Easy Solutions to 4 Common Supply Chain Process Problems

What is a Restaurant Supply Chain?

The restaurant supply chain is a set of links that connects a restaurant's suppliers to its kitchen. The supply chain makes sure a restaurant has what it needs in food and beverages to meets its daily customer demands. Supply chain management involves identifying the restaurant's needs, fulfilling them at the vendor's end, delivering them to the restaurant, and turning those items into sellable dishes for customers to enjoy.

There are five elements of the restaurant supply chain that can help scale up your business-

1. Forecasting demand- This function marks the beginning of your supply chain. Supplies are ordered based on projections of what customers are expected to demand in the near future. These projections are, themselves, based on historical customer demand trends.
2. Vendor management- A restaurant's supplies are procured either directly from farmers or their distributors. Finding vendors can be tricky, because you need a trusted partner for your business who can supply the best ingredients at an optimum cost.
3. Inventory management- Tracks inventory in real time so that a restaurant always has a grip on stock levels to make sure no ingredient runs out.
4. Purchase order- Supply chain platforms automatically replenish diminishing inventory by initiating purchase orders with vendors. This makes ordering easy and error-proof.
5. Managing consumption and variance level- The difference between the volume of ordering inventory and its actual use is known as variance. When preparing food, some amount of raw material is always left over. A restaurant's goal is to minimize its variance level to lower food costs and increase profits.

What is Supply Chain Management and Why is it Important?

To run a successful business, it's important for a restaurant to offer the same taste and quality to its customers each time they order their favorite dishes. To make that happen, the restaurant has to have strong backend technology that manages the supply chain of goods that are needed to make the restaurant successful. Continuously replenishing the inventory and balancing it with the demand generated from customer orders is something inventory management software does well.

In the last two years of the pandemic, disrupted supply chains have caused massive problems for all kinds of businesses. This is why business owners today are working harder than ever to shore up their supply chain management process. With supply chain management, restaurant owners are able to maintain good relations with vendors and distributors, control food costs, and maintain the high quality of raw materials and supplies. Upshot- exceptional Customer Service.

Relationships with vendors is one of the most important aspects of supply chain management, as restaurants are dependent on them for supplies. Trust, food quality, and food pricing are the factors that determine this relationship, and businesses constantly strive to balance all three.

Another important aspect of supply chain management is technology. Order Management software and inventory software are used to control purchase, procurement, fulfilment, shipping, and delivery of raw materials. Order management software makes sure a restaurant's Food Supply orders are delivered on time and meet expected quality and costs.

A restaurant supply chain is the backbone of a business. But it’s often beset with challenges.

This article addresses four common problems the supply chain process faces, and offers simple solutions to tackle them.

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Supply Chain Problem and Solution No. 1- Supply Issues

Problem-
You want to scale up your business, but you're encountering several problems with your supply chain that are holding you back. You rely on your vendors to deliver goods on time, but their promises never hold true. Your supplies are perennially delayed and you can't fulfil your customers' requirements. This has had a negative impact on your sales and brand reputation.

Solution-
1. Adopt technology so that every minute detail of your inventory is stored and tracked. All you'll have to do is log in to your mobile devices to check your inventory levels and re-order what you need with just the click of a button. No need to rely on people as it leads to confusion and miscommunication. Generate the requirement of supplies straight from the software to your vendor, while maintaining the pricing.
2. You should never rely only on one vendor to fulfill all your restaurant needs. For each item, you should have al least two vendors at hand. This allows you to depend on one or the other, making sure you receive your inventory on time. When you have more than one vendor, it's also easy to get a competitive price.

Supply Chain Problem and Solution No. 2- Price Fluctuations

Problem-
In the past few years, raw materials in general, and food supplies in particular, have witnessed a steep price rise. There can be more than one reason for these price hikes- changing seasons, unexpected weather events, unstable economies, and so on. When your cost of inventory increases, so do menu prices. This can lead some of your customers to cheaper restaurants.

Solution-
Understand your vendor woes and strike a good bargain with them. If that's not possible, try and use local produce that's readily available and cheaper. You can also try to modify your menu depending on the season. For example, mangoes are not available through the year, so introduce mango dishes during summers only. This simplifies the production process, and you don't have to change your menu pricing for the same dish again and again. Your restaurant management software manages these seasonal changes intuitively. Its analytics and reports also highlight new trends to adopt and point out hot-selling items on the menu.

Supply Chain Problem and Solution No. 3- Vendor Management

Problem-
Relying only on vendors for timely deliveries is not a great move, as far as Risk Management is concerned. It's like shutting your eyes while you're in the middle of a storm and pretending it doesn't exist. As a restaurant owner, it's your responsibility to manage inventory needs and check the quality of goods to make sure they are up to business standards. Vendor relationship is central to any business that involves good supply chain management. So how do you make sure you're supplied with good quality food at a low cost, consistently?

Solution-
Vendor management involves centralizing all the details related to invoices, contracts and delivery logs in one place and tracking them in real time. The transparency provided by chain management scm helps improve communication between supplier and buyer, making the supply chain process quick and efficient.
Inventory management automatically initiates orders with vendors by analyzing Big Data across inventory. It identifies what needs to be ordered, in what quantity, and at the best price from the list of vendors and their quotations.

There are multiple factors that impact the supply chain process of a restaurant. Unchecked, they can upend a business.

This article identifies the problems and suggests easy and effective ways they can be countered.

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Supply Chain Problem and Solution No. 4- Purchase Order Management

Problem-

You're running a restaurant chain and each unit has different inventory requirements. You've placed your purchase order for every restaurant and the deliveries are made. You later learn that one restaurant has received more stock and has no storage space, while the other restaurant has not received supplies at all. Such situations occur when inventory requirements are not properly analyzed and communicated well.

Solution-
To make great sales and build your business, you need to get your basics right. Purchase Order management is a very crucial step in the supply chain management process, as it initiates the demand process. By adopting technology, you can analyze data that will show exactly how much inventory is needed by every restaurant you manage. Inventory software lets you order, track and receive equally distributed inventory across all units in your chain.

Advantages of Order Management Software

Automating the inventory replenishment process in a restaurant supply chain is one way to streamline operations. Some of the benefits include having more time to serve customers and getting better pricing information from suppliers. Here are the advantages in detail-

• Reduced Costs - By monitoring your inventory levels, you can place your orders well in advance. The ordering software is programmed to automatically place orders and can save employee hours and costs raised by the manual handling of inventory.

• Right amount of Inventory - When your inventory is low, it can lead to low sales. When you have more inventory than you need, it leads to wastage. But with ordering software, you can track your inventory levels in real time, and order an item only when it reaches par level.

• Curb Wastage - Wasting food is not only harmful to the environment but also affects your food budget. Food wastage can signify two things for your business -

1. You are overspending on your inventory.
2. Your demand forecasting is inaccurate.

Your restaurants are running low on supplies, your employees are struggling to find the right ingredients, and your customers are feeling frustrated.

These four easy-to-implement solutions will help you streamline your supply chain process and save time and money in the process.

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