Posts tagged Food Cost Tracking
What Is An Order Guide? And Why You Should Request + Review Them Regularly
 
zucchini

Last week I discussed the Top 5 Benefits of Using a Custom Order Guide, and I got a few questions about what exactly an Order Guide is and why they are an important tool for Chefs + Buyers. So, here is some basic and essential information regarding what an Order Guide is, how to obtain them and why it's so important to request and review them regularly. 

WHAT IS AN ORDER GUIDE? 

An Order Guide is a report of all of the items you have purchased (or plan to purchase) from a vendor, and the associated pricing. 
Each vendor you work with (your produce vendor, meat vendor, seafood vendor, cheese vendor, cleaning + supplies vendor, etc.) typically creates an Order Guide for your business at the beginning of your relationship based on the specifics you give them about the items you want to order and the volume in which you'll be ordering them. 

For example, if you've indicated that you want only Bellwether Farm's Ricotta cheese, that information will be stored in your Order Guide so when you request "Ricotta", the vendor knows which brand of Ricotta to send you.
The guide also includes the price you pay for that Ricotta. It is true that not all businesses pay the same price for a product ~ depending on the volume of product that you purchase or your overall spend, you will pay more or less for a product than your neighbor. To ensure that you are charged the appropriate price, vendors create Order Guides for each of their customers. As time goes on and you purchase additional items that were not in your original order guide, they are added.

After working with a vendor for a few months, you can request an Order Guide for a stated timeframe. Unlike the initial Order Guide the vendor created, this will show the count of each item that you ordered within the stated time frame, the total spend per product, any price changes etc.  I'll discuss the importance and benefits of reviewing your Order Guide regularly below.
 

How DO YOU OBTAIN AN Order Guide?

Obtaining order guides is very easy.  Simply request one from you sales representative(s) and specify the date range that you want the guide to show. The last 3-6 months is generally a good place to start, especially if you are a seasonal restaurant.  

If you are a fairly new business, or you are just getting started with a new vendor, ask to meet with your sales representative and detail the products that you would like to source from them.  Be very specific about the brand, quality and unit size that you desire for each product, and your best estimate of how much you'll order per month. Your rep will take this information back to their team and produce your order guide, complete with pricing. 
If you are exploring possible vendor partners, do this exercise with all the vendors you are considering working with then compare the product quality and pricing that each has offered to determine the best possible partners for your business. 

When you choose your vendors, hang on to the initial order guide(s) and in 3-6 months request your order guide history.  Compare your actual volume to your estimated volume, your actual costs to their initial quotes, and review items #1-5 below to see if there are any changes or requests you can make to save money without hindering product quality. 

Note: Many companies now offer online order systems that allow you to easily access your Order Guide or "Profile" with current pricing.   This is helpful for obtaining current pricing and reviewing the items in your Order Guide, but won't provide the order and pricing history that is necessary to obtain the benefits in items #2-5 below.


What are the Benefits of REQUESTING + Reviewing Your Order Guides? 

Reviewing your Order Guides regularly (or creating a Custom Order Guide) is key for making informed purchasing decisions and ensuring you are getting the best quality products at the best price. It also ensures that your vendors stay competitive and helps your business run smoothly.
Here’s how…

1. ENSURES THAT ONLY THE ITEMS YOU'VE SPECIFIED GET DELIVERED
Many clients have run into the problem where incorrect products are being delivered regularly and need to be returned.  The cause is most often that somewhere along the line their ideal product was unavailable and a substitution was delivered and accepted.  The substitute product was then added to the order guide and deemed an acceptable item for delivery by the vendor.  Resulting in the substitute product being delivered without notice.
Reviewing your order guide to remove any items that were mistakenly added will prevent the incorrect item from being delivered again in the future, unless absolutely necessary.
 

2. GIVES YOU THE ABILITY TO REQUEST VOLUME DISCOUNTS BASED ON ACTUAL PURCHASES
Vendors are unlikely to offer you a break in price without you asking for it.  Reviewing your order guides regularly and understanding the volume you are using allows you to recognize if your order volume has increased for a particular item, and if it has you may be able to request a volume discount. 
 

3. HELPS IDENTIFY IF BULK PURCHASING CAN SAVE YOU MONEY
In reviewing your order guide, you may see that you're using an average of, let's say 15# of garlic per week. Frequently ordering 3 to 5 5# containers rather than purchasing one 20# bulk case, which is less expensive per pound. You can make the switch and start saving money right away!  
Similarly, you may see that your monthly spend on mushrooms is very high compared to other items in your guide.  If the mushrooms aren't center of plate, or are being chopped up very small for a dish, you may be able to get #2 mushrooms from the same farm at a lower price, because they are broken or a less desirable size ~ both of which are fine for your use. This change will also save you money without affecting the quality of your finished product.
 

