Introduction:
Insights about the Food and Beverage Industry of the UK will be analysed in this blog by showing different statistics. The food and beverage industry helps to contribute about £28.2b to economic development in the UK each year (Food and Drink Federation, 2020). However, this industry also faces challenges such as COVID-19, and other market uncertainties for reasons such as BREXIT. It has become mandatory for food service organizations to identify the best practices to harness growth potential and improve productivity. Supply chain efficiency and optimized operations management can play significant roles in this regard by ensuring continuous and flawless supplies of raw materials, products and services. This report will investigate the supply chain and operations management of a food service organization named Moor Hall Restaurants with Rooms. This is a UK-based award-winning restaurant providing food services in different indoor and outdoor settings with food made by talented chefs (Moor Hall, 2020). This report will investigate the sourcing and procurement process in Moor Hall by examining the supply chain approaches and principles of procurement and sourcing processes of the company. It will investigate operations management strategies by applying different analytical tools and operations management practices in Moor Hall.
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Examining different food supply chain approaches in the food service industry, highlighting major stakeholders
A Supply chain approach refers to the manner through which supply chain jobs are performed (Christopher, 2011). A range of supply chain approaches (such as long chain, short chain, analytics-driven chain etc.) are available to every company; the selection of the approaches depends on the nature of the business, size of the business, sales volume, geographical spread etc. Hugos (2018) revealed that supply chain approaches are very much sensitive for the food industry because the lead time should be very minimum, and supplies are case-sensitive. The above analysis implies that Moor Hall should particularly be careful to adopt the right combination of supply chain approaches. The adoption of an approach will affect the stakeholders of Moor Hall. The list of stakeholders, along with their relative power, is illustrated below:
| Stakeholders | Internal/External | Dominance |
| Moor Hall stockholders | Internal | High |
| Moor Hall employees | Internal | Medium |
| Moor Hall top management | Internal | High |
| Customers | External | High |
| Local community | External | Low |
| Bankers | External | Low |
| Creditors | External | Medium |
| Suppliers | External | Medium |
| Government | External | High |
| Competitors | External | Low |
| Service providers | External | Low |
Lead time and logistics systems are two important concepts in every supply chain management. These two concepts have led to an approach related to supply chain leg length: Long Supply Chain Leg and Short Supply Chain Leg.
Long Supply Chain Leg: This approach is usually used by those restaurants which are spread across the globe or by those that acquire materials from international suppliers (Christopher, 2016). The reason for adopting such an approach is cost benefits in order to receive price advantages. Long-leg supply chain generally has big quantity and are produced in different continents with a high lead time of delivery (Monczka et al., 2015). As the definition shows, such supply chain approaches are suitable for large MNCs and global restaurant chains (such as Starbucks or McDonald’s) that ideally have the capability to order big and to afford lock large volumes of money for a long time. Additionally, all materials of such big companies should not be procured through this approach; only materials that could be used for sure (such as coffee beans) can be ordered through this approach. In contrast, such an approach is really not suitable for small food service organizations such as Moor Hall, which does not have the financial ability to lock a large amount of money in a large stock capacity to stock the goods. Rather Long Supply Chain Leg is not suitable for a food company because demand and consumer tests change quickly, which require Ready-To-Make or Ready-To-Order approaches. The adoption of an approach will significantly affect the stakeholders of the food service company. For example, if Moor Hall follows this approach, it will make a loss because the approach is not suitable. As a result, stakeholders such as investors, management, customers, and employees will all be negatively affected. However, these stakeholders have high power to decide if this approach will be selected.
Short Supply Chain Leg: This approach refers to circumstances of short lead-time, ready-to-make, ready-to-assemble, short order quantity, and easy change in order detailing etc. (Chopra, Meindl, & Kalra, 2013). Most of the issues mentioned in the definition work as advantages of the approach; for example, the short lead time will help a company to get the materials in a shorter time and offer customers more variations in services in less time; short order quantity will help a food company to get materials with less investment; easy change in order detailing will help a food company to make changes in order at convenience. It is clear from the above analysis that the short supply chain leg is increasingly suitable for a small or medium-sized food service organization because they have the less financial capability, frequently change materials detailing, and they have less geographic spread. However, one potential disadvantage of this approach is that it is very expensive because of less lead time and more variations at less quantity. In contrast, this approach is not suitable at all for large foodservice organizations, as demonstrated in the previous analysis. The adoption of this approach will significantly affect the stakeholders of Moor Hall. For example, if Moor Hall takes this approach, it is expected to have positive outcomes. As a result, stakeholders such as investors, customers, and employees will be benefited.
