How to optimise supply chain management in trying times

There is new normal that is going to be achieved, particularly for the restaurant chains going forward as they sort of get used to the lockdown, unlock and re-lock. We are going to see a lot of disruption in the supply chain sector that is going to happen. The supply chain wasn’t able to cope up the way we have always been used to. Going forward what would be the future of supply chain and how would the restaurateurs plan themselves in order to be keep servicing their customer is a big question.

There are few trends that we saw emerging the food service sector that will also affect the supply chain industry one being the consumption of plant based meat because there was less use of labour in the factory verses meat based products where there is far more human interaction involved. Therefore, vendors must be in better position to supply us the plant based meat going forward and that may get visible in the menus of the restaurants. Frozen will be going to become the new fresh while we like it or not, we are going to see lots of frozen foods in our menu. Local sourcing of food will again become a new normal. We can see more farms to table kind of concepts emerging in top cities. They have always been sort of very difficult because of the entire procurement, middle people but because of the Covid this may find a rebalance. Automation is going to certainly play a big role. The vendors that restaurants will look forward would be the vendors who have got highest level of automation at their factories, operations. And, more importantly consumer behavior is going to change.

Outsource whatever you can:  As restaurants are all gearing up to roll their businesses, they are looking for ways to re-start their business and for them outsourcing came as handy. “The short term practice that we are looking in the middle east is outsource whatever you can, working capital is very important at this point in time,” shared Sandeep Sharma, Head- Procurement & Supply Chain, Domino’s Pizza ( Alamar FoodS) MENAP.

Reducing Wastage: Avoiding over buying, purchasing the ingredient you only need will be of much important post covid era. By reducing wastage at the restaurants, hotel, people can both save money and environment. “My top priority would be whichever ways I can minimize the wastage for my system,” pointed Deepa Prasad, Director- Procurement & Supply chain- South Asia, IPC ( Subway) who also believed that in future restaurants would proceed with eco-friendly packaging rather than the plastic packaging.

Collaborations is way forward: Enforcing relationships for strategic procurement would be the future of supply chain sector. You need to have collaborative partnerships. There is no word called vendor now, the restaurant sector will have to look for partnerships now. The vendor is not going to work now.

Connecting with partners: Joint meeting with partners and re-assuring them of your presence because they also are going through lot of pain and lot of money in the market that they will probably never get will help in a big way and will be biggest trend going forward. So, re-assuring them that even if there is a delay we are there for them.

Speed is the way forward: If you have to get your product right, execute everything and adopt it on time, you will need to do it fast as compared to pre-covid era. Now, it will be all about how fast have you adopted the change and how innovative you are with it. “We need to be agile on it. We can’t rely on someone for a product for months and then wait for it. We will have to get the speed, speed of the idea, execution,” said Sanjay Goyal, VP- Supply Chain Management, Lite Bite Foods for whom partners and speed is very important for smoothly running the business.

Focus on people: We need to focus on our people, employees. We need to take care about them as they are the one because of who our business is running. “Today, it is about cross- utilizing and not letting go the people as they are the most important pillar of the business,” added Kunal Gupta, Director- Supply Chain, Bateel International who is managing over 200 F&B outlets (Bateel café’s and boutiques, Godiva Café’s , Tim Hortons, Coldstone Creamery and Sbarro Pizza) across Middle East and Europe.

Technology is the key: Technology has changed the game of every business during this period. And, it is surely going to be the biggest change maker for the restaurant and food sector. There’s no denying that going forward everyone knows that eCommerce is going to be permanent and we need to change according the trend.

Hygiene and sanitization: “Going forward sanitization, hygiene will become very important where people would like to know about the source of the product. We will have to ensure that the product is sourced, procured and is at the restaurant meeting the complete hygiene and sanitization process,” concluded Nitin Nagrale, Founder, HPMF.

Strategic hospitality procurement is considered as a critical part of the supply chain for any company that intends to remain competitive in the business climate for years to come. A well developed strategic hospitality procurement process directly translates into improved business performance by way of focusing on bottom line savings in the long-term. To do so, companies need to manage and source their supply base in an efficient manner, while streamlining the process as a whole to retain strategic viability.

The hospitality procurement function in an organization is basically responsible for the same; so what sets strategic hospitality procurement apart? Basically, when considering the long-term, the process of pruning away the weeds and the unruly edges in this arena becomes an ongoing activity. As long as the organization functions, the activity continues. Companies which intent to head towards strategic hospitality procurement must understand this would require a complete overhaul of their current hospitality procurement and sourcing model. Advancements like web based purchasing and software systems move from being advisable to required status. Purchasing accountability suddenly takes a whole new importance. Spend analysis becomes integral to operations.

Major Objectives

To make the shift towards strategic hospitality procurement, understanding the major objectives is essential. Let’s take a look:

• Relationships with the key supplier need to be enhanced and built upon
• Determining and identifying exactly which aspects result in maximum bottom-line savings
• Putting a stop to maverick buying, and enforcing centralized Hospitality Procurement where necessary
• Contract compliance should be streamlined, and errors should be eliminated to facilitate transactions between vendors and buyers
• Not only the top level management, but junior executives should be equipped to deal with Hospitality Procurement challenges if the need arises for a proactive approach
• Supply base should always remain optimally pruned, eliminating redundancies and un-rationalized choices
• Technology tools like web based purchasing systems should be incorporated and transition should be complete among the workforce
• The shift from manual to automation must be focused upon throughout the organization’s  Procurement and sourcing processes, leading to significant bottom-line savings eventually
• Supplier management programs should be raised to critically important status, and should remain at the core if relationships are to be maintained and further enhanced

Implementing Strategic Hospitality Procurement

A look at some of the more major objectives of strategic hospitality procurement makes it clear that considerable focus is put on reducing redundancies and enhancing relationships with the supplier base. Thus, these are often the main aspects organizations consider when heading towards implementation of strategic hospitality procurement.

Those who intend to take the initiative today can take the first step by opting for technologies which help the company move towards the aforementioned aspects. Prime among these tools is hospitality procurement software. Not only does it enable companies to head towards increased automation in sourcing and hospitality procurement processes, it also offers a number of modules that enhance purchasing accountability, supplier base management, and even help with building and refining supplier relationships.

India is predominantly an agricultural country. However, the emergence and rise of other sectors has led to it no longer having an agriculture driven economy. The food processing industry, for instance, makes up about 32% of the total food industry of India.

India’s digression from being an agrarian society, has given rise to a number of problems which need to be pointed out and resolved. A large portion of the produce is exported, which makes it surprising that the one area in which India seems to be lacking is Cold Chain. Cold Chain is the process of introducing temperature controlled storage and transportation facilities to prevent rotting of easily perishable food produce.

The bottlenecks encountered when looking to improve these processes are large scale wastage of food, inadequate transportation facilities and lack of technical knowledge. With over 50% of the population engaging in farming opportunities, it becomes imperative to provide services and processes that are capable of aiding this sector. The obvious solution to the problems being faced seems to be Cold Chain Management.

So what are some of the challenges being faced by farmers when it comes to the implementation of Cold Chain? The lack of infrastructure allotted to the cold chain sector seems to be the biggest issue. Without the appropriate technical knowledge, farmers are unable to store produce in a manner which keeps it fresh long enough to be exported. Another glaring issue is that the farmers depend heavily on middlemen. This inefficiency of the supply chain makes it near impossible for farmers to access those facilities which can help reduce wastage. At the moment, the Cold Chain Market in India is a niche which assures hygiene, longevity of produce and a boost to the food industry, which will carry it through to the upcoming boom on the global front.

It is important here to note that almost 40% of produce goes to waste due to improper storage and transportation facilities. UK at present stores 70% of its agricultural produce in Cold Chains while India is at only 4%. Implementation of a cold chain management system can reduce food product wastage by almost 75%, thus increasing the capacity to export produce and increasing the overall GDP of India. The advantages of this are manifold – an extended lifecycle for perishable products, reduced wastage of food products and a larger market reach which then leads to a greater customer base.

While the current capacity is nowhere close to being enough to support cold chain management, resolving the issues requires cold storage facilities to be implemented in the supply chain. By cold storage, ISB identifies the following features: Pre-cooling facilities, Refrigerated Carriers, Cold Storages, Warehouse Information Management systems, Financial and Insurance Institutions and Traceability. The fixing of the supply chain also needs to be done in a manner that keeps in mind the requirements of farmers and care should be taken to not hamper their livelihoods. On the one hand, investment by Walmart and other such multinational corporations would lead to development of cold chain management systems, as they would need to transport perishable materials countrywide. However, it should be kept in mind that this does not hamper the jobs presently being created for storeowners or farmers. On the other hand, companies working directly with farmers to implement better supply chain management systems have reported a 25% increase in prices.

Thus, it is clear that there is not one single approach which will improve the condition of the Indian agricultural market. Rather, a combined approach of taking care of the supply chain, as well as investments by MNCs, will on the whole result in a better process which will benefit farmers. The need to implement cold chain to prevent the wastage of perishable goods needs to be realised on a large scale.

Another critical problem being faced by the food industry is climate change. Recent studies have revealed extreme fluctuations in the weather with increased maximum temperatures and lesser rainfall. In order to prevent these extreme climates from having a long lasting effect on the produce, certain processes can be introduced. For instance, proper transportation systems to reduce post-harvest loss. Small landholders are unable to use large scale preservation and processing technologies, thus resulting in a lot of wastage. Middlemen, upon whom farmers are dependent, are also sometimes forced to sell produce at a price lower than the production cost. There needs to be an implementation of better transport systems, which can store produce at required temperatures, and is also available at a local level.

All in all, we can identify an unorganized supply chain as the major problem faced by farmers in India. An appropriate remedy to this situation, as we can see, is maintaining a proper cold chain system. Proper storage facilities, along with appropriate temperature controlled transportation will help to reduce the problems of wastage which occurs most at the post-harvest stage. Efforts also need to be made to educate farmers regarding the proper steps which need to be taken to manage food better and reduce wastage. If all of these processes are taken care of, Cold Chain could soon become a linchpin in the wheel of the agricultural economy in India!

Supply Chain is the management of network interconnected business involved in the ultimate provision of goods and service required by the end customer. It spans all movement and storage of raw materials, work in-progress inventory & finished goods from Origin to point of consumption (QSR perspective it’s FARM TO FORK).

Critical aspect of SCM is that everyone is involved, system approach to reducing cost and lastly integration being the key to drive it. In nutshell - Effective integration of Right product at Righty Quantity, Right Quality, Right place, Right time and Right value. Supply Chain comprises of Planning, Buying & Sourcing, Inventory Management, Distribution, Merchandizing, Logistics & Fleet operation.

Here are 5 ways to build up road map to World-class Supply Chain:

• Managing Demand: Managing demand is an important part of running a smooth supply chain. Many a times we see that there is less demand but we see lots of wastages being done all because of the supply chain miss management.
• Achieving Manufacturing Excellence: It is all about providing high quality, competitively priced products and services in a global marketplace. This is a major hurdle confronting manufacturers. Generally what happens is that suppliers always try to improve product quality, drastically shorten product development cycles, increase productivity growth, stimulate product and process innovation, and respond quickly to changing customer demands.
• World class Logistics: Maintaining a world-class logistic is a major challenge in India market. Half of the products get wasted mid-way while getting them supplied to the hotel or the restaurant. An efficient supply chain isn’t just a way to get reduce operating costs, improve your margins and get products delivered faster. The most complicated issue for any restaurants is logistics handling and that needs to be managed well. Most of the restaurants do not have sufficient space for the storage and hence the JIT delivery method is used to ensure proper supplies. It’s of utmost importance that the restaurants have loyal suppliers who supply products as and when required so there are no excess or short stocks. It also allows the restaurant to provide fresh products all the time.
• Minimizing Risk: Risk is part of any business you do. Especially, there is lots of risk involved in managing supply chain for restaurants. Ideally, if risk is properly managed, nothing occurs that has a negative impact on operations or profitability. Hence, it has to be taken care.
• Product Innovation and use of Technology: Innovate if you want to succeed tells expert in the business. With more technological advancements restaurant owners can minimise any supply chain related faults.
• Human Resource: It is all about team and people. Right people doing the right things in the right way are very important for a successful brand. World-class companies expect supply chain management to focus on the following value adding outputs:

• Quality – purchased materials and services should be virtually defect free. Many defects can be traced back to bought in items.
• Cost – minimisation of total cost of acquiring, transporting, holding, converting items as well as quality costs.
• Time – need to minimise time to market for new products as well as minimising lead-times to increase flexibility.

In an interview with Restaurant India, at the Indian Restaurant Congress 2018, Amit Malakar, President & Business Head, Sical Supply Chain Solutions shares the secret of running a successful business by providing the right solutions to the brands.

Tell us about your brand.

Founded in 1955 and with revenues in excess of Rs. 800 Cr, Sical Supply Chain Solutions is India’s leading integrated logistics solutions provider with over five decades of experience in providing end to end logistics solutions. In 2011 Sical was acquired by Coffee Day group, with interests ranging from coffee retail business, stake holdings in leading IT and embedded technology companies, to technology parks and SEZs and hospitality. We are focused in providing supply chain services to our consumers in the retail segment and also to the restaurants, cafes. We are helping brands to serve from bean to cup.

Restaurants and cafes face innumerable challenges related to supply chain. What solutions do you provide to help them grow?

When we talk about supply chain in cafes, we only think of food but then most importantly, supply chain encompasses everything you see in a restaurant, right from the setup to the furnitures, and most importantly to the food getting delivered at the right time and right place to give a complete seamless experience. As far as procurement is concerned, it should be at a right price, at the right time and stored at the right place.

