Central procurement unlocks a world of opportunity for SMEs

There’s much debate over the benefits of centralised procurement as opposed to decentralised. As featured in the January 2021 CIPS Supply Management Magazine, Sophie Daniels, our Category Development Director, shares her thoughts on why centralised food procurement works for Foodbuy.

“We’re a group procurement organisation, or GPO for short. That means we use our client’s combined purchasing power to secure best in market pricing for our customers. The more our clients purchase, using the same products and suppliers, the lower the individual cost for everyone. It’s also a win for suppliers as they’re able to streamline operations and negotiate pricing with one organisation, instead of with many companies.”

“For a GPO model to work, the procurement needs to be centralised, but the benefits are far wider than just cost savings”, explains Sophie.

Sustainable supply chains

“Now more than ever, supporting local and smaller suppliers is vital. We work with 600+ SMEs, over 20 social enterprises and c.80% of our food comes from the UK. By consolidating deliveries and nominating products through central distribution partners, we unlock a world of opportunity for SMEs, as well as reducing food miles and CO2 emissions across our supply chain”.

Data is king

“Without access to meaningful data, centralised procurement models are destined for failure. At Foodbuy, we’re fortunate enough to own the foodservice and hospitality industry’s leading Procure-to-Pay and eProcurement system, Epsys. This gives us full visibility of our client’s purchasing - helping us to identify potential switches, optimise buying behaviours, report on sustainability goals and much more. Thanks to our centralised model, we’re able to maximise the benefits of our procurement decisions by embedding them far and wide”.

Robust processes

“Robust processes underpin all great centralised procurement models. All our procurement activity follows an award-winning procurement framework with clear owners, activities, triggers and checks. Plus, every project is also underpinned by an annual sourcing calendar allowing us to go to market at the optimum time to reduce the impact of seasonal, market-driven changes.”

Relationships and expertise

“One of the most common misconceptions of a centralised model is it’s always a ‘cookie-cutter’ approach. At Foodbuy, we collaborate with clients to ensure specific purchasing or local requirements are met with the right rigour to ensure a competitive price and safe solution.”

“We also have real breadth of expertise. We have the purchasing power of over £1bn, spanning 70+ specialist categories - 75% food 25% non-food. Our teams regularly review the macro-economic market to identify opportunities that in combination with our in-depth category knowledge, enable us to build robust negotiation plans whilst delivering bespoke procurement and supply chain strategies for our clients.”