Forecasting launch and early-stage demand powered by data: Critically evaluating the historical data and making ordering and re-ordering points can play a significant role in supply chain management (Tayur, Ganeshan, & Magazine, 2012). Data analytics can add further value to the approach to making an optimized decision. For food service companies, either large or small to medium-sized companies, all can critically identify the pick-times, high seasons and low seasons, most sold items etc. Based on the findings, Moor Hall can determine the ordering point and re-ordering point of specific materials. Data analytics and data-driven decisions can play a greater role in making the decision more accurate. This approach will significantly affect stakeholders such as suppliers because the approach is linked to them. The result will also affect potential stakeholders such as employees, investors etc.
Adopting multi-level manufacturing: This will provide a food company with much flexibility and cost-saving options by optimally controlling the inventory levels and making the supply chain agile (Bozarth & Handfield, 2016). Moor Hall could adopt multiple levels such as a direct order option, keeping the raw materials ready option, and space booking option. The availability of multiple options will provide much agility to the supply chain of Moor Hall. For example, the food company could book spare capacity for its supply chain. In such an option, if the expectations are not realized, Moor Hall can cancel the booked capacity at minimum cost. This approach will affect potential stakeholders such as suppliers because if the expectations are not realized, they will be affected most. The company itself will also be affected because it needs to pay fees.
Principles of effective procurement and sourcing processes for a food service operation
Among all the activities of supply chain management, sourcing and procurement are important ones. Sourcing refers to everything from finding a suitable supplier to making them able to quote for the job (Jacobs, Chase, & Lummus, 2011). On the other hand, procurement is a broader concept which includes all the activities from purchasing the materials to arranging transportation and storage (Crum et al., 2011). The core difference between sourcing and procurement is that sourcing deals with suppliers with abstract concepts such as agreement making, and procurement deals with hard issues such as purchasing, making payments, arranging logistics, managing inventory, and finally storing the materials. The principles of sourcing and procurement related to food services operations are critically analysed below.
Principle 01: Adapting sourcing and procurement strategy to customers’ needs: The most important principle should be to adopt a sourcing and procurement strategy adapted to customers’ needs (Wisner, Tan, & Leong, 2014). This means Moor Hall should emphasize the needs of customers while communicating with vendors. For example, customers of Moor Hall prefer Indonesian famous Kopi luwak Coffee, which is expensive and found only in Indonesia. The company should not source and procure Brazilian or Cuban coffee only for cost benefits. Moor Hall should emphasize the preferences of the customers.
Principle 02: Customizing the logistics networks: Another important principle is that a food service company should design the logistics network based on need and demand rather than cost minimization because the food industry is sensitive (Kshetri, 2018). For example, Moor Hall has two logistics options: sea and air. The company needs the goods as quickly as possible. In such a situation, such logistics should be conducted by air to save time. Sales return from this procurement strategy is worth the excess cost incurred in air transportation. The food company should design the rest of the logistics network in the same fashion.
Principle 03: Focusing on sustainable business operations: This implies that sourcing and procurement strategies should be sustainable (Saberi et al., 2019). This can be implemented by finding vendors that also emphasize sustainability and by building sustainable relationships with them. Food services particularly require sustainability because customers in this industry highly emphasize sustainable manners.
Principle 04: Aligning the sourcing and procurement strategies with corporate and business strategies: One important sourcing and procurement principle is aligning the strategies with corporate and business strategies (Green et al., 2012). For example, the business strategy of Moor Hall could be to increase logistics costs by 5% at the same time, and make logistics more responsive by 10%. To align with this business-level strategy of Moor Hall, it should source more potential logistics support providers and explore more options to achieve the business-level objectives. Such synchronization of business and operational level strategies will help Moor Hall to better achieve its corporate goals.