How do you bridge the gap within the sector?

We have been developing the solutions for Café Coffee Day, and have established ourselves in this space, with 1200 cities in the country which is by far the largest footprint by any service provider. We are bridging the gap in terms of geography, so not just few cities; we are catering pan India. We understand the business, so we know what the food industry needs. When you make a delivery to a café, be it peak hours or off hours, we absolutely make sure that we are non intrusive to their business.

How do you manage the inventory in the business?

Major part of the inventory is food which is perishable, as they have a shelf life. On one hand, some amount of it can be increased by putting it in the freezer while some amount has to be consumed the same day. We keep track of inventory of different shelf lives in our system. With technology we are keeping track of when, where and how much to physically deliver and store.

How brands can maintain their value by cutting the costs with the Supply Chain?

For brands, it is the value which they have created and the quality which they have promised to their customers. Some of these brands are not looking at pure cost cutting. They are looking at premium quality being delivered in the right manner. Typically, in the industry, there is a lot of wastage and to make sure that the food is fresh and wasted as little as possible helps in cutting the cost but not quality.

With commodity prices becoming an increasing concern and food safety and traceability securing the top position of mind, managing supply chain issues has evolved as a major concern for the restaurant industry. However, supply chain issues are problems with the supplier that has no control.

Managing your restaurant day-to-day is going to rely on fresh ingredients being delivered to your kitchen exactly when you need them. This definitely doesn’t happen by magic. Great suppliers and distributors are definitely out there, but you need to plan carefully to set up a system that works for your business.

Making the supply chain factor more fractured is the increasing use of limited time offers (LTOs) which make the demand challenge more complicated. Needless to say, this is a huge problem as inadequate forecasts for LTO demand combined with poor supply chain visibility results in restaurants ending up with either running out of stock for promoted dishes, which leaves customers unhappy, or building too much stock, which increases food waste.

“Sourcing is done mostly with vendors within city limits and few of the ingredients are outsourced from outstation. Logistics is a challenge when ingredients need to be sourced from outstation as minimum order quantity comes into play which gets added to our cost,” said Riyaaz Amlani, CEO and MD, Impresario Entertainment & Hospitality.

For the greater ROI, it is important that the network integrates both logistics planning and warehouse execution, which allows partners to optimize inventory and transportation cost at the same time. Adding more to it, Prasad Rao, Asst. F&B Manager, Renaissance Mumbai commented, “Logistics is a big challenge as sourcing revolves around seasonality, financial cost and lack of availability/supply. And part of logistics includes building operational time and nailing the price upfront which is largely affected by the above-mentioned challenges of sourcing.  While managing costs is an important challenge, our top priority will always be quality and safety.”

Solving the major part of the supply chain problem can be the use of local ingredient sourced from the local vendors. Also, the hotel giants on the other hand has started in-house farming of certain vegetables in order to promote organic food. “Trial and error method has been applied to a variety of vendors, local or international, before selecting the best one. In order to promote organic and healthy food, we have also resorted to in-house farming for certain vegetables,” adds Rao.

Sourcing locally, however, can be a major logistical problem for food service operations. Dealing with dozens of local farmers and suppliers isn't a cost-effective process. Instead, the economies of scale derived from doing business with one of the major food service wholesalers makes better business sense. The solution to this problem is thus matching the demand for locally grown foods with restaurant buyers who want one-stop shopping, which is emerging as the concept of ‘food hub’.

“Logistics is a challenge in case of perishables mostly. Most of the long shelf life ingredients can be transported easily. We lay a lot of emphasis on cold chain being maintained throughout. All our perishables must not face temperature shocks. We insist our vendors on maintaining cold chain and delivering the perishables below 10 degrees C,” said Chef Vineet Manocha from Lite Bite Foods.

Today, some leading restaurant chains are embracing digital business networks. Similar to a social network but used for conducting and transacting business, restaurant chain owners are implementing a single platform that brings together restaurants, franchises, distributors, and suppliers into a single operating network to improve both visibility and course corrections. These networks are providing instrumental value to all parties and are quickly gaining in popularity when done correctly.

Sourcing ingredients are one of the top priorities for any successful food business. Choosing the right food supplier is a critical business decision, as one has to guarantee the quality, safety, and value of the food offered. It’s a restaurateur’s responsibility to cater to customer and client needs. This has to comply with government regulations and quality standards, and provide quality meals, all while keeping the budget under control. As government and industry put a stronger emphasis on food safety and quality; so, evaluating and selecting the right supplier today has become even more complex.

Manish Tandon, CEO, au bon pain & Sagar Daryani, Co-Founder, WOW MOMO spoke candidly about best practices in working with suppliers to drive brand sales and profits, as well as the importance of cutting ties and moving to other vendors when the time is right. 

How do you find the best suppliers for your brands?

Your relationship with your vendor is like a marriage: you should be able to complain or argue with your best supplier, and at the end of the day, you will have hopefully corrected any problems and made up. Before you commit to a vendor, you have to shop around. Make sure that your vendor has outstanding references by asking them what restaurants they serve and contact those restaurants directly.

au bon pain- Manish Tandon says,” The process of identifying a supplier is a step by step process. Firstly, we identify the products for which we need a supplier and establish a set of product specifications. Then we ask the available/reputed suppliers to provide us with samples. Basis the product quality check and price quote, we negotiate on the price for our volume. Then our team does a vendor facility audit for quality and hygiene and cross check all legal requirements. Based on the audit report, we finalize the best vendor/supplier.”

WOW Momo- Sagar Daryani says,” What you put into the food, that’s what comes out of it. A quality product will always ensure that you have repeated customers which make your quality brand. When it comes to suppliers or raw materials, this entire ecosystem goes by the word of mouth. All our food ingredients for our packaged foods, we have one single vendor with whom we operate nationally, with a direct tie-up with the brand. We ensure that we get the required quantity in the right quality to maintain the consistency of our brand. When fresh food is concerned, we look for vendors supplying to other big chains, say the best chicken vendor in Delhi or Mumbai and accordingly we get the samples.

How does the supplier's performance ultimately impact the brand?

Your customers love your food and the service, but it’s a delicate thread that binds them to you. All it takes is one or two disappointing meals, or their favorite menu item is sold out; or, the food is not as fresh as it could be… and one day you realize that you haven’t seen that family in a while.

au bon pain- Tandon says,” Restaurant business is very unpredictable because we deal in a lot of perishable ingredients, hence supplier performance plays a very crucial role in building a brand image. Some of the key areas of supplier performance affecting the brand image are: timely delivery, quality as per desired specs, Emergency support in case of urgent requirement.”

WOW Momo- Daryani opines,” If there is marginal complacency from the suppliers, with sluggish service or problems with the delivery of the product; it hampers the entire supply chain logistics. Brands like us who are producing and selling on a daily basis, suppliers have to consistent with their efforts. Suppliers are indeed very important stakeholders in your business and with that both the brand and the supplier has to cooperate to take the game further.”

