From Sole Sourcing to Significant Savings Developing An Efficient Purchasing Process
Back in 2019, the YMCA of Calgary reached out to Round Table for help. Food costs for their overnight camps and childcare centers - two of their most important services - were spiralling out of control. They also felt they needed to re-evaluate their relationship with their current supplier. While they were a reliable and trusted supplier, the rising costs were of concern. At the time, the YMCA was single sourcing their camp and childcare food from one supplier. While costs were increasing each year, their buying habits had not changed proportionately to justify the rising costs.
A preliminary look into their spend data confirmed this - food was indeed their highest operational spend, and their purchasing habits had remained, for the most part, unchanged!
A deeper probe of their purchasing practices was requested...
Action Taken
Round Table worked closely with the Camp and Childcare departments to get an understanding of their current purchasing processes and spending habits, helped them identifying redundancies and excesses in these practices. From these findings they put forth a plan to reel in spending and lower the food costs. It was determined that a multi-vendor approach would best serve the YMCA of Calgary's needs.
First steps were to compile a list of the most popular items ordered by both the daycares and the camps on a regular basis. Two revisions of the list were undertaken to get as specific a set of key products as possible. Next, service levels were established. All potential new vendors were to include, with their pricing, assurances that the level of value-added services (such as menu help, shows, training, Food Safety Certifications) offered by their incumbent supplier would maintained at current levels, if not improved upon.
With the criteria established, RTPS went to market through the RFQ process, opening up this list to a stable of local and national vendors the team felt would be able to support the needs of the Calgary YMCA. Service level assurances and price quotes were received and analysed, and offered an impressive snapshot of the savings that were available to the YMCA of Calgary. Preliminary figures showed at least 28% in saving were possible through RTPS's multi-vendor approach.
It was agreed by all that this was the best approach to help YMCA of Calgary bring their costs under control and increase the efficiency of their food purchasing processes.
The Result
While the incumbent food provider was retained (an act of loyalty by the YMCA to a vendor who had been reliable, long-standing supplier), a second vendor was made available to both parties. This helped keep food costs in line, opened up the YMCA to another vendor and improved the relationships of all parties involved. The YMCA of Calgary's Camp and Childcare departments shared in $274,500 in hard costs savings. From that, an additional $82,500 in soft costs savings was uncovered, for a total of $357,000 in savings from the previous year! Camp staff were happy they had multiple suppliers to depend on while Childcare staff were happy they got to keep their existing partner. Both teams were elated with the savings!
For the YMCA of Calgary, they gained a better understanding of the food service industry and the players who play in it, and, perhaps more importantly, the value of an efficient purchasing program.
