Understanding Procurement : SNAM Industry Conference

Transcription

1 Understanding Procurement : SNAM Industry Conference March 12, 2015 Learning Objectives Rules and regulations surrounding procurement Effective procurement practices Understanding the value of industry technology tools and operating with efficiency and accuracy Procurement compliance Bench marking tools Distributor/Broker/Manufacturers Embracing technology tools can help streamline operations: Impacting your bottom line Overall Facts on School Food Service NSLP 30.3 Million served daily 4.99 Billion Lunches Served annually $1.3 Billion in commodity entitlement What percent of schools that offer lunch, offer breakfast also? SBP 13.5 million served daily 2.25 billion breakfasts served annually No commodity entitlement To what percentage has the average daily participation in breakfast rose over the last 10 years? 1

2 Rules and Regulations School districts use federal funds to purchase the majority of food and supplies Use of federal funds subjects school districts to follow regulations and ethical procurement standards All food and supplies must be purchased through a competitive procurement process considering: Price Food safety Vendor reliability Buy local initiatives Customer acceptance Marketing support Expertise/experience in K 12 market Delivery terms Overall Facts on School Food Service Increasing costs When the USDA published the final rule regarding implementing the new meal pattern changes, how much did they project the costs would increase? Procurement Procedures Flowchart Food Michigan Department of Education Office of School Support Services Administrative Policy No. 10 School Year : Guidance on Procurement Procedures for the USDA Child Nutrition Programs Policy_10_470429_7.pdf Local school boards may set lower thresholds and the lower threshold must be used. 2

3 Procurement Procedures Flowchart Supplies (Non Food Items) Michigan Department of Education Office of School Support Services Administrative Policy No. 10 School Year : Guidance on Procurement Procedures for the USDA Child Nutrition Programs Policy_10_470429_7.pdf Local school boards may set lower thresholds and the lower threshold must be used. Effective Procurement Practices Pricing Mechanisms Firm Pricing amount cannot be adjusted for term of contract (Canned and Frozen Products) Cost plus a Fixed Fee cost of the product fluctuates with the market, the fee to distribute remains firm (Fresh Produce) Price Redetermination items purchased that were not included in the contract (New Items) Volume Discounts discount offered based on the volume of the purchase (Commodity Purchases) Fixed Price with Escalator/De escalator Clause price is fixed for an amount of time but can be increased/decreased based on established pricing index (Milk) Facts on Food Service Increasing Meal Prices What percentage of SNA member school districts reported increasing meal prices in SY ? 3

4 Buying the Right Items Choosing items for the menu meets the needs Understanding participation on the contract If purchasing an item not on contract Search for others that comply with the contract Better value more participation, price, yield Effective Procurement Practices Types of Awards and Contracts Bottom Line lowest price, most responsible bidder based on the total price for all items Aggregate lowest price by category, many vendors Line Item lowest price by item, many vendors Prime Vendor buying 90 percent or more from one source Higher volumes = lower costs More attractive to distributors = larger drop size Some schools may exclude milk and bread Understand the Value of your Contract Understand Rebate Programs Maximize the program 4

5 Understand the Value of your Contract Understand Rebate Programs (Cont.) Monitor participation through reporting Purchasing Cooperatives Combining School Districts Purchases School districts within a geographic region School districts within a state Michigan cooperative options: MOR SPARC GLC Facts on Food Service Who is with Who? According to SNA s 2014 Operations Report, what percentage of school districts reported that they belong to a purchasing cooperative? 5

6 Understand the Value of your Contract Purchasing power: Know the savings results from procurement How items are purchased on the contract Facts on Food Service How much??? In 2013, how many dollars were reported by Technomic Inc. purchased in the K 12 segment? Request usage reports Distributor Cooperative coordinator Other school districts to compare Comparing Notes with neighboring districts Top Items utilized by all schools 6

7 Who are you really buying from Manufacturer and Broker Relationships Know the top manufacturers 3 manufacturers over 50% of spend! Tyson 22.23% Pepsicoquaker 21.71% Cavendish 8.59% It s More than Food Costs Total Spend Don t forget about purchases beyond green beans Disposables 9% of total spend! Table Top Supplies Chemicals It s More than Food Costs Equipment Replacement and Repair 88 percent of school districts report they do not have sufficient equipment to meet the new nutrition standards 2013 study by PEW Charitable Trusts and the Robert Wood Johnson Foundation Only 38 percent of districts ordered equipment for SY SNA s 2012 Back to School Trends Report 42 percent of SFA s reported even having a budget to purchase capital equipment Serving Healthy Meals Study 7

8 Facts on Food Service How much revenue??? What is the average price for high school lunch nationwide? High School Breakfast? SNA 2014 Operations Study Create and Monitor your Budget Create for each location understand each location Request reports on previous year spend Analyze by product category Determine the beginning date Include or separate summer programs Start with beginning order Adjust for Inflation Compare last year spend Adjust for inflation? All By Category 8

9 Budget Monitoring by Quarter Enter spend data as it becomes available Budget Monitoring by Month Procurement Above and Beyond in School Food Service Understanding procurement regulations Food and Supplies Contract Milk and Dairy purchases Bread and Bakery items Beverage Contracts Chemicals Equipment Replacement and Repair Indirect Costs Labor Catering 9

10 Discussion and Questions? HPS, LLC N M-37 Highway Middleville, MI

11 Enter spend data as it becomes available Budget Monitoring by Quarter

12 Budget Monitoring by Month