1. How to Create Win-Win
Relationships with Your Suppliers
Presented by:
Warren Dietel, President & Owner
Orlando, FL

2. Housekeeping
• Questions welcomed
• Spend time on what s important to YOU!
• Discuss the WHY behind creating a great relationship
with your suppliers
• Leverage your purchasing power
• Learn about Master Distribution Agreements
• Group Purchasing Organizations
• Twitter: @pscatering, #catersource
• Facebook.com/puffnstuffcatering
• Presentation will be available online:
http://www.slideshare.net/WarrenDietel

3. About the Speaker
• Entrepreneurial from the start
• Professional Experience
– Car Detailing, Puff n Stuff
Catering, Disney Weddings,
Disney Institute, Scott Kay, back
Home!
• Industry Involvement
– ICA Board Member, Regular
Speaker for Catersource, The
Special Event, American Rental
Association, and NACE

4. The Puff Story
• Opened in Central Florida in 1980 as a family-owned business
• Purchased in 2003, annual sales of $1.8 million, at operational limit
• Antiquated infrastructure with inefficient space & poor equipment
• Tremendous potential + aggressive growth plan = 267% growth in 3 years
• Opened new commissary in 2006

5. It’s All About People & Culture
• 40+ Full-Time Team Members and 200+ On-Call
• Diversified business segments and multiple markets – Orlando & Tampa
• 3 Exclusive Venues and over 100 Preferred Status
When employees think, act and feel like owners…
everybody wins. - Jack Stack

6. Building the Case for Win Win
• Buy-sell context: both parties never want the same
thing
• Complimentary motivations introduce opportunities
for mutual satisfaction
• Win-win approach = long-term, mutually beneficial
buy-sell relationships when… both sides’ needs are
well served

7. Developing an Effective Purchasing Plan
• Transition from:
– Low value, transactional/administrative focuses to
– High value, strategically focused initiatives that add
competitive advantage
• Competitive advantages achieved by applying the
best practices of world-class purchasing operations
• Best procurement practices = significant tactical
and strategic value to your organization

8. The Norm
• Vendor & distributor
relationships
• Orders are placed
• Orders arrive
• Invoices are processed
• Operations team takes over
• Product evolves

9. How Does Effective Purchasing Impact My Bottom
Line?
• Reduces your overall delivered cost
• Produces 5%-15% savings on annual
purchases
Remember the 80/20 Rule!
20% of Costs - impacted by smart purchasing
Remaining 80% - managed by operational controls
What you do once products arrive at your backdoor

10. The Players
Start by defining and understanding the
world of product distribution
1. Manufacturers
2. Freight
3. Distributors
4. YOUR TEAM!

11. Manufacturers
Develop/produce products for sale
• National branding, spec, quality and price
affects your buying decision
Pricing
• Varies by product category (Dry food, fresh meats,
frozen seafood, plastic packaging, chemicals, health
care, equipment, etc.)
• Affected by demand, market conditions, time of
year, acts of God, etc.

12. Manufacturers
• Utilize multiple sales and marketing channels
– Company-paid sales teams
– Food brokers
– Distributors
• Bury money in each channel
– Incentives paid to whoever moves product
– Large advances frequently paid to
distributors
– Marketing costs

13. Manufacturers
• Focus on your high volume purchases
• Leverage descending order reports
• Negotiate directly with manufacturers –
ASK to meet and Food Shows
• Understand what is important to them
• Help them understand your organization
• Ultimately, committing to purchasing
volume with manufacturers = deviated
pricing and/or volume discounts.
• Understand available rebates

14. Distributors
Are essentially freight companies
• Very low margins = focus on volume
• Distributors vary in all shapes & sizes
• An efficient distributor is always effective
Large vs. Small Distributors
Efficiency Attention
Higher volume Lower volume
Purchasing power/buying leverage Limited buying leverage

15. Why is Freight Important?
Products travel to distributors by train,
ship, tractor trailer, and airplane
• Multiple variables affect costs/calculations
– National published freight vs. actual
– Box size vs. weight
– Full truck, rail car, container advantages
• Partnering with right distributer is critical!