How can suppliers make or break a brand?

Your approach to suppliers needs to be part of your strategic plan since almost every company, whether product- or service-oriented, is dependent on suppliers. Many business owners seem to get this supplier issue backwards. They think that because they write the order, they're in the dominant position and can exploit it with unreasonable demands, including personal perks.

au bon pain- “Supplies are at the core of any restaurants business. If there is any compromise on the quality specifications or a delay in supplies, it can lead to significant impact on the quality of output to the customers. A single bad review on any digital media platform and word of mouth can tarnish the brand image, and this multiplies very fast. So the supplier has to adhere to quality specifications and delivery in a timely manner as agreed with the brand”, said Tandon.

WOW Momo- “Today, the entire manufacturing and production cycle can get disrupted if suppliers don’t give the products on time. You have to ensure the supplier’s performance in terms of their quality consistency and product service timings etc. with other brands from the industry. We are paying for the fresh materials and we expect the same from our suppliers. Quality assurance is our key concern when it comes to building our brand”, said Daryani.

Let's get this right--you need good and reliable suppliers!

Globally there is change in how people have been dining in all these years. Restaurant brands like KFC, McDonald’s among others are going green by adopting natural and healthier measures to serve food. Countries like the US, Singapore, Kenya, UK, Australia, Canada and some cities in India including Mumbai, Delhi and parts of South India are banning the use of single-used plastic to bring this natural change.

With a consumption of about 13 Mn Tonnes Per year, India generates 9 MN tones plastic waste per year. As the plastic waste menace increases in scale around the world, scientists, entrepreneurs and engineers have begun to come up with solutions that help to reduce it. Some are developing methods for recycling plastics, while others are developing products that are safe and biodegradeable. Some companies are beginning to develop products that are better suited for recycling.

Adopting Biodegradable Alternatives

Hardcastle Restaurants Pvt Ltd, the Master Franchisee for McDonald’s restaurants in West and South India, has successfully transitioned from plastic to eco-friendly and biodegradable alternatives for items used for guest packaging. The Group has already moved away from plastic in Maharashtra and key cities in Karnataka and is working on a plan for a market-wide change over the coming months.

“As the leader in the Quick Service Restaurant space in India, we are committed to using our scale for good and working towards finding sustainable solutions across our business.  This is in line with McDonald’s global vision of building a responsible business,” said Ranjit Paliath, Senior Vice President, Business Operations & Restaurant Enablement while commenting on the initiative.

The burger chain is now giving customers wooden cutlery (spoons, stirrers, knives, and forks) instead of plastic ones. The plastic cups have been replaced by superior quality paper cups. The straws are either made of paper or other biodegradable materials that are derived from corn starch.

Likewise, KFC the fried chicken chain is ditching plastic straw and lids and is replacing it with paper straw in the India, Singapore and few other International markets.

Delhi based, Mother India- a fine dine restaurant situated in the heart of Connaught Place, has also bid goodbye to plastic straws and opted for a green route via using Paper straws. The restaurant is going green to bring in a small change by #refusetheplasticstraw and aims to spread awareness about the effects of plastic straws.

 “We are happy and proud to take this pledge #refusetheplasticstraw at our restaurant. By taking this initiative, it’s our small contribution towards a greener world. Plastic straws are particularly dangerous because they are too small to be recycled. Instead of these, using and giving paper straw that are easy to recycle”, shared Nandini Nneeraj, owner, Mother India.

The Game Changers

According to a report, in Kerala 3.3 million plastic straws are used every day. It is 500 million daily in the U.S. So billions of these straws, by implication, are thrown away around the planet. The initiative against the plastic straw had started a little earlier, but it was about two years ago that the campaign took off really well in India including in mainly metro cities like Delhi, Mumbai, Bangalore etc.

Mumbai-based Reefwatch Marine Conservation has tied up with startups from Bengaluru and Mumbai in an attempt to bring about the shift away from plastic among coconut water vendors in Chennai. The organisation, though optimistic, acknowledges that they have a long way to go before that change takes effect.

Similarly, Faizabad based Chuk is using compostable materials like sugarcane waste to make microwable, ovenable and freezeable cutlery’s and we are trying to provide this to companies in India including the institutional caterers and QSRs. “It is very important that we are not reactive in terms of these bans that happens. We need to become pro-active in today’s time. The idea is to keep moving in right direction and fulfill the need,” added Sumant Pai, Business Head, Yash Compostables Ltd.   

To go with the customers demand and need, a group of packaging industry veterans in the UK are preparing to open a dedicated paper straw production line in Ebbw Vale, Wales, making hundreds of millions of straws a year for McDonald’s and other food companies as they prepare for a ban on plastic straws in the UK.

“We spotted a huge opportunity, and we went for it,” said Mark Varney, sales and marketing director of the newly created paper straw manufacturer Transcend Packaging. “When the BBC’s Blue Planet II was on the telly and the government started talking about the dangers of plastic straws, we saw a niche in the market,” shared Varney to the Guardian.

Hundreds of restaurants today are getting more sustainable and automated when it comes to getting the procurement right. Restaurant owners and operators are constantly eyeing sustainability as a value proposition – and rightfully so. This all change is happening because of the consumer getting more engrossed in what they are eating. Consumers today are looking at all things healthy and natural focusing on the freshness and the authenticity of the produce. According to a research done more than half of the customers who went through this research were happy eating fresh and local produce. Similarly, restaurants also focus on locally sourced foods and ingredients in terms of cutting their cost.

Evidently, consumers choice and their liking for fresh local produce is being heard and restaurants are responding to this changes by adapting all best tricks to get the supply rightly delivered at the restaurant and this trend can be seen across the spectrum of the food industry.

“One critical challenge that restaurants and food businesses are facing these days is that consumers are getting more and more aware and there is lots of awareness which is pushing organisations and supply chain players to meet all the kinds of demand in terms of delivering the freshest ingredients and raw materials in the best possible ways,” says Sumant Vikas, Corporate Chef, Cremica Foods. 

According to FranchiseHelp reports, QSR chains demand and use of locally sourced ingredients is increasing. And Technomic Menu Monitor data shows "local" call-outs on restaurant menus has increased in the past five years for that matter. As covered in the report 150 percent for desserts, 137 percent for main dishes and 82 percent for appetizers have increased in the overall menu.

Domino’s Pizza which is the largest and one of the most profitable food companies in India has a very complicated supply chain transferred into very manageable. The fast food chain which work on a network of 250 suppliers in India operate out of 10 factories. The raw material that the QSR chain buys is a lot of fresh produce. “We buy around 25,000 tonnes of vegetable and about 15 million litres of milk is gone in processing the cheese,” shares Sandeep Gugnani, GM & Head-Supply Chain, Dunkin Donuts (Jubilant Foodworks) adding that the group owns temperature controlled centres, vehicles and their logistic is also fully automated. “We have done a lot of automation in the supply chain in last few years,” adds Gugnani as Domino’s was one of the first brands in India to bring the culture of online or home deliveries.

