Food Procurement: Tips for a smart and responsible approach
At critical times over the past twenty years food inflation has been more volatile than the rate of overall UK inflation. This has created significant pressure on catering budgets, highlighting the need for schools to apply strategic procurement principles to deliver value for money. Annual increases of food inflation of 14% and 7% in 2008 and 2011 respectively were handsomely eclipsed by an annual CPI food rate of 19.1% in 2023. This was nearly double the rate of overall CPI which reached 11.1%.
Recent food inflation has coincided at a time when schools face other challenging cost pressures. Adopting essential procurement standards will help schools to provide value for money, improve service levels, raise quality, innovate and enhance the pupil’s dining experience.
Here is a guide, including the key considerations when tendering or reviewing your food procurement… for your peace of mind.
There are some simple and effective principles that can be employed in schools to help catering teams to enhance sustainable value and achieve effectiveness and competitiveness within their broader supply chain.
1. Recognising that price is only one aspect of purchasing catering goods.
Other factors include:
• Delivery capability
• Food safety
• Quality
• Yield
• Seasonality
• Availability
• Support
• Allergen information
• Innovation
• Environmental and social value impacts
1. Assessing and auditing potential suppliers to identify capability and current performance.
Suppliers should commit to providing full visibility of their value chain to meet the changing environmental landscape and to build food system resilience against the worst effects of climate change.
3. Being aware of market conditions.
Food commodities often follow seasonal cycles that impact price, quality and availability.
Early involvement of and communication with food procurement specialists and suppliers helps to optimise purchase timings which is critical to effectively managing food commodities and unstable market conditions.
4. Analysing the likely future usage
...of high volume and high-value food items.
This includes factoring in menu and recipe changes.
5.
1. Conducting cost analysis across a fully weighted basket of goods.
Many suppliers discount a limited number of key product lines but recover margin across the rest of the basket of goods.
Evaluating the top 50 product lines or limited analysis is likely to provide false readings.
Mike Meek
Procurement & Sustainability Director at food procurement experts, allmanhall
“Here at allmanhall, we strive to transform food systems both affordably and sustainably. We specialise in building climate resilience, protecting our natural capital and enhancing social value, whilst still delivering vital cost savings. Established 18 years ago, we partner with schools to bring about informed and transparent food supply chains.
When managing the supply chain, there are several areas we focus on to help reduce costs for our clients.
In the spring of 2024, independent benchmarking of pricing using Quennelle’s showed allmanhall have increased competitiveness against the market place by over 10%. This is despite food inflation for the year prior to the analysis. Further analysis more recently still, of 6291 SKUs and £9.65M spend, showed allmanhall achieving food prices that are 7.5% more competitive.
When managing the supply chain for our client partners, there are several areas we focus on to help reduce costs for schools. This guide explores some of them and provides tactics Bursars can employ too.”
Tendering
Tendering can be an effective project, used to evaluate, improve and perhaps change suppliers. The overall aim is to ensure the most preferable pricing whilst still maintaining or even enhancing quality and yield.
Key considerations when tendering or reviewing food costs
• What are the specific criteria by which you will compare?
• How will you weight these?
• Will these enable a direct comparison that reflects suitability based on your school’s specific need?
• Will the criteria help identify beneficial opportunities and changes?
• Have you involved the catering team in defining these criteria?
• Through benchmark analysis, make sure you’re looking at savings on a weighted basket rather than line by line pricing.
• Have you applied Pareto principle? Focus on the 80% you buy regularly and not the 20% ‘tail’.
• Is consolidation an option? This can apply to:
- The number of suppliers
- The number of lines purchased – could range management consolidate duplicate lines?