16. How Distributors Make Money
Do you have a dedicated Profit Management
Department? Most Distributors do…
• Markup/margin on all products
• Freight
• Buried case monies
• Upfront payments
• Distributor branded items
• Large purchase volumes
• Internal cost controls
• Product loss
• Sales!

17. How Distributors Make Money
Who gets paid on every case sold? Sales person
to CEO, share holders and everyone in
between…
• Street accounts = the “sweet spot”
– Typically 15%-25% Margin
– High volume accounts – 10-15% Margin
• GPOs, Multi-unit, & national chains
– Average 6-9% Margin
• The Role of a Distributor’s Sales Person
– Process orders, service customers, protect the business and profitability
– Paid on commission
• Consider online ordering

18. Calculating Margin
How is your delivered price calculated?
Pricing based on:
• Annual sales, drop sizes
• Delivery frequency
• Payment terms
• Business type
• Items ordered
• Agreement length or terms

19. Group Purchasing Organizations
• Goal is simple: Contribute to the bottom line of the
members while increasing sales for participating
suppliers
• Analyze your organization and specific purchasing
history, needs, and future requirements
• Develop unique purchasing strategies
• Leverage the combined purchasing power with
Distributers and Manufacturers
• Negotiate Master Distribution Agreement with
Distributers and Manufacturer Agreements

20. Group Purchasing Organizations
• Reduce your time chasing the deal
• Track and manage your refunds
• Identify manufacturer opportunities
• Piggy back on others
• Typical Fee Structure
– 1% - 2% of Annual Purchases
– Percentage of Rebates
– Manufacturer

21. Negotiating
Distribution Agreement Points
• Financial
– Annual sales/commitments
– Growth incentives
– Deviated pricing
– % of overall broad line business, 70% +
– Audit privileges
– Terms – payment and length (typically 1, 3 and 5 years)
• Logistics
– Delivery $$$ or drop size, $1,500+
– Delivery frequency, delivery day & time
• Product
– Number of proprietary items stocked
– Distributor branded items

22. Orders/Payments
• Online ordering
– If appropriate for your business model
– Exclude the sales person (and commission) from your program
– Empower a trusted person to managed the process in-house
• Delivery savings
– Key drops
– Off-day delivery
• Take advantage of quick-pay incentives
• Pay on-time!
– Poor credit history and slow payments = credit risk and higher
margins

23. Your Role
• Receiving product
• Invoice price
• Product handling
• Portioning/menu item costs
• Waste
• Theft (Industry average = 3%)
• Appropriate pricing
• Implementing systems and controls

24. Effective Purchasing Strategies
1. Build and leverage relationships
2. Negotiate
3. Manage ordering/payments
4. Manage in-house processes

25. Relationships
The Cardinal Rule
Don t chase the lowest price
Buying from multiple distributors dilutes your purchasing
power
• Leverage your volume with a select few
• Create win-win relationships with distributors by
clearly explaining your definition of success
• Listen to distributors challenges and needs
• Remember – loyal and educated customers receive
better pricing

26. It s a Wrap!
In the end, successful implementation is
up to YOU!
Devise a purchasing plan that best fits
your operation
Everyone in this room can improve their
delivered price with a little effort!

27. ICA Membership Benefits
Come learn more at the Inspiration Zone/Attendee
Lounge or Tradeshow Booth #1918
• Professional Recognition
• Education: Culinary Learning Journeys, Regional Education Days, CaterArts
& Monthly Free Webinars
• Amazing Networking
• Your chef enjoys membership in the Culinary Council
• Work & Learn Program
• Membership Show Special: ONLY for Catersource Conference 2011
• New Members: $250 vs. $290 (must be paid in full)
• First 250 new members get Inspiration CD FREE!

28. Thank You!
To download a copy of today s presentation, go to:
http://www.slideshare.net/WarrenDietel
Warren G. Dietel | warren@puffnstuff.com | 407.398.6306