Cutting the challenges

How we get the material to the hotels or restaurant right and in good condition is a biggest issue. Supply chain plays an important part in restaurant procurement. Though, there are hurdles and challenges restaurants are continuously cutting their procurement short to overcome these challenges. “The road transportation and the amount of time to get the supply right is the biggest challenge, points Basil Massey, Director-Procurement, Duet India Hotels.

We can say that these trends are all an answer to the ever demanding customers but freshness is a big challenge because restaurants are sourcing a large amount of vegetable and controlling its freshness at source is a big issue, reliability is another issue. Also, availability of good quality cheese and milk in the market is a big issue. We have been noticing that instead of getting the supply right restaurants have to strengthen their internal system so that they do not compromise on quality.

So, the bottom line is that we can all expect to see more fresh and local offerings among QSRs in the near future. It’s a proven method to not only lure in customers but catering to the need of ever demanding existing and the new age customers. The supply chain issue can only be sorted if we have all the roadblocks sorted in order to be recognised as a food nation. 

Supply chain remains an important issue in the restaurant and food business. Supply is all about meeting the need; from understanding the need to fulfilling the need. And, over the years restaurant and food players are working hard on getting the supplies at the best possible values; sourcing locally to tying up with farmers for the fresh produce and getting them delivered at the proposed time.

“Our mission is to make Coca Cola available at arm’s reached of length. We have process in both warehousing and transportation on delivery of our products across. We do lots of planning in terms of beforehand forecasting on a weekly bucket as well as monthly bucket of estimating the demand; not only in-house demand but also collaborating with modern trade to capture trends on a pack analysis as well as new products and basis that we try and design our supply chain in not only cater to bulk but also manage niche and small product deliveries,” shares Umesh Madhyan, National Head - Infrastructure & Logistics, Hindustan Coca-Cola Beverages Pvt. Ltd which is one of the largest supplier to the food and restaurant businesses in India.

Fresh is the New Selling Point

One critical challenge that restaurants and food businesses are facing these days is that consumers are getting more and more aware and there is lots of awareness which is pushing organisations and supply chain players to meet all the kinds of demand in terms of delivering the freshest ingredients and raw materials in the best possible ways. “Our endeavour is to uncomplicated the backend operations as far as possible. We try to get the insights of the backend operations of restaurant operators and we do a lot of networking with these restaurant operators and try to understand their challenges and need and that’s how we have been able to get very deep inside their backend operations and based on those insights we come up with products.,” says Sumant Vikas, Corporate Chef of Cremica Foods which is working on making the kitchen work easy by coming up with convenience products which eases restaurant operations so that they do not depend a lot on skilled labour which is very hard to come these days. “We are more than willing to customise the products as per their needs as per the minimum volume is met.,” adds Sumant.

Hence, we can say that restaurant and suppliers both are looking at customising the products according to the need of the market and demand set by the consumer. Fresher the product, better for the growth of the restaurant and customer. 

When it comes to an experience at restaurant, it includes everything from plate to palate. It sometimes becomes a big deal to serve best of the both worlds to the customer. Also at the same time, restaurateurs need to meet customer’s aspiration to have most fresh, healthiest and organic food which is served usually in their grandma’s kitchen which is only possible with supply chains.

Gratifying Supply Chain

If there is a chain of restaurants then it is necessary to build a good supply chain and maintain it. Restaurateurs and supply chains have to be together; get their hands dirty to get what is required. In restaurant industry, supply chains play a crucial role because the ingredients are sensitive to temperature and the time which they take to travel. Also they have limited shelf life which could be anything between one day and one year. “Restaurateurs need to take care that the ingredients are stored at the right temperature for limited time because every single ingredient is fragile. Things should not be taken granted, make sure every ingredient reaches the restaurant at right temperature and should be stored at right temperature further and used as quick as possible so that there is a rotation,” avers Alok Anand, Executive Chef, JW Marriott.

Manage the Balance in Menu

Restaurants should curate 70 per cent of the local ingredients which are sustainable that helps in getting fresh products regularly. They are also adaptable to the same temperature. Restaurants today focus on what is fancy instead if they curate ingredients locally, they’ll get them fresher and which won’t increase their production cost.

Standardisation

The foremost thing is recipe to standardise the restaurant. It has to be frozen, documented and people have to be trained on that recipe. “Ingredients need to be consistent throughout. One should use same grade and quality at all of their restaurant chains otherwise the dish will end up tasting different which in turn will affect the cost. For the consistent standardised operation, the yield, taste and cost of the dish should be consistent,” says Sumanth Das, Executive Chef, Macao Hospitality. By depending up on some of the convenient products, the standardisation could be achieved.

Blending the Spices

The fundamentals of food are aroma and freshness. “Supply chains should follow a strict quality check while assisting the raw products and put the best material to process further for the supply. They need to follow a robust system for supplying and distributing and keep the product in such a way that it should remain fresh at least for next one year. Also the products should be delivered to the restaurant with in the three months of manufacturing so that the freshness and aroma remain alive”, says Sourav Guha Bakshi, DS Group, V.P – Sales East. Do not try to customize the natural ingredients, let the natural aroma and freshness come so that the customer could feel it while the dish is being served on his table. Efficient supply chain could take restaurant to the heights.

No matter how successful restaurant you are and how efficient your supply chain may be, your food will be not as fresh as at your grandma’s kitchen. And, the answer probably lies in equations where restaurants have to understand what they want to do to achieve something big.

Managing the supply chain

In restaurant industry supply chain plays a crucial role because all the raw materials that the segment use is very crucial to temperature and the time it takes to travel. At the same time it has also got a very limited shelf life. One need to focus that the ingredients are stored at the right temperature and for the right amount of time and used within that limited period which is there. Every single ingredient has its importance. Many a times restaurant operators think that the particular ingredient can be kept at room temperature but they are supposed t be at a different temperature. “We ensure that everything that comes in once, it reaches the hotel on time at the right temperature and is stored at the right condition and used as early as possible so that there is quick rotation of the ingredients and it gets consumed within the shortest period of time,” shares Chef Alok Anand, Executive Chef, JW Marriott Kolkata, adding that Marriott as a policy curate ingredients which is local and sustainable and it should leave very minimum carbon footprints. “Our menu is planned is such a way that 70-80 per cent items are local. Usually in restaurants we tend to put things which look fancy, sounds fancy and the ones which are exotic. But if those ingredients are not available locally it adds to the cost, the wastages are high. And, hence, the production cost increases and the margin decreases,” adds Anand.

