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Being the Chef » Chef Life, Chef's Office, Purchasing » The P.I.A Equation: 3 Ways To Lower Vendor Pricing

The P.I.A Equation: 3 Ways To Lower Vendor Pricing

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Do you know what determines the pricing you receive from your primary food vendors? Surely it’s some complicated algorithm that takes purchasing volume, average delivery size and location and then performs some mathematical magic and determines exactly what your pricing is….right?  Right?

Well yes and no.  All of these factors play a part in your pricing, but the most important aspect of your pricing structure is your sales representative.  Most sales reps won’t admit to having anything to do with your pricing, much less admitting to being a major influencing factor in determining your price margins.  After all, it is far easier to act like there is nothing they can do and it’s big brother’s fault your prices are what they are.

The truth is that the sales rep is the single largest component in setting your pricing!  Now this is where the P.I.A. Equation comes in.  The P.I.A. Equation works on one of the most basic human principles around.  Simply stated, your sales rep is for all intents and purposes a freelancing middle man, being paid 100% commission for generating sales for his sponsor company.  There are only so many hours in a week, and your rep has only two ways of making more money, they can sell you more (or more expensive) products or they can service more customers.

The P.I.A. Equation stands for Pain In the A__.  The more you can do to limit how much of a pain you create in your sales rep’s week, the more time that rep has to call on new customers and make his additional commissions there and not on your invoices. I firmly believe your sales rep should work for you and take very good care of your account, but there are three areas, that with a little planning on your part, could be a huge benefit to your rep and ultimately to your pricing.

Online Ordering

Almost every vendor now has some sort of online ordering system, use it.  Not only are you not tying up your allotted time with the rep just placing an order, but you can save a considerable amount of money using the online system.  Being able to see what and how much you are purchasing gives you the advantage of buying based on financial goals and not just refilling shelves. It also lets you compare like items to make sure your getting the right price vs. quality balance on every item your buying.

Order Day / Delivery Window

Order day and delivery window is a huge pain for your rep and you can really impact their week by working a little smarter here.  There is only one “8 am Friday morning” and every restaurant wants a delivery then. I personally, don’t cook off the delivery truck, meaning that I plan my work well enough that I don’t need anything off the truck the day it arrives.  Consequently, I don’t care when the truck gets there.  I do have windows (lunch time, etc.) when I can’t receive an order, but as long as my deliveries are at the same time each week, I don’t care which day or what time.  Not only does this make my rep’s week flow better, but trucks breakdown and products are sometimes out of stock, and by planning ahead if there is a problem, I still have time to reorder or find a new source.

Receive and Inspect Your Deliveries

Receiving your orders is one of those classic text book procedures that everyone assumes is taking place, but this actually seldom takes place in most operations.  There are tons of problems that would be avoided if chefs would just check in their orders and inspect for quality issues, then problems could be returned and credited by the delivery driver.  Just as with online ordering, this is also a very important place to save money.  If you don’t know what actually came through the back door and checked it against the invoice, you will be billed for items that aren’t actually delivered to you.  I catch an error like this at least once a week as I check in my orders!

These three simple things represent at least 60% of your sales rep’s time during the week and by eliminating these time constraints or at least reducing them, your rep will have time to pick up new customers and meet his financial obligations through account growth and not have to resort to pricing.  It is, however, extremely important to point all of this out to your sales rep and ASK for the price breaks you are due by making it easier for him to build his territory.

As a side note, by following these steps you will get the added benefit of actually getting better service from your sales rep.  If they are not busy keying in your order, tracking down your delivery truck and trying to issue credits for things you didn’t check in, then they will have time to show you new products, bring samples and make recommendations on better/cheaper products for your menu.  It really can be a win/win situation.

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Filed under: Chef Life, Chef's Office, Purchasing

13 Responses to "The P.I.A Equation: 3 Ways To Lower Vendor Pricing"

  1. [...] rookie sales rep is mainly focused on building a territory, they are also extra susceptible to the P.I.A. Equation for even better [...]

  2. Chef Rob says:

    I’m trying to use more online ordering in my location, but I’m having issues with the pricing. My reps even act hesitant to give me the information to get online. I love the idea of online ordering and not going through the rep, but it’s proving to be a difficult task.
    How can you order online, with correct pricing? It’s frustrating to say the least.

    1. Randy Sansom says:

      Chef Rob,

      Most reps don’t want to lose control over how they price your account, so they tend to be hesitant to lock in your pricing on online portals. I’m working on an article about how online pricing works and how we, as chefs, can make better use of internet ordering. Look for it within the next day. Thanks for commenting!

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