Your restaurant has a new supplier of perishable produce. Their service offering seems good and their pricing is very competitive, but unfortunately your restaurant suffers complaints from customers about food poisoning, and you believe that the produce emanates from your new supplier.
Aside from food safety regulations and the impact on your business and your supplier's business, your supplier chain management is a contractual issue for your business to manage. The contractual terms in your supplier agreement should be carefully considered and, where supplies are critical but carry higher risk (eg perishable produce) it is often not sufficient simply to sign the suppliers terms and conditions.
It is worth considering which of the supplies to your business are higher risk and, certainly initially, concentrating your efforts on ensuring that your supply chain for these products is secure. The reputation of your business means that it is worthwhile investing time in making the right choice and ensuring that your decision is not simply based on price. There may be a short-term gain from taking the supplier quoting the lowest prices but this could be at the expense of your business.
Your suppliers should be capable of forming partnership relationships with you. Transparency is a key ingredient for such a partnership and, while no one has the time to live in the pocket of another business, a good measure is that you know at all times how your supplier's business is faring and vice versa. You should know how your supplier's business is developing and changing and your supplier should be able to understand how your business develops and improves its service offer.
• Inspect the premises of suppliers providing you with higher-risk products at the start of the relationship and periodically throughout.
• Ask pertinent questions of a prospective supplier. Consider asking them to complete a short questionnaire covering the salient points which you would have concerns about on a practical or food safety basis.
• Seek references from other satisfied customers of a prospective supplier.
• Review the financial health of a prospective supplier. Credit reference agencies can supply useful information or a finance professional within your business or your accountant can review the historical financial information.
• Review the supplier's delivery of a good service regularly, preferably with colleagues. Consider why you chose the supplier in the first place. Are they measuring up to your expectations or are you seeing a deterioration in service levels (for example; delivery times, turnover of staff, quality of goods, evidence of financial pressure)? If you see any deterioration, address it with your supplier quickly and listen carefully to the explanation.
• Periodically, peer over the precipice at the worst-case scenario for your business. What factors have led to this imaginary perfect storm? What contingency planning could you put in place to mitigate the main risks?
• Review your supply agreements on a regular basis and at least once a year. It is worth taking an hour with an experienced lawyer to consider your rights and remedies in the event that a key supplier lets you down. You need to be able to implement your contingency plan and you may need to fall back on the terms within your contract to make a claim against the supplier who has let you down.
Catering businesses are acutely reliant on real-time supplies. While the reputation of your business is reliant on the quality of the produce supplied just as much as the quality of your service, all readers of this publication will be aware of the stringent food safety regulations and the consequences of failure.
The failure of your supply chain can have catastrophic consequences in terms of your service to your customers and in terms of food safety and traceability issues.
Andrew Tate is a partner and head of restructuring at Kreston Reeves
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