Common Mistakes that Purchasing Managers Make

John Lawn

The purchasing manager plays a critical role in most foodser-vice operations, although sometimes not a very visible one.

The very nature of the job involves lots of paper work, computer work and phone work—not the kinds of activities that take you to the front of the house where you regularly are working with customers and staff. But it's a role that is a lot broader and more complex than is often imagined.

A good purchasing manager must of course know how to negotiate good pricing agreements, but he or she also plays a key role in coordinating purchasing activities with food production, food safety programs, operations, receiving, IT and other areas. To work effectively with vendors, purchasing must under-stand logistics, warehousing, transportation and other issues as well as working effectively with those responsible for an opera-tion's menu mix and nutritional programs.

In short, the purchasing manager is responsible for making sure the right product is on hand at the right price at the right time and in the right amounts for just about every meal or service a foodservice department provides.

There are many times that the purchasing manager will find that his suppliers are his or her most important resource, helping to provide the detailed specs, product data and application information that he or she needs to do his job well. Recently I had the pleasure of moderating a supplier's panel on this subject.

Our group discussed "The Top Ten Mistakes that Purchasing Managers Make," highlighting some of the subtleties the purchasing manager's job entails, with an eye to ways they can be accomplished more effectively in the context of building constructive supplier relationships. It was a topic I thought would also make a useful one for my column, so here's the first of two installments.

So what are some of the common mistakes purchasing managers make in the pursuit of their goals?

They can fail to be realistic about what can be expected in terms of long term pricing and supply guarantees for items subject to the rise and fall of commodity markets. Everyone would like long-term, stable prices for items like lettuce and ground beef, including those who produce them. But that doesn't make price and supply stability a reality. Negotiate a fair and auditable cost-plus agreement on items subject to market forces. Then, honor your end of the agreement when it's a buyer's market if you expect it to be honored when the market turns to the seller's advantage.

A purchasing manager can become so intent on "buying like the big guys" that he or she loses an appropriate perspective on the actual purchasing volume that's being leveraged. Purchasing clout depends on many things, including the old adage, "if you don't ask, you don't get." At the same time, effective purchasing negotiations require realism on the part of both buyers and sellers.

Many times it's a matter of picking your battles wisely. Unless you really have the purchasing volume to back it up, simple economics will dictate that you can't ask your distributor for daily drops at multiple locations during peak demand times while also receiving rock bottom prices. In a manufacturer negotiation, if a bid price is your main objective, don't expect to also receive extensive promotional and merchandising support. Everything has a cost, and in the end that cost is reflected in your price. Pick the parts of the "value equation" that are most important to you and make them your primary negotiating focus. Be ready to compromise on other issues to reach your primary objective.

Not allowing enough time for suppliers to adequately complete and document RFPs and bids. This is a classic case in support of the idea that "where you stand depends on where you sit." Most purchasing managers pretty regularly find themselves in positions where they have to generate bid estimates and pricing forecasts under tight time constraints. Many of the suppliers who have to provide that information hold jobs that require them to travel frequently and which do not come with a great deal of administrative support.

Complicate this with the bid and RFP documentation often required by state or public sector regulation and you have a pressure cooker environment in which both purchasing managers and vendors find themselves facing one tight time constraint after another. There only real answer here is for each side to respect the deadlines and resources of the other and to try offer as much warning and breathing room as possible.

On that note, I'll hold my remaining comments until next month.