4. ALLOWS YOU TO COMPARE PRICE + PRODUCT INFO WITH OTHER VENDORS
I am not an advocate for sharing order guides amongst vendors to obtain competitive pricing. I am however, an advocate for sharing the product info and current order volume that an order guide details with other vendors at least once a year to obtain their product availability and pricing, and then comparing it to current pricing. Hopping back and forth from vendor to vendor to get the best price is exhausting and won't lead to valuable long-term relationships.  Privately comparing prices and product availability across vendors and being open and honest about it, ensures that you continue to get the best product possible for your business at the best price, and keeps you informed. 
 

5. HELPFUL FOR CREATING INVENTORY + ORDERING TOOLS
Order guides are very helpful for creating inventory sheets - the sheets that list all the products you keep in inventory, their location in the kitchen, standard pars and who the items are ordered from. A well organized inventory sheet will allow your team to walk through the kitchen and storage areas just once, identifying inventory quantities and order needs, and enabling them to easily place orders by vendor directly from the sheet, or via the custom order guide template.
 

6. PROVIDES EVERYTHING YOU NEED TO CREATE A CUSTOMER ORDER GUIDE
A Custom Order Guide is resource that holds information about every item you source, from every vendor you work with,  with order unit, price and other important details, in a single location.  It is created by gathering your individual Order Guides and entering the product information into a Custom Order Guide Template (we call ours the Ultimate Ordering + Budgeting Tool).
In its most basic form it is a spreadsheet, but it is an extremely powerful spreadsheet utilized for ordering, receiving, price + product quality comparisons, tracking food costs, and creating an in-house seasonal guide.  
It can be a critical tool for success in your restaurant, catering company, brand, market or other food-driven business.  Learn more about Custom Order Guides and the benefits of utilizing one here


Got Your Guides, But Need Some Help?

Requesting and reviewing your order guides is pretty straight forward, but I know that Chefs and Business Owners often don't have the time to add another project to their list ~ regardless of the money-saving potential ~ there are simply too many fires that need your attention!  

Get in touch and we can set up a time to review your current vendors, order guides, usage patterns + pricing. If you’d like, I can also create a project plan for building your Custom Order Guide and offer suggestions for partner + pricing improvements.

 
5 Benefits of Using the Ultimate Ordering + Budgeting tool
 
tomatoes

Reviewing the order guides from each of your vendors is a very good idea for several reasons, but looking over static reports when this information can change almost daily is not going to help you build a profitable business.

Frustrated with the lack of real-time information to help me make smart purchasing decisions, I created what is now known as the “Ultimate Ordering + Budgeting Tool”. A low cost and extremely powerful spreadsheet that has been critical to my success and to the success of my catering, restaurant, wholesale + retail clients. How, You Ask... ? 

The Ultimate Ordering + Budgeting Tool utilizes filters and formulas to deliver information to you quickly and in real time.  When used to its full potential it can be the most powerful tool in your kitchen and one of the most valuable to your business. 

Here are the Top 5 Benefits of using a Custom Order Guide (yes, there are more) and how they can help you and your team save time + money. 


Quickly Compare Products, Quality + Pricing Across All Vendors

As a Purchasing Manager it is your job to make informed purchasing decisions - to obtain the product that best meets your need, that is the best quality, and the best price.  If you are working with just one vendor for produce, for example, you limit your sourcing options and eliminate the ability to cost compare to ensure that you are getting the best product on the market at the best price.  With two or more vendors in your arsenal, and by utilizing a Custom Order Guide, you can consider several product options and identify the best price very quickly.

If for example you're sourcing beets and want Baby Chioggas with beautiful tops attached, you'd filter the sheet quickly to show your beet options - eliminating from the view any without tops - and you would get something like this... 

Beet Quality and Cost Comparison

A quick scan of the options show that Rutiz Farm has Baby Chiogga beets with tops for a price of $2.00 per bunch. Other vendors or farmers do not offer exactly what you need, so you order from Rutiz Farm.  If you needed Gold beets with tops, and size didn't matter, you would likely choose the gold beets from Domestic Produce because they are the lowest priced option at $0.89 per bunch.

This example assumes that all products are of equal quality. If you are sourcing a mix of Organic and non-organic products; grass-fed and conventional meats; wild and farmed seafood, etc.  I highly recommended that you include these details in the item info so that you can easily compare quality too.  It would look something like this... 

Meat Comparison


Eliminate Pen + Paper Ordering - SAVING YOU LOTS OF MONEY

I get it. It's a quick, down and dirty, simple ordering. And you've been doing forever, right? And it works great, right? 
I beg to differ.  

What I've discovered is that pen and paper ordering without an inventory guide typically results in missing items. 
For example, if there is no butter for you to see in the fridge and you don't remember in that moment that butter usually sits in that space - you won't write it down.  Butter seems obvious, but it's happened!
The result is that butter doesn't get ordered, and the the next morning someone (possibly you) is sent to the store to purchase the missing butter (and other products that inevitably are discovered missing), losing production time, overspending on retail products, not getting the quality product that you want, etc., etc.

