Watching your business requires diligence in all areas, even with your vendors. According to a report from the University of Florida, 5.96% of shrink can be contributed to vendor theft.
I had a hard lesson during my first days as a manager at TGIFriday’s regarding vendor theft. I have never forgotten what my mentor Ken taught me – the four critical areas that you need to check your vendors, or the DIPS. That is: Delivery, Invoice, Product Specs and Service.
Delivery is a crucial point of control for vendors. One loaf of bread here, fewer oranges there and a miss count on returns all adds up quickly and can affect your food cost. Be certain to check each vendor in at your back door; don’t let them in your facility without someone from your staff to accept them. Also it is wise to take your order form, compare to the delivery and COUNT. Yes, it is a hard discipline to follow when the craziness of the day starts to creep up on you, but you or a trusted staff member should count the order, open the boxes and check under the layers!
The invoicing process for many vendors travels through several hands and departments, so inevitably some human, non-intentional mistakes are common. It is your responsibility to check your invoice against the order and physical delivery; they should all match, or at minimum match the physical delivery. Be certain to check the extensions for errors. Although most invoices are electronic and computer generated, a quick spot check of the extensions never hurt, specifically for those items you may order in quantity. Even a five cent differential can add up quickly when multiplied!
Matching specifications in your order is an area we don’t always scrutinize. Many times our vendors need to send a substitution for a product we order, it is understandable if this happens every once in a while. If you do have a substitution, be sure to check the quality and count of the substitution. You should be paying a fair and equitable value for it – after all, there is a difference between Heinz Ketchup and Hunts Ketchup; and that is not a fair substitution either way. If your vendor is substituting, it could impact your food quality, taste and consistency.
Your vendors should honor their commitment of service level. One of the greatest sources of theft is through personnel. Just like in our restaurants, vendors have challenges with personnel, and it is our responsibility as their customers to keep the communication open with our vendors. A few tell tail signs that something might be challenging for them include: consistently late deliveries or inconsistent deliveries; route drivers that say “they will complete the paperwork later, they are ‘running late’”; or “your order is in the back of the truck, it will take me awhile to unload. These are all signs that the route driver is not following standard protocol for delivery, and you are not getting the service you require.
One last service hint: watch for extra delivery charges. Unless you’ve agreed to a ‘surcharge’ or ‘off peak’ charge they do not belong on your invoice.
The majority of your vendors, route drivers, order desk and customer service personnel are great allies and partners. But like any other business, there is a bad apple here and there that can affect your profits. So be vigilant, be fair and treat everyone with respect… however, be sure to check on them so you don’t suffer from DIPS in your profit.
For more insight into what to do regarding restaurant theft, read on: