December 5, 2022

Top Purchasing Mistakes that are Affecting your Costs

By TopUp Mama

  1. Over-Paying 

For procurement professionals, getting the best product quality at the best price possible is the dream. Supply chain managers need to build and maintain strong relationships with various suppliers to always be on top of the best deals. 

To avoid overpaying for ingredients, supply chain professionals should be aware of the market changes that affect their business. For example, if there is a nationwide shortage of maize, the price of maize meals might increase. 

Another tip is to have major suppliers that provide you with all / most of the ingredients you purchase often. When you purchase in bulk from a single supplier, you are likely to benefit from discounts and promotions. 

  1. Not enough Information on your Purchase Order Forms 

A procurement purchase order form is an important tool for managing the purchasing process for your business. Having enough information on the form can help to ensure that the purchase is made correctly and efficiently. 

Detailed order specifications will help you avoid errors, facilitate communication between supply chain players, keep records of all your purchases and improve the overall efficiency of the purchasing process. Consistency in order intakes can also be observed if order forms are clearly outlined. This way, the process can run smoothly even when the overseeing manager is not around to ensure it. 

  1. Not Streamlining Back of House Procedures 

Inefficiencies in the Back of House procedures and processes can lead to wasted resources, such as food and supplies, and can increase costs for your business. Regularly reviewing these procedures and processes can help to identify opportunities. Reviewing this documentation can help ensure that your business stays for cost savings.

  1. Not Carefully Reviewing Documentation 

Invoices and delivery notes provide important information for financial management and budgeting, such as the costs of goods and services. Reviewing this documentation can help to ensure that your business is staying on track with its financial goals.

To improve the overall efficiency of the purchasing process: Regularly reviewing invoices and delivery notes can help to identify inefficiencies and bottlenecks in the purchasing process, and can lead to improvements in efficiency and productivity

Simple things like checking invoices and delivery notes before signing them are prudent. Check quantities, pricing, and quality (rejects), and ensure that all the numbers are correct to avoid costly procurement mistakes. 

  1. Lacking a Centralized Procurement System

For businesses with more than one location/branch, a centralized purchasing system helps your team manage the cycle. One team working within a dedicated system keeps costs under control and also with easy reporting. While this means a lot of work for the team, it ensures minimal mistakes, and better data, and insights which improve the quality of all processes. Centralize your procurement with TopUp Mama. It makes your life a whole lot easier! Request demo. 

  1. Lacking Location-specific budgets

If you are purchasing supplies for more than one business location, it is advisable to know the estimated budget spend for each of these locations based on forecasted sales and budgeted food costs during a particular period. This way, you are more likely to stay on budget with a short allowance for extra spending or, sometimes, some extra cash to spare for future purchases. 

  1. Over-Purchasing 

Over-purchasing is the number one procurement mistake that drives up the food cost in the hospitality industry. Not only does over-purchasing lead to more food waste, but it also causes overstocking which can lead to pilferage and unplanned promotions to liberate storage space thus blowing your business’ margins. 

Audit your inventory and waste and always order to par every single time. This way you can easily keep your costs in line, and your waste minimal. 

Data-driven purchase orders should be the norm in every procurement department. When you use procurement software like TopUp Mama you avoid overstocks and shortages that cause fluctuating sales and deteriorate margins.  Request a Demo by filling out the form at the Get Real Support section of our website.  

In conclusion, restaurants should be careful about buying in bulk by avoiding buying perishable items in large quantities, and considering the cost and value of items before making a purchase. We recommend that you develop a purchasing plan and budget to help you make more informed and strategic decisions about what to buy. We also encourage restaurants to seek out the advice of industry experts or consultants to help them avoid common purchasing mistakes and optimize their purchasing decisions. Relying on procurement software is one of the best ways to optimize everything. 

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