Principle 05: High emphasis on cost reduction: Another important principle for all sourcing and procurement strategies is to put a high emphasis on cost reduction (Gruchmann et al., 2019). To avail of this strategy, a company such as Moor Hall could find alternative vendors and make a comparison of services and their costs to make a better decision.
Principle 06: Developing IT infrastructure for multi-level decision-making: IT infrastructure should be aligned with other operational units in a food company (Heizer, Render, & Munson, 2014). This is important because only IT infrastructure development at the supply chain will not benefit the company; rather, a complete IT infrastructure connecting all the operational units of Moor Hall will be highly rewarding. Implementation of ERP can be a better decision in this regard because it would connect all the operational units of Moor Hall.
Principle 07: Differentiating the food services closer to customers: Finally, one important principle of the food industry’s sourcing and procuring is the differentiation of food services closer to the needs and demands of customers (Barratt, Choi, & Li, 2011). Following this strategy, Moor Hall should look for differentiated materials and ingredients so that it can make the food unique. This will help Moor Hall to stand out from the crowd.
Different analytical tools that support effective management strategies
At Moor Hall, there are different types of analytical tools that are used by the food industry in the UK; however, within the restaurant’s few effective analytical tools are being used to support its overall management procedures in order to obtain insights on their position in the market, such as:
SWOT analysis
| Strengths: Infrastructure design, which has the restaurant earn awardsInnovating menus frequently provide rooms as well local suppliers and having own barn to acquire materials holding events | Weaknesses: Marketing and promoting of the business require more attentionMenu, items are not in a broader range also has a limited process flexibility a low product diversification, as it serves like any other |
| Opportunities: Can create more diversification in the menu requires investing in marketing and promotional activities to increase the menu items while suggesting the day specialities provide healthier choices for customers considering the price range, as it is very expensive for ordinary people to attend requires investing in the above-mentioned technology implementations. | Threats: Similar theme restaurants are available with better price choices require more focus on customer choice during innovation remit impacts through law and regulations better technologies |
Analysis: SWOT analysis helps to address the issues effectively, and the main advantage of this tool is that it helps in the effective strategy formulation and demerits, as it is subjective, so this is less accepted by others (Phadermrod, Crowder, and Wills, 2019).In the above SWOT analysis, it can be seen that the business has its fair share of strengths and weaknesses as well, where it has the advantages of its infrastructure that attracts and maintain the environment for customers. On the other hand, it also has disadvantages that are being faced due to a lack of marketing and promotional activities along with offering more menu items to the customers. Therefore, both outlined strengths and weaknesses have helped to gain opportunities and threats for the business as well, where it can improve for better by indulging in marketing activities to serve better, while threats such as better technology investments and BREXIT can create real consequences for the business.
Similarly, PEST analysis also can be done by the restaurant to know how external factors are impacting the business activities, such as
| Political: It is mostly related to living wages, as it has increased, thus, making restaurant owners and farmers concerned, as they have to comply with this increase rule by increasing salary, which also means the restaurant suppliers will also increase their supply prices. |
| Economic: Similarly, the restaurant also requires considering that BREXIT impacts the economy, where changes in trade will most likely take place, which will affect local business-like Moor Hall. |
| Social: Customers and communities are becoming more responsive to technology uses, while the restaurants mostly conduct traditional methods, while both customers and investors seek engagement with business in terms of their CRM activity. |
| Technologies: Within the business, technology impacts the most, as in the UK, most restaurants have become technology savvy, therefore, within the part above, certain technologies have been identified, in order to compete in the competitive market (Morosan, Dawson, and Whalen,2017). |
Analysis: According to the conducted PEST methods, it helps to know how the external environment, such as political, social or technologies, is impacting the business. The cost-effective model denotes the main advantage of this tool, and diffusing in accessing the changing racing environment makes it difficult to use this tool (Vazquez et al. 2018). In which the major external impact can be perceived during political analysis, where due to the increase of wages as per current political decisions, the business has no choice but to comply with the regulation. In simple words, in order to maintain staff and supplier’s good relationship with the business, they have to pay more than their previously planned payment structure. Similarly, other businesses are becoming more competitive by adopting newly introduced technologies within their own businesses, which are also forcing the business to become savvier in terms of acquiring new technologies to access customers better. On the other hand, the business is already conducting CRM activities by indulging local farmers’ communities as suppliers, so they can benefit along with the business.