Bringing standardisation

Standardisation of the ingredient is an important factor in restaurant business and its where top restaurants fail because they tend to lose focus on consistency. A biryani which is cooked in Kolkata will be of different taste to that of the one served in Hyderabad and for that matter Lucknow because of the regional flavours and quality of ingredients grown in these areas. “The first point is your recipe. It has to be frozen, documented and people have to be trained on that recipe. Secondly, the ingredient that a restaurant is using need to be consistent throughout. If you are using a particular grade of tomato at one location, you will have to use the same grade and same quality across all other locations otherwise your end dish is going to end up different,” points Chef Sumant Vikas, Corporate Chef, Cremica Food Industries. Everything needs to be consistent. And, that’s where the company like Cremica come who work as an intermediary ingredient suppliers to chain of restaurants and international chain. So, by depending on these convenience products restaurants can actually standardised their backend.

According to industry experts, the very fundamental of good food is aroma and freshness. “We source raw materials from places where it is done best bringing the same to our factory where a stringent quality test is done. The freshness remains same for an year making sure that we supply these products to hotels within 3 months to maintain the freshness of the foods. We don’t do any customisation but there is product differentiation in every region depending on the local aromas and flavours,” adds Sourav Guha Bakshi, V.P -Sales East, DS Group.

Hundreds of restaurants today are getting more sustainable and automated when it comes to getting the procurement right. Restaurant owners and operators are constantly eyeing sustainability as a value proposition – and rightfully so. This all change is happening because of the consumer getting more engrossed in what they are eating. Consumers today are looking at all things healthy and natural focusing on the freshness and the authenticity of the produce. According to a research done more than half of the customers who went through this research were happy eating fresh and local produce. Similarly, restaurants also focus on locally sourced foods and ingredients in terms of cutting their cost.

Evidently, consumers choice and their liking for fresh local produce is being heard and restaurants are responding to this changes by adapting all best tricks to get the supply rightly delivered at the restaurant and this trend can be seen across the spectrum of the food industry.

According to FranchiseHelp reports, QSR chains demand and use of locally sourced ingredients is increasing. And Technomic Menu Monitor data shows "local" call-outs on restaurant menus has increased in the past five years for that matter. As covered in the report 150 percent for desserts, 137 percent for main dishes and 82 percent for appetizers have increased in the overall menu.

Domino’s Pizza which is the largest and one of the most profitable food companies in India has a very complicated supply chain transferred into very manageable. The fast food chain which work on a network of 250 suppliers in India operate out of 10 factories. The raw material that the QSR chain buys is a lot of fresh produce. “We buy around 25,000 tonnes of vegetable and about 15 million litres of milk is gone in processing the cheese,” shares Sandeep Gugnani, GM & Head-Supply Chain, Dunkin Donuts (Jubilant Foodworks) adding that the group owns temperature controlled centres, vehicles and their logistic is also fully automated. “We have done a lot of automation in the supply chain in last few years,” adds Gugnani as Domino’s was one of the first brands in India to bring the culture of online or home deliveries.

Cutting the challenges

How we get the material to the hotels or restaurant right and in good condition is a biggest issue. Supply chain plays an important part in restaurant procurement. Though, there are hurdles and challenges restaurants are continuously cutting their procurement short to overcome these challenges. “The road transportation and the amount of time to get the supply right is the biggest challenge, points Basil Massey, Director-Procurement, Duet India Hotels.

We can say that these trends are all an answer to the ever demanding customers but freshness is a big challenge because restaurants are sourcing a large amount of vegetable and controlling its freshness at source is a big issue, reliability is another issue. Also, availability of good quality cheese and milk in the market is a big issue. We have been noticing that instead of getting the supply right restaurants have to strengthen their internal system so that they do not compromise on quality.

So the bottom line is that we can all expect to see more fresh and local offerings among QSRs in the near future. It’s a proven method to not only lure in customers but catering to the need of ever demanding existing and the new age customers. The supply chain issue can only be sorted if we have all the roadblocks sorted in order to be recognised as a food nation. 

Murali Parna shares with Restaurant India the current F&B trend, the supply chain management process and also the reason for foreign restaurants tasting success in India.

Tell us something about the current F&B trend in India?

The outlook is really positive and the opportunity is quite huge. The younger population makes eating out more often which is actually the size of the opportunity for this country.

What is your take on the popular trend of this industry?

Low priced, ‘on-the-move’ food will probably be the big thing in next 2-3 years. Affordable and good quality snacking out will increase. Very soon round the clock food will be required. Home delivery as a trend would be probably one of the biggest one.

Please tell us about your role as COO of Sagar Ratna. What is your core responsibility?

The most important responsibility is creating value for the shareholders, making this business relevant in this high competition QSR environment and engaging and keeping customers for life.

You have more than two decades of experience in operations. Please tell something about the supply chain management.

We have a centralised supply chain system. The decision making is centralised, the ability to know what to reach out to various restaurants is all centralised. We only do local deliveries for local products but the specifications are very crystal clear. We do some kind of ‘hub and scope’ model as well for semi finished goods but that is primarily in-house arrangement. We haven’t outsourced the supply chain on that.

Elaborate your journey from Godrej to Lintas and then to the F&B segment.

I feel the decisions I have taken in my career are a bit planned. I started with sales primarily to know how to build customer relationship. Later on I went into brand management to understand how brands are created and marketed and then I went into retailing. In retail, I started with grocery because it was in my mind that any business may die but grocery will not because that is the basic necessity. The next obvious choice was F&B which is one of the largest segments. So, I feel, over the years I have gained good amount of experience in sales, brand management, supply chain and then getting into running a business.

What advice you would like to give the aspiring restaurateurs?

Do not compromise on quality, keep up the standards, know the customer- what exactly they want because until and unless you can’t identify who your customer is do not get into this business.

In a candid chat with Franchise India, Pawan Raj Kumar talks about the Technological advances, the supply chain management process, uniformity and the value position in the market place.

How can technological advances be smartly integrated into existing setup to improve the efficiency and profitability of a restaurant?

I think they should be included into a kitchen because the world is changing very fast; the Indian demography is changing very fast. We are very young country so people want things very fast and this can happen only if you have new technology. There is always new things happening and this is only possible if you smartly integrate the existing setup.

What is the supply chain management process at your company?

It is very obvious that the supply chain management process at my company is very different. We have got very good supply chain management process at the company. Some of them are really very big QSRs and we have to go through lots of audit and certification which are against the quality of product, consistency of product and also manage our own people. We have to submit the reports regularly and of course the quality is something which is checked by everybody. Even for consistency of the product, how we manage the consistency, how we incorporate hygiene into our design we have to get certification. We have to give enough information about how much cleaning we are providing to our own people and how much we are managing their problem.

How can the company like yours say, Continental India can maintain supply chain uniformity in product, price and Quality?

Quality is something which is a very big name. Quality means adhering to specifications, adhering to time of delivery, adhering to the requirement of the customer. We do this kind of things by maintaining proper spreadsheets and by giving proper training to the people; we have to keep proper stock of the things. We have to have some kind of planning predicting the demand of the customer. We work very regularly with our customers to understand their clients for future and work backwards and get ready for the actions.

