Why Your Food Company Can’t Rely on Your Vendor’s Systems

And How to Know More About Their Business Than They Do

No one knows your business, or your customers, better than you do; so why would you rely on your vendors to determine the best product for you to procure and rely on them to track it? Instead, you want the decision-making power and insights in your hands to ensure you’re getting the best product, for the best price and taking it a step further to guarantee you’re tracking it thoroughly and setting the right price for your customers accordingly. How can all of this be achieved? By taking matters into your own hands when it comes to vendor and inventory management and choosing the right system to help you do so.  

Why You Can’t Trust Your Vendor’s System & Need to Take Matters into Your Own Hands

You can’t rely on your vendor’s system to manage what you know about your inventory; you need to take that ownership yourself. As American Express explains, some challenges can arise when you rely on your vendor’s data including loss of control, limited options, and less agile market responsiveness. Combined, these challenges create an environment where:

• You’re exposed and vulnerable as your vendor has your data in their hands.
• You’re at the mercy of that vendor’s decision making without a complete picture yourself of why decisions are being made and unable or deterred from switching to other suppliers that are more cost-effective or have better products (if you even are able to get that insight).
• You have less visibility and control to be able to respond to demand fluctuations rapidly because while your supplier may work with your data insights, those may “not accurately reflect your sales forecast or your anticipated, sometimes unpredictable, market shifts.”

Regardless of the risks associated with your vendors’ data, you shouldn’t rely on it because you’re the one who’s liable. And, while you may trust your vendors, it’s your responsibility to adhere and prove adherence to various compliance requirements, such as FSMA, as well as expectations your customers may have. Moreover, your vendors don’t set prices for your customers. So, once you understand your costs and feel confident you’ve secured the best vendor with the best price for your product or commodity, the next step is to set your own prices – can you do it all in one system reliably if you’re relying on someone else’s data in an unknown system?

Instead, you should opt for taking ownership of your inventory and vendor data and having more visibility than your vendors because, simply put, your system is better than theirs.

The Vendor Management Essentials

So what should you be looking for to make sure you get “more visibility” than your vendors with that “better system?” You should consider the following questions and if you have the data and/or insights to answer them:

• When you look at your inventory, can you segment it by vendor, and can you tell your customers which vendor that you bought it from if you need to?
• And when you look at your costs and see everybody’s costs are going up, do you know why they’re going up? Is it the base item cost? The freight cost? Is it the import tariffs or the duties or whatever other cost elements that you have? Can you segment your costs by the components that your vendors charge you for or are you just stuck looking at one number and wondering why it changed?
• Can you track your vendor’s item numbers and lot numbers?
• Do you know the last time that you reviewed your vendor’s account with them?
• Do you know the last time you bought product from your vendor?
• Do you know how much you bought from your vendor by month over the last year?
• Can you answer all those other questions to decide not only what you buy and who you buy it from, but who’s the best person to buy it from based on historical performance and similar metrics?
• Do you know the last price that you paid and pricing trends compared across multiple vendors that you source the same item from?

Choosing the Right Vendor Management System

When it comes to choosing the right system to manage your vendors and your inventory, NorthScope gives you the answers to all the questions above and more. With tools to help you take ownership of vendor relationship management and effectively purchase, track and sell inventory, NorthScope offers a single source of truth for making business decisions to help control spending, cut costs, and increase profitability. Additionally, NorthScope provides visibility and real-time access to your data to optimize vendor communication and performance while allowing you to save time and money through automated processes.

Examples of NorthScope’s features to help you manage your vendors and inventory include:

• Costing: NorthScope can track incoming purchase orders and their related invoices for the primary vendor that you’re purchasing product from as well as secondary vendors for freight, duty, customs, or other brokerage fees. This makes it so that you can track not just the purchase price of an item, but all the various components of cost and the system will build a landed cost that is reflective of everything. Then, these costs flow into the general ledger in your inventory valuation and other components of the system wherever you want to see that cost as a whole or the individual pieces of it. This, in turn, allows the system to help you plan and analyze these costs against your planned or budgeted cost or a sales revenue target cost. With this, you can know what you planned for, what the actuals were and identify variances as well as give the sales team a target to sell over which may be different than your landed cost.
• Traceability: NorthScope provides the ability to track your product no matter where/how you bought it or where it’s going. Whether it’s farm to fork, dock to delivery, buying from a vessel, importing product, blending ingredients, or repacking. NorthScope provides a comprehensive traceability system with:
  • Tracking across multiple sites at the granular lot level detail.
  • Perpetual inventory balances that allow you to trace today or last month/year to see what inventory was where at any point in time.
  • One-click forward backward trace report to show where product went and where it came from.
  • Quality data recording and analyzing that can be related to lot traceability.
  • Lot certification assignments.
  • And more!
• Purchasing: A full-featured set of purchasing capabilities complete with real-time analysis tools, including:
  • The purchase order transaction with inventory items to reduce manual data entry and aid in real-time accuracy.
  • Purchase order lookup functionality on AP invoices and credit memos as well as inventory receipts, allowing the details of the linked PO to automatically be pulled into the transaction.
  • Support for inventory items on AP invoices and credit memos with the added capability to link purchase order lines to individual line items for increased accuracy in invoiced/ordered calculations.
  • Inquiries providing data for users to analyze all linked transactions based on purchase order.
  • And more! 
• Vendor Management: Quick visibility of current vendor balances, historical vendor aging, vendor maintenance with user-defined attributes, safe pay and direct deposit (ACH) for vendors, flexible reporting and inquiries with drill-through to transactions, and more.

Take Matters Into Your Own Hands

If you want or need to move beyond record keeping to process management for your vendors and inventory, it’s time to take matters into your own hands and stop relying on your vendors. Get your free demo today to learn how NorthScope can help manage vendors, track your product, and optimize your business.