• In addition to price, have you considered factors such as:
- Product specification
- Supplier service and delivery
- Commercial terms
- Yield
- Operational considerations of limitations such as freezer storage space
Evaluating suppliers – The 10 Cs
In line with best practice from the Chartered Institute of Procurement and Supply (CIPS), an expert approach to supplier evaluation should follow Carter’s 10 Cs…
Cost
- Price competitiveness
- Price stability and price holds
- Value through scale
Clean
- Act responsibly and ethically
- Product traceability
- Sustainability plan
- Supplier auditing
Control
- Insurance
- Accreditation and food safety
- Allergen control
- Ability to implement
Authorised Buying Lists
Communication
- Account management
- Finance reports
- Offers
- Out of stocks and delists approach
Consistency
- Trusted
- Order fulfilment process
- Quality control
Capacity
- Current capacity
- Depots and distribution
- Future demands
Cash
- Financial risk
- Current credit score
Competency
- Sector specialism
- Delivery in delivery window
- Accreditations & awards
- Seasonality and market updates
Culture
- Employee professional development
Commitment
- Service and performance
- EDI capable
- Engagement with review process
- Qualifications and developmental experiences
Delivering sustainable value: because good food shouldn’t cost the Earth
Climate, CSER, Community and Carbon impact are further ‘Cs’ which could also be considered in the evaluation process to enable responsible evaluation for long term sustainable value.
For example, as Gold Rated by both Investors in People and EcoVadis, allmanhall upholds accredited principles and holds all core suppliers to high standards, on an ongoing basis.
The standards expected of suppliers can be explored more fully in this Supplier Code of Conduct.
In short:
“Our client and supplier relationships are established on fairness, integrity, longevity and mutual respect.
We expect our suppliers to uphold these same values and to commit to bring about transparency within their supply chains so that our clients can appreciate what lies behind our food from a social and environmental perspective to the same extent as to how we consider, quality, cost and taste.”
Continuous supplier management
Whilst a thorough and considered process of tendering or reviewing suppliers should ensure the selection of an appropriate supplier and market competitive pricing, continuous supplier management thereafter is sometimes overlooked and, after a time, can lead to complacency.
Take a look at this real-life example…
Jo Hall Development Director at allmanhall
“In 2023, a catering team at a school approached allmanhall for a benchmark. They had been managing their food procurement directly with a supplier. The school had carried out a tender at the start of that supplier contract and were relatively happy with the quality.
However, they were busy with the day to day catering and did not have the capacity for continuous supplier management. Nor were they procurement professionals.
By not even changing supplier, just through application of expert procurement practices, allmanhall:
- demonstrated feasible savings of 8.9% per annum
- streamlined some of the more manual processes eating into their time - brought about availability of data and visibility
- gave the school greater control of their food spend
- identified opportunities to gain greater value
- mitigated price increases through negotiations
- further enhanced the supplier’s quality and delivery standards
- after working with this particular school as procurement partners for a year, achieved an actual saving of 11.9%
- … and had enabled a benefit of a 1% loyalty payment from an incumbent supplier that hadn’t previously been awarded.
The school’s food purchasing spend was over £600,000 a year. So more than £70,000 benefit was achieved, per year, simply from working with a procurement partner to ensure continuous supplier management and avoiding complacency post-tender.”
Delivering sustainable value: because good food shouldn’t cost the Earth
Operational processes
As well as Continuous Supplier Management, simple and effective operational processes are another area to consider if your school is to achieve ensure best value from food procurement on an ongoing basis.
Earlier we briefly touched on consolidation as a strategy to reduce costs. This extends from range management and the number of suppliers to more operational considerations, such as the cost to serve... the cost of pulling up a handbrake.
Your school’s cost to serve will be enhanced by reviewing the number of days a week deliveries are needed. And how much is delivered at that time. An effective approach to procurement will ensure these benefits are be passed on to your school through drop discounts and other cost savings. Furthermore, the number of vehicles on site and frequency of deliveries will reduce the amount of time the catering team are spending on delivery-related on-site operations and have the added bonus of lowering emissions.
Hayden Hibbert Client Relationship Director at allmanhall
“Before joining allmanhall in 2014, I was Head of Catering for a group of independent schools, and a client of allmanhall. Our in-house catering operations produced over 3,000 meals a day for pupils from 85 nationalities aged between 3 and 18.
This experience has given me a unique and advantageous perspective of the advantages and benefits our clients receive from their partnership with an expert procurement partner. The key benefits for me were peace of mind through knowing my schools were receiving the best price on every order placed, all suppliers were quality accredited, accountable and any issues robustly managed on our behalf. All this as well as access to a transparent and efficient finance and invoicing controls platform which, very importantly, saved my team time… invaluable to any busy operator!”