How do you maintain the value position within the market place?

Value is maintained by first of all doing the cost engineering. That is one aspect about the price-the cost of the customer. However, there is another aspect of providing more value to the same rupee spent-how much capacity of value you may provide, how much more efficiency less energy consumption you can do and also how much you can make your product versatile. The same product can be used for many things. So it is a result of consistent research and development which allows us to give more and more value to the same product that you are giving to the customer.

What should one look for in the right distribution partner and process?

We actually do not have a channel or partner. When we supply to our customer, we supply directly to the customer, to the end user. I think a distribution network should be such that the distributor is allowed to provide good service.

How did you feel getting accolades at the IRC?

It is always exciting as well as humbling because it is a very tough market and you are recognised by your customer in this way. It is very encouraging and helps us to get excited about what we are doing.

Please tell something about your company and your journey as I think your company was the first to get NCF certification?

Our company is more than 30 years old now.  Since our company was started there was one basic philosophy we followed. We wanted to be the leader and to stays like that it is not about doing the business but also staying in the industry. So, our goal was always to do something new and become better at what we have done before. We did a lot of things which were first in the country. NSF is the latest one where we were the first one to do joint venture and fee certification, iso certification and various things. We are the first company to have launched our own brand of refrigeration, known as Frostline. This is the only product in our country which is of international standards.

Are you expanding in International markets also? Who all are your clients?

Yes, we do provide our equipment to national and international chains. We are providing equipments to KFC in Africa and many other chains like that. We also have distributors in South Asia and Middle East.

In the restaurant industry, we work mostly with the QSRs like Pizza Hut, Domino’s, Cafe Coffee Day and Haldiram. Nando’s is also a very big customer of ours. Then there are lots of standalone restaurants where we supply our equipments.

In the year2014-2015, Indian start-up ecosystem has brought a storm in the food service market. Start-ups who are present mainly in online raw meat have raise funding and investments. For instance Zappfresh has raised Rs 2 crore ($300,000) in angel round of funding from a couple of unnamed investors. Similarly, Licious has raised a seed investment of about $ 1 million. The investment has been made by Mohandas Pai (Former CFO Infosys), Kanwaljit Singh of Helion Venture Partners along with few other investors.

According to reports, India is the second largest egg and third largest broiler-chicken producer in the world — 65,000 million eggs and 3.8 million tonne of poultry meat a year. The market is estimated to be worth about Rs 90,000 crore. Presently, analyst reported that urban markets account for about 80 per cent of demand, but rural demand to pick up significantly, thanks to lower chicken prices, improving prosperity and changing lifestyles, helping the sector post at least 8-10 per cent expansion.

“India is evolving and all the government initiatives and overall start-up scene in India is booming. When it comes to new age food businesses, consumer is the king and customers are going to be the cynosure of the game. Moreover, our model enhances the customer experience a great deal and that is what serves right to eliminate the pain point of going the filthy portals of traditional meat shops and have a “fresh” new experience” comments Deepanshu Manchanda, ‎Co-Founder & CEO at Zappfresh.

The model

Meat intake in India is at a large scale. So, the starts-ups or the brands have to see what are the opportunities to develop in this business or strategies that they can incorporate in this.

On the same note, Abhay Hanjura, Founder & CEO at Licious shares, “Licious will add tremendous value to the life of a meat lover, there are various aspects that a consumer is bound to love which includes choice of custom cuts, convenience of having all meats in one basket including seafood & cold cuts and the guarantee of germ, insect and contamination free 'fresh' and not frozen meat, powered by the promise of instant delivery with various payment options and easy returns made accessible by new gen-tech solutions.”

At the same time, Licious has partnered with hyper local delivery start-up Grofers in October to scale up its reach across the city and ensure delivery of fresh vacuum-packed meat and fish within 90 minutes of placing an order.

Recently, Zappfresh has tied up with PepperTap, hyper local grocery delivery Services Company to sell non-vegetarian items such as fresh pork, chicken and mutton especially to residents of Gurgaon. This partnership will work on the inventory led mode. Cold storage and stock facilities will be handled by Zappfresh and PepperTap will ensure the last mile delivery of meat products through its logistics network. Manchanda adds, "We are planning to sell seafood with them. We are really excited about the alliance as this will help us extend our product line to PepperTap's user base.”

Seeing to these hyper local grocery deliveries services company, even BigBasket sells items such as meat, beef and pork to their customers. Thus, India's will see double the growth in this sector by 2016 because of high prices and increasing demand of the product.

At a time when India is going though the biggest tech-disruption, industry players believe technology start-ups have the potential to innovate and solve problems, particularly at the supply end.

The industry drawn by the supply chain also wants back-end issues like cold chain infrastructure to be improved.

Experts on a panel discussion on “Real Food Start-ups” at TiEcon Delhi 2015 pointed out to the huge potential in the food space as more and more Indian consumers opt to eat out or take home deliveries. With a younger demographic, higher disposable incomes and increasing globe-trotting, consumers are ready to spend on quality food, said Ritu Dalmia, Co-owner of Diva Restaurants.

Riyaaz Amlani, MD and CEO, Impresario Entertainment shared, “high real estate costs, scarcity of skilled hospitality graduates and a complicated licensing regime continue to be big challenges.”

“The sourcing quality ingredients also remain a challenge for restaurants and FMCG players in the food space, and this expands the scope for innovative solutions. The food tech space, which is attracting substantial investments, is likely to become a bigger industry in three-four years,” added Amit Burman, Chairman, Lite bite Foods and Vice-Chairman, Dabur India.

Sharing on the same lines, Ashish Kapur, MD of The Wine Company said that food delivery services need to understand the expectations of customers and ensure that the last mile delivery experience is consistent.

Hence, with segment becoming hot in the space, where restaurants have also started participating with these players to deliver their food, these segments may overcome as the supply chain head for the food business in India.

Supply chain costs, too, were not optimised and there were several opportunities waiting to be tapped. But the chain wanted to focus its core activity – serving delicious and famous KFC chicken and other products to the customer. Therefore, an integrated approach was what the company opted for.

Over the years, the eating habits and lifestyles of people embracing the Western culture has fuelled the growth and expansion of the restaurant industry in India, followed by the innovations in cold chain segment by logistic providers, helping them deliver fresh and finest ingredients on the table.

With the growing number of food chains and the love for food in India, cold chain companies like ColdEX, Crystal Logistics, Gati Kausar by Gati Supply Chain, Future Logistics, JIFPL and Snowman are eyeing at a bigger market share, targeting somewhere between 20-25 per cent in next two years. And as cold chain logistics has become an excellent business fuel for brands, Burger King, Subway, Krispy Kreme, Joost Juice, Sbarro, KFC, Domino’s and five-star chains like ITC and Taj Group of Hotels are seeing a reduction in their losses from 10-22 per cent to 5-7 per cent.