I've also uncovered a lot of over-spending that results from pen + paper ordering. 
The most vivid memory I have of this is a client who requested a general audit and my recommendations for areas of improvement.  In reviewing his invoices I discovered that Cauliflower and Basil came in from two different vendors on the same day, and that the pricing was very different between vendors.  Upon investigating why he had ordered the items from both vendors he said it was a mistake and that it should have just come from one particular vendor.  Get this, it was the MORE EXPENSIVE vendor! Not only did he not realize that he had ordered the products twice, but his standard for ordering the product was from the vendor that charged $4 more per pound for Basil, and $10 more per case for the Cauliflower.  He had no idea. He had no system for making informed decisions.

Using a Custom Order Guide to store all of your product information, compare product quality and pricing, and place your orders ensures the best quality, the best pricing, and that you only order what you need.  We identified more than $10,000 in over-spending for that client. And with the implementation of a Custom Order Guide we helped him identify additional areas of improvement and cost savings for his company, all while continuing to improve product quality.


Streamline communication between ordering + receiving teams

A Custom Order Guide not only stores product info and allows you to filter and compare your product information, but there are also column built in where you enter your daily orders.  It looks like this...   

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Once your orders are entered they can easily be copied + transferred into the body of an email for sending to each vendor.  This creates a paper trail and time stamp for each order. It also creates an order summary which can be printed for your receiving team, or stored in a shared folder for easy computer access.

The order summary indicates to the receiving team, or individual, exactly what they should expect to arrive from each vendor, right down to the brand, quality and unit pack size. If there are discrepancies between what is on the receiving document and what is delivered items can be refused, credit slips issued immediately and replacement products and fixes can be requested immediately. There is no time lost on figuring out where a mistake may have been made, and new product gets to you quickly. 


Track food costs + budgets in real time

Seeing your food costs and tracking budgets in real-time can be a game changer for businesses that are trying to achieve specific food cost goals, and enables chefs and purchasing managers to make proactive purchasing decisions based on actual spending rather than waiting a week or more for accounting to catch up and to 'See how things turned out...'.

Here is a condensed look at the guide, showing the above orders for Monday, the costs for that day + the current weekly spend summary.

Custom Order Guide Food Costing Section

By adding your revenue for the week into the sheet, you can easily obtain a real-time food cost budget.  You also have the option to enter your full week of orders into the sheet at once and compare the estimated costs to your revenue for a peek at where your food costs will land for the week.  If you're over budget you can make changes to your purchases that will keep your costs on target. It could be something as simple as lower pars on a few items that you know you won't use this week - sourcing #2 organic peppers because they don't need to be pretty for making Romesco Sauce - or swapping in lower cost in season strawberries for the raspberries on top of the overnight oats. With a little creativity and all the data at your fingertips you are in total control and CAN reach your goals! 

The expense tracking and budget section of a Custom Order Guide is a bit of an advanced customization, but it comes standard with our download, and if you are competent with excel you can create a basic system of your own with simple sum functions.


Create A Custom Seasonal Buying Guide

Information and organization create a foundation for endless inspiration and creation!
Our Custom Order Guide template is designed to record orders daily for one week at a time.  At the start of each new week a fresh order sheet is created with any updated pricing, new revenue and spending budgets, and new daily orders. 

As the weeks pass and seasons change you'll stop buying things like Winter Squash and replace them with Asparagus, English Peas, Summer Squash, Tomatoes, etc.  As items fall out of season, you can replace them with new seasonal items in your sheet, and in doing so you are creating a custom seasonal guide for your business, broken down by week, that you can refer back to at any time!   Are you as excited about this as I am?! 

This means that in a year from now, when you are trying to plan a menu for June and it's only April 1st, you can look back at what you ordered in June of the prior year.  You can filter your sheet to show you just fruit, just vegetables, just seafood... whatever food category it is that you need some inspiration for - you can narrow down your view to just that, get inspired, and start creating! 

And, with a fair amount of certainty you can also predict the costs and appropriate pricing for your future creations based on the historical data that you have.
This is very exciting stuff! 


Now it's time to get started!

If this info has you as jazzed about using a Custom Order Guide as I have been to use and share my Custom Order Guide with clients, then it's time to get to work!
The truth is, it is work to create your order guide. But the benefits I've shared here will quickly make up for it in future savings of time and money.

Gather your order guides from your current vendors, and request a product order guide from vendors you've been considering working with.  
Download our Custom Order Guide Template or build your own with the info we provide here
Enter your product details and start experiencing the benefits in less than one week! 

If you've got questions, or would like to hire Sarah Delevan Consulting to build out your Custom Guide, let us know! 
Send an email to hello@sarahdelevan.com and we'll get back to you real soon.