What is a Supply Order?
A supply order is a request for food supplies, ingredients, equipment or other non-food items such as tissues, napkins, cutlery, and so on, that are needed to run a restaurant or food service business. A supply order request is typically made by a business or organization to replenish inventory stocks, but it can also be made by individuals or employees in charge of maintaining supplies. Supply orders may be placed with a supplier, vendor, or manufacturer and typically includes specifications such as the quantity of goods needed, the desired delivery date, and other special instructions.
Drawing up a supply order is one of the first steps in a supply chain. It kickstarts the entire process of a business or an individual moving to replenish their stocks, and a vendor or supplier supplying them with the required goods, following a fixed timeline. A supply order may be created for a one-time purchase, or as part of an ongoing contract between two companies.
Although creating a supply order may sound like a simple job, mistakes in the process can lead to wastage, increased costs, vague purchases, and other anomalies that may end up hurting the business. Let's take a look at some common supply order mistakes and how you can avoid making them.
Supply Order Mistake No. 1- Lack of a Centralized System
One of the most common and costly mistakes restaurant businesses make is not having a centralized system to manage the entire Supply Chain. This can lead to confusion and frustration among employees, wastage of time and money while tracking down missing or incorrect items, and lost opportunities when suppliers are unable to meet deadlines.
The lack of a centralized system can result in inadequate supplies. This may prevent your restaurant from serving all its menu items and customer favorites, particularly those items that are high in demand. This not only hampers sales, but can also give you a bad reputation in the market and cost you customers. Creating a central repository for all purchase orders (POs) is crucial to ensure timely and accurate customer service. This can be done using software systems that integrate with your existing accounting and inventory management systems, such as enterprise resource planning (ERP) solutions. Once everything is part of one centralized system, you can set up automated alerts for low stocks, supply order movement and workflows to streamline the supply chain process from start to finish.
The restaurant supply chain can be a complex and daunting task.
Managing inventory, ordering supplies, and dealing with suppliers can be a full-time job.
Supply Order Mistake No. 2- No Budget Planning
Restaurant Supply is also about budgeting -- not just a generalized budget, but a location- and category-specific budget to manage the supply chain. A well-defined budget has to take into account past spending patterns and forecasted sales.
If you're running a restaurant business, one of the most important things you can do is to create and stick to a budget. This will help you keep track of your spending, ensure that you're not overspending on unnecessary items, and also help you plan for future expenses. Without a budget in place, it's very easy to overspend on supplies, especially if you order from multiple vendors or purchase in bulk. If possible, sit down and map out a budget for your business's supply needs before placing a supply order. This will help you stay on track and avoid making any costly mistakes, especially if you are a small business.
Supply Order Mistake No. 3- Overpaying
Anyone handling Restaurant Management knows that one of the largest expenses your business bears is inventory costs. Many new restaurateurs make the mistake of overpaying for their regular supplies. It is important to try to secure optimum prices for your frequently ordered items like food, paper goods, utensils, and other goods you need on a regular basis. If you overpay for your daily necessities, you will end up exhausting all your financial resources before you make a recovery.
However, there are a few ways to avoid overpaying on your supply orders. The first is to make a comparison. Compare prices being offered by different vendors before making a purchase. Develop a good relationship with your suppliers. If they know you're a good customer who pays on time, they'll be more willing to give you a discount. Finally, don't be afraid to negotiate prices -- after all, vendors do want your business!
Restaurant Supply Order Mistakes No. 4- Over-purchasing
When it comes to stocking your restaurant with supplies and managing the Supply Chain, one mistake you don't want to make is over-purchasing. It can be tempting to buy in bulk or to overstock on items that are on sale, but this can quickly lead to an overflowing storage room and immense wastage, which will ultimately drive up your expenses. Dead inventory stocks are one of the most common causes of high inventory expenses at restaurants.
Instead, take time to assess your needs and only place supply orders for quantities that are realistically needed. This will save you money in the long run and also help to keep your restaurant running smoothly. Also, follow the first-in, first-out principle of inventory management and supply order control, where you use the products you had ordered earlier and have a shorter shelf-life, first. Arrange your inventory shelves accordingly and make sure your staff uses the goods from earlier supply orders before starting with new supplies. You may also offer discounts and special offers when you have extra stocks lying in the inventory. Try to efficiently get rid of the products with these offers.
Your supply chain is the backbone of your business. Without it, you can’t get food to the tables and customers to come in.
You need a partner who understands what it takes to keep your business running smoothly.
Supply Order Mistakes No. 5- Lack of Documentation
One of the most important things to do when placing a supply order is to maintain meticulous documentation. This includes records of what was ordered, when it was ordered, how much it cost, and when it arrived. Good documentation is essential for keeping track of spending and identifying patterns over time. It also makes it easier for managers to compare prices and find better deals in the future. Lack of documentation can lead to confusion, missing items and more frustration managing supplies and inventory when running a small business.
Moreover, if there's ever a problem with a supply order, it will be difficult to resolve without proper documentation and invoicing, as you will have no records or references to help support your case.
Why You Need Order Management Software
Implementing an order management system is crucial for any large or small business that relies on supply orders and needs to track inventory. An effective order management software solution will automate your ordering process and also keep track of your inventory levels, so that you can focus on other aspects of running your business.
The benefits of an order management software solution include-
- Improved accuracy- Automating your ordering process with order management software can help reduce errors and improve accuracy when running the business.
- Increased efficiency- Order management software helps streamline the ordering process, making it more efficient and saving time that your employees typically spend managing orders.
- Better inventory control- Keeping track of your inventory levels with order management software can help you avoid stockouts and overstocks, so you always have the products you need on hand.
- Reduced costs- Ordering products efficiently with order management software can help you save money on shipping and handling costs.
You’re not sure what to do. You know you need to set up a supply chain management strategy, but don’t know where to start.
You need to make sure that your supply chain is effective and efficient.