See the next page for more operation processes to enable maximum value from your food spend…
What other operations processes and considerations can help maximise value from your catering budget?
• Waste reduction – read more about that here in another guide produced for the ISBA: https://issuu.com/allmanhall/docs/amh_food_waste_guide_ for ISBA
• Track take up and head count for each service, and amend production volumes accordingly
• Effective and collaborative recipe engineering, working with suppliers and / or procurement partners to cost dishes
• Dynamic and flexible menu planning, make the most of ingredient promotions and seasonal produce
• Regularly reviewing menu cycles to help prevent high-cost items from dominating the menu
• Undertaking a review of protein sources and portion sizes and ratios, linked to defined specifications and nutritional compliance
• Carbon intensive recipes can form part of this review too. Take a look at this example of what the in-house catering team at Epsom College are doing in partnership with allmanhall: https://allmanhall.co.uk/blog/ epsom-colleges-sustainability-journey-with-allmanhall-reaches-a-newmilestone
• Investing in effective and efficient equipment – the benefits often outlay the initial investment and will be quickly recouped
• Increase storage capacity to benefit from higher volume and less frequent deliveries
• Catering controls platforms and support that saves your catering team time, releasing them for catering tasks rather than administration
• Review non-core feeding (free issues and hospitality), to ensure requisitions are appropriate suited to requirements
• Ensure cost centres are transparent and defined, and that those responsible for spend are accountable for budgetary performance and that this is monitored and visible
• Consider zero-based budgeting as an approach as opposed to incremental budgeting
• Review production line techniques and workflow to drive efficiencies
• Focus on staff development and upskilling the catering team, working with external experts such as https://hittraining.co.uk/
• Network with experts and other caterers, sharing ideas and solutions.
The question of whether to outsource or manage catering in-house…
Key reasons to consider in-house are cost, control and agility. An in-house team employed directly by the school supports a culture of inclusion and the quality of the food offering can directly align to the ethos of the school.
Key reasons for considering a contractor include the removal of the labour / resource burden (HR etc). Sometimes a the quality of food offering is also a reason given for outsourcing. However a skilled and experienced catering manager with a competent and professional team can certainly explore all the required deliverables; from food quality and innovation to safety and compliance. With out-sourced catering often comes attractive offers of capital investment. Yet the repayments will, most likely, favour the contractor. There is after all no such thing as a free lunch… literally, in this sense! In the most recent benchmark for a school using a contract caterer, allmanhall identified a food cost saving on a like for like basis of 23%. Prior to that the average saving was as high as 30%.
There are arguments for both models and these have been previously covered in allmanhall x ISBA webinars. You can explore this debate in greater depth here: https://allmanhall.co.uk/blog/the-benefits-of-inhouse-catering
Food procurement expertise and foodservice consultancy: allmanhall.co.uk
Real life example: One of our long term clients changed their inhouse catering solution and took the decision to change to outsourced catering last August. Unfortunately they've not been satisfied with the new solution this past academic year and therefore asked us to benchmark the catering purchases under their new arrangement.
allmanhall have done so and are achieving 19.8% cost savings, rising to a huge 24% when drop discount value is applied. No detrimental impact on quality or provenance - these are like-for-like savings.
Ending on some notes of caution…
There are certain practices that ring alarm bells and may require a closer and more questioning look if genuine value and availability of information regarding your food supply chain are to be accessible to your school. It may be wise to be wary and mindful of the following…
• Incumbent prices that suddenly drop when benchmarked or challenged
• Fixed prices for long periods – especially for fresh produce and if fixing at a high
• Capital investment as part of the contract - the cost will be recouped somehow during the contract lifetime
• Food miles as a sustainability approach – it is about what food is eaten, not where it’s from. Transport is such a low proportion of overall emissions. (You can find out more here)
• Any benchmarking approach that doesn’t look at a weighted basket
• A provider who only benchmarks a short price list / small number of products
• Informal supplier / catering team ‘arrangements’ or rewards
• Who owns the catering budget and what is spent on food – your internal team or outsourced contractor?...
• What is the governance of this budget and what visibility do you have over it to ensure due diligence?
• Are there hidden costs?
Some of these things may initially seem appealing.
However, on reflection the more nebulous the costs, the harder it may be to achieve visibility, control and value for money for your school.