In the perishable product supply chain, there is always some kind of trade-off when trying to balance costs against transportation needs, inventory management, and overall efficiency. The goal, however, is to keep that trade-off to a minimum.
The best supply chain interventions are ones that close the gap between cost efficiency and overall efficiency. That’s exactly what we’ll be exploring in this article as we break down some of the best sourcing strategies and technologies that QSRs can use to improve their bottom line and optimize operations at the same time.
Foster Supplier Partnerships to Enhance Negotiation and Ensure Quality
A 2024 research paper helped shed some qualitative light on something most in the restaurant world already know instinctively: the importance of strong supplier relationships. Supplier relationships can affect everything from the quality of ingredients to the overall health of a QSR supply chain.
McDonald’s has famously maintained decades-long relationships with many of its suppliers and invested in creating mutually beneficial partnerships wherever possible. Their approach is a lesson to all QSRs on the importance of taking care of suppliers and making them feel like a valued part of the business. The benefits of this approach are almost endless.
If suppliers feel that they are true partners with your restaurant, they’re more likely to be open to negotiation on pricing, go above and beyond during supply chain disruptions, and prioritize the QSR with access to their best product. There’s a level of quality assurance that comes when these relationships are well developed, and suppliers feel that their efforts will be recognized and rewarded.
Harness Technology to Optimize Procurement Efficiency
Procurement is a never-ending sea of tasks for most QSRs. Thankfully, there are plenty of technological innovations that are streamlining the process and helping businesses avoid supply chain disruptions as well:
- Robotics Process Automation (RPA) for Basic Tasks: So much of what makes up the day-to-day procurement tasks are things like data entry, approving routine purchases, processing invoices, etc. RPA technology automates all those tasks so that QSRs are freed up to focus on the more strategic and hands-on aspects of sourcing, like supplier relationships.
- Automated Procurement Systems: Automated procurement systems take things a step further, and while they often use RPA, they combine it with AI and ML technology as well to automate and streamline as much of the procurement process as possible. These systems track orders from start to finish, flag price changes, handle bulk orders, and help reduce stockouts by always staying on top of things.
Another benefit of using automation technology is the boosted accuracy it brings. It takes away that worry of someone clicking too many times and overordering or missing an invoice entirely and thus delaying an order.
- Smart Sensors and Inventory Management: Inventory Management Systems (IMS) are, in and of themselves, a great way to track inventory and plan procurement better. Used alongside technology such as IoT sensors, however, these systems can take QSRs to new efficiency heights.
Sensors can track everything from the condition to the location of the produce in real time and send alerts when products are out of date or in need of a restock.
- AI and ML Assistance for Dynamic Pricing: Chipotle and many others have begun to embrace AI and ML in their supply chains. For procurement efficiency, the technology is most useful in giving businesses a better sense of the pricing landscape. Algorithms can track changes in the market and provide QSRs with valuable data to request more dynamic pricing from their suppliers.
- Risk Assessment Tools: A poor supplier can be a nightmare for QSRs. New risk assessment tools are emerging that use AI and data analytics to pick up potential issues with suppliers early on so that businesses can see when it’s time to intervene or pivot to new suppliers.
Centralize Purchasing to Achieve Economies of Scale
Centralized purchasing is a highly effective strategy for QSRs looking to save costs and increase their efficiency. This approach centralizes all tasks related to procurement into a single department or system.
The advantage of managing procurement this way is that it forces order consolidation, which in turn makes bulk ordering possible. Buying bulk makes it easier to negotiate lower prices with suppliers and often comes with more favorable payment terms because of the high order volumes.
Centralization also reduces the level of admin involved. It’s much easier to automate and manage inventory, etc., if it’s done so by one team and system. This consolidation brings about better data tracking and consistency and ensures that there is a dedicated team on hand to foster strong supplier relationships.
Apply Data Analytics for Accurate Demand Forecasting and Inventory Optimization
The restaurant industry is highly competitive. Every QSR is looking for a way to stay ahead while minimizing costs. Big data is one of the best ways to do it.
Data analytics tools can form a part of automated procurement systems or be used separately. By tracking past sourcing and procurement data such as supplier lead times and costs, these tools will often find patterns that help predict when it’s best to order certain produce, when demand will fluctuate, etc.
They can be set up to take general market fluctuations into account so that all the guesswork of sourcing is taken away. Data can also be used to provide insights on inventory management and help ensure that businesses keep essential items in stock at all tim
Nick Fryer, VP of marketing for Sheer Logistics, has over a decade of experience in the logistics industry, spanning marketing, public relations, sales enablement, M&A and more at 3PLs and 4PLs including AFN Logistics, GlobalTranz, and Sheer Logistics.
