With food costs continuing to rise across the country; organizations are increasingly looking to procurement strategies as a powerful lever for budget control—without compromising on the quality of meals delivered to students.
ERA Group for many years has worked extensively with schools and aged care facilities where smarter procurement practices have led to significant savings while improving operational efficiency; often 6 figure savings amounts.
Food waste and menu planning often get the attention; but procurement does make the difference. It’s not about cutting corners; but about buying smarter; negotiating better; and making data-informed decisions.
Two Models; Shared Pressures
Organizations typically operate under one of two food service models: outsourced catering; where an external provider is engaged to provide meals; or in-house catering; where the organization employs its own kitchen staff.
Outsourcing is often viewed as the simpler less hassle option; but I caution that it still requires ongoing regular oversight.
Even with a caterer in place; it’s essential to monitor their performance closely. At one boarding school we have been working with for 7 years; we regularly review detailed reports—meal numbers; stock-on-hand; waste—and feed that data into dashboards and reports that track performance trends and flag any issues early.
In-house catering; on the other hand; offers greater control but can become far more complex; especially when dealing with a large number of suppliers.
In one case; we support a school with over 26 different catering suppliers. While we’ve managed to consolidate to 20 suppliers it’s still a high number. In comparison; we work with an aged care facility and have managed to streamline it to just eight or nine key vendors.
Six Procurement Tactics Delivering Results
As budgets tighten and prices rise; ERA Group is encouraging organizations to adopt several practical strategies to get the most value from their food spend:
- Consolidate Suppliers:
Working with multiple suppliers across categories often leads to missed volume discounts and increased delivery fees. Organizations are advised to audit existing suppliers and consider consolidation to drive better pricing and reduce administrative overhead. Often organizations are not exploiting their buying power to the fullest. - Secure Long-Term Pricing Agreements:
Locking in 6–12 month contracts with fixed pricing periods can provide price stability and improve forecasting. Agreements should clearly outline expectations such as key areas such price; price protection; delivery; quality expectations; and substitution policies. - Monitor Supplier Performance:
ERA Group recommends implementing simple scorecards; reports or quarterly reviews to assess supplier performance based on pricing; delivery accuracy; and service quality. Long-term relationships should be reassessed regularly to ensure continued value.
I’ve had a lot of success using benchmarking. While it is difficult to benchmark across peers unless using a third party such as myself; we have been finding meaningful internal benchmarks where we can provide a more insightful measure of performance.
- Improve Inventory and Ordering Practices:
One of the major difficulties we have faced is with monitoring SOH levels. With outsourced caterers they should be providing a SOH report and position on a regular basis. For in-house operations it’s a little more difficult and often organizations don’t have the resources. SOH levels do make a difference especially if you are monitoring bed day costs or per meal costs. - Train Staff in Cost Awareness:
Procurement strategies are only as effective as the people implementing them. Organizations should invest in training for staff responsible for ordering and receiving; encouraging vigilance around pricing anomalies and supplier compliance.
Group Buying
Group buying schemes are a highly underutilised opportunity in the education and not-for-profit sectors. While most of us know they exist; they’re often overlooked in day-to-day procurement planning; and can be an effective tool.
The core idea is simple: by pooling demand with other organizations i.e. schools; organizations can access the kind of pricing and terms typically reserved for much larger entities. These collective arrangements can significantly reduce unit costs; streamline the tendering process; and lower the administrative burden of sourcing and managing suppliers. Beyond cost savings; they also improve consistency in product quality and service delivery; offering smaller institutions a powerful way to level the playing field.
The one downside of group buying schemes is that organizations cede some of their control to the group; and; it can be like herding cats to get everyone to do the right thing; it only works if the collective can deliver on their promise.
Real-World Impact
These practical changes can add up quickly.
“In one school; applying these procurement principles resulted in tens of thousands of annual savings—and that’s most improving service and quality at the same time; even from long term suppliers
A Growing Need for Smarter Systems
As economic pressures continue; smart procurement is emerging not just as a cost-saving measure; but as a critical component of sustainable food service.
If you would like more information on how smarter procurement may make a difference in your food services; get in touch with ERA Group or Grant Morrow directly at gmorrow@eragroup.com or 0415 203 575
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