Different management practices that support successful business operations in a food service organization
Global companies and research institutes evolved new technologies and ideas to present companies with innovative management practices to help them improve business operations (Hitt, Xu, & Carnes, 2016). The below section has advised some management practices for Moor Hall to help them enhance operational efficiency.
Team-up with customers: This refers to engaging with the customers to know their needs, wants, demands and preferences to better design the product offering (Krajewski, Ritzman, & Malhotra, 2013). Being engaged and knowing the expectations and needs of clients is much more important for the food service organizations such as Moor Hall because this is a service-oriented Food Company. Therefore, knowing customers’ needs will keep Moor Hall updated with the changing needs of the market. Therefore, Moor Hall will be more efficient in tracking customers’ needs and making accurate offers that will help the company to optimize business efficiency.
Implement continuous improvement: Looking for options to implement continuous improvement is another important management practice that can optimize the business operations of a food company (Peng & Lai, 2012). Continuous improvement should include both strategic improvement and technological improvement. This will enhance productivity, increase efficiency, reduce losses, and create a competitive advantage for Moor Hall. Competitiveness will increase because Moor Hall will be strategically and technologically advanced from other companies due to an emphasis on continuous improvement. All these issues will lead to the optimization of business operations.
Strategies, purposes and actions should be aligned across the organization: Reid & Sanders (2019) argued that strategies, purposes and actions should be aligned with all the functional departments across an organization. Failure to do so will lead to a lack of proper orientation and synchronized approach to actions leading to failure to achieve corporate and business-level strategies. In contrast, if Moor Hall has aligned strategies, purposes and actions, all the functional departments of the food service organization will work at the same pace for one unified set of objectives. This will lead to the achievement of corporate and business-level strategies.
Emphasize talent development and retention: Talented and retained employees always play a significant role in any organization (Subramanian & Ramanathan, 2012). Moor Hall should emphasize even more developing talents and retain the talented chefs who are considered the brain of a food company since they design and make the food. Retained employees can provide the same flavour and sense of taste which are highly emphasized by food lovers around the globe. This will help Moor Hall to retain existing customers and to get new ones. As a result, the business will grow, and the company will be more efficient.
Reduce new product introduction lead-time: Reduction of innovation and new product introduction lead-time has become another important management practice in modern operations management (Jones & Robinson, 2012). At Moor Hall, the company could introduce new dishes and new approaches to serving food in an innovative environment. This practice will add new and unique value to the business. As a result, new customers will be attracted to the business.
Conclusion:
Understanding the key aspects of food and service management, it can be said that restaurant management needs to be amazingly effective and focused towards some essential constantly in order to maintain proper service management. The aim of the report can be significantly managed with the detailed analysis of the report, and that can be amazingly effective for the strategic management process and practices as well. Practical knowledge and information can be investigated here as well during the research and managing of the report. Besides that, I think that the solution to various challenges of the food sector can be used here for Moor Hall as well.
References:
Bozarth, C. C., & Handfield, R. B. (2016). Introduction to operations and supply chain management. Pearson.
Crum, M., Poist, R., Carter, C. R., & Easton, P. L. (2011). Sustainable supply chain management: evolution and future directions. International journal of physical distribution & logistics management.
Food and Drink Federation, 2020. THE FOOD AND DRINK INDUSTRY: Economic contribution and growth opportunities. [Online] Available at https://www.fdf.org.uk/publicgeneral/FDF-GT-Exec-Summary.pdf (Assessed date: 5 August 2020)
Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (2013). Operations management. Pearson,.
Jones, P., & Robinson, P. (2012). Operations management. Oxford University Press.
Moor Hall, 2020. About us. [Online] Available at https://moorhall.com/ (Assessed date: 5 August 2020)