverage our buying power, stemming from over $25 billion in annual purchases. Our proprietary tracking of commodity forecasts, regulatory issues, sustainability goals, product innovation and economies of scale also garner more than just a good price. Using extensive data analysis allows for constant reevaluation of our products and helps keep our partners and Compass Group stocked and prepared.
As part of our risk mitigation strategy, we focus on the following key areas:
Though the combined volumes of foodservice and retail food demands exceed supply on a prepandemic scale, our cross-functional task force continues to respond to changing market conditions to anticipate shortages. Our sourcing, category, communications, quality assurance and distribution teams meet frequently to assess the latest supply challenges, secure product on behalf of our customers and identify alternative routes to market.
Supplier Relationship Management
Supplier relationship management is one of the most important core functions of the category development and sourcing teams, and this work is even more important with a disrupted supply chain. Foodbuy has a number of tools in place to measure and manage our suppliers including taking proactive steps to incorporate specific and robust language around quality assurance, product and service warranties that our suppliers must adhere to, implementing price control language with tighter controls in our contracts to mitigate price increases, and multisourcing categories where possible to reduce supply chain risk.
Foodbuy is distributor neutral, allowing our managers to continue working with their preferred choice. This creates the most flexible supply chain management while we continue working closely with our suppliers to improve inventories. Local distribution options further increase our agility and responsiveness during shortages and disruptions, with the additional benefit from categories of regional specialties such as fresh fish, meats, bakery, dairy and imported products.
Product Risk Tracking and Rationalization
Currently, Foodbuy’s priorities are mitigating price increases and operational disruptions. We are monitoring supply chain risk, securing inventory for our operations and encouraging units to continue converting to higher volumes and more cost-effective products. We are also recommending early ordering and increasing safety stock. By streamlining our purchasing, we have simplified our supply chain and helped our units stay efficient.
How We Help Clients
As the world’s largest foodservice and hospitality company, we continually strive to deliver a high-quality program in a fiscally responsible way. Interested in how we can help you navigate inflation in your foodservice operations? Let’s take time to talk!