Building an effective supply chain

Food wastage can be a result of multiple factors in the supply chain. At a broader level, an important one would be inappropriate conditions for movement of products. Cold chain integration from point of processing to point of sale needs to be addressed at the infrastructural level – wherein pre-cooling chambers are erected at the farm level, to conserve harvest shelf life and freshness – and thereafter transportation, processing, storage and last mile distribution, where conditions should be conducive to preserve products.

Then at the planning level, the consumption should be monitored closely so that the products are not only available at the right place and time, but also in quantities ensuring demand and supply gap is optimal. Although things at the planning level have progressed manifold in the last several years, with the availability of several advanced tools, the former still seems to be a challenge.

“An effective supply chain can only ride on a platform wherein variables involved become more predictable and controllable. Each year, the country achieves bumper wheat production, but a substantial chunk is lost or wasted simply because we do not have storage available to preserve the produce. It is an irony that while we talk of food security on one hand, little is done to ensure that infrastructure is created to achieve it,” shares Rahul Mathur, VP- Business Excellence and Operations, ColdEX which has helped QSR chains like KFC and Burger King in getting the best inventory while launching their brand in India.

Sharing his view on the same, Akhil Puri, CEO, JIFPL, one of the largest cold chain providers to restaurants like the Subway, Krispy Kreme and Nando’s suggests, “We need to ensure that the government support is there in not just developing the infrastructure, but also in operating them and ensuring that there is a pricing mechanism in which probably a subsidy could work, and location advantages that could reduce the logistic cost.”

Challenges faced by the restaurants

The main problem that the restaurant industry faces in India today is a dearth of good infrastructure to store the product and a lack of skilled manpower that can reduce the inventory losses while dealing with the supply chain issues. 

Take for instance KFC, whose supply chain costs were not optimised and so, integration was what it opted for. There were a total of 250 plus of frozen, chilled and dry products to be dealt with and in erstwhile set up; all these were being managed in separate legs which were not the best practice.

Moreover, the chain wanted to focus its core activity – serving the best of chicken and other products to their customers. Outsourcing legs of supply chain to the experts was the key to focusing on its core. It was also felt that the best optimisation would come if the entire end-to-end distribution of finished products was managed with minimum set of partners.

There were five distribution centres to be served, 70 vendors to be managed and products to be sent across five distribution centres in India. Outsourcing primary leg keeping a fill rate of 95 per cent was a mammoth task.  And then ColdEX offered a solution to address all of the above. With a large owned fleet operating out of every nook and corner of India, ColdEX went about to create a robust and responsive ecosystem for YUM primary movement, resulting in at least 20 to 25 per cent saving in the primary leg over the previous scenario.

Commenting on the same, Akash Agarwal, CEO and Director, Crystal Logistic, which has come up with an Arctic store concept or portable cold store containers to reduce the inventory losses and is known to provide its services to global majors like McDonald’s, Domino’s and ITC shares, “Normally, we have seen that there is more than 20 per cent of damages due to water content or change in the temperature of the product and once you adopt the cold chain, it decreases up to five per cent.”

The game changer

For ages, Indian restaurants are facing the problem of supplying the ingredients of their choice because of the unavailability of proper networks and distributors, finding it difficult to bring the food products fresh from the ‘Farms to the Folks’. But the industry is seeing a better prospect of growth in the last two years, owing to cold chain providers. According to the experts, setting up an integrated cold chain supply is what the industry needs today.

“The idea of integrated supply chain in handling food is both to maintain quality as well as bring efficiency in the system. What is most helpful in supply chains is the visibility of goods enabled by the IT infrastructure. It is also about sharing of information between the manufacturer and the service provider and most importantly, it is about proper inventory control,” believes Manish Agarwal, VP of Gati, which points at Taj Group of Hotels as its major client.

The maintaining of temperature while bringing the products from farms to the restaurants is significant too. “The average temperature required to maintain the freshness of fruits and vegetable is somewhere between 12 degree centigrade to 22 degree centigrade,” points out Agarwal.

Rivoli Sinha, Founder-Director, Joost Juice Bars, who faced a difficulty in maintaining temperatures of fruits with limited shelf life, took the matter in her own hands, “I have worked a lot in delivering the best quality juices to the customers by adopting technologies like Individual Quick Freezing (IQF) and partnering with Future Logistics to deliver the product in best shape and taste.”

Investments in quality and organised supply chain will increase manifold with an increasing focus on brand protection, reliability and sustainability by brands, as an effective supply chain will not only promise the freshest delivery of their produce, but will keep their customers happy too.

Supply chain is the most important part of a restaurant business. Sourcing the right produce to make the best quality ingredient is a major challenge for restaurant industry. To reduce all these problems and effectively expand the business, restaurant and food majors in the country are betting high on the local suppliers as well as on the importers to expand their business successfully.

A robust process

Restaurant and the food brands have tied ups with local vendors and suppliers in their respective space, to effectively run their business. Major brands like Subway, Domino’s and Mainland China are amongst those who have signed a contract with the local and the international suppliers, to get the freshly sourced products and ingredients on time.

Not only this, the growth of the food services market has led to a centralised procurement system by national as well as international brands. Backed by a strong supply chain network, these major brands are running the process smoothly. Pabrai’s, which claims to offer 100 per cent natural ice creams, has tied up with both local as well as international suppliers to get the quality ingredients from diverse locations.

“We source the ingredients from all corners of the world. We are sourcing fruits from all corners of India. We import vanilla from Madagascar, wasabi and macha green from Japan, chocolates from signature houses across the globe. We also make naturally processed cocoa, which is the richest form of cocoa. So, the entire world is open for us, in terms of sourcing of the ingredients,” says Kunal Pabrai, Partner, Pabrai’s Fresh & Naturelle.

On the other hand, many restaurateurs believe that tying up with a same vendor for few years also helps in an effective supply chain process. The restaurateurs sign a deal with the vendors where they maintain certain preferences for quality fruits and vegetables that they use in their outlets.

“We are dealing with one reliable vendor from past five years. During the initial phase, we faced certain challenges, but we experimented with our business model and now we have the same vendor who supplies fresh fruits to all our outlets in Mumbai,” shares Hemaang Bhhatt, Director, Has Juice Bar.

Major players

Domino’s has been ranked as one of the largest pizza manufacturers in India for maintaining its product quality, freshness, taste and efficient supply chain network. The pizza chain follows an efficient outsourcing model, which helps the brand to ensure quality while maintaining the food cost low.

Domino’s Pizza follows an operational model and has outsourced most of its operations from procurement to logistics and distribution to its local India partners. It has a vertically integrated supply chain system with automatic delivery of raw materials. The centralised procurement system, which procures raw materials from Punjab and distributes it to four commissaries, helps Domino’s maintain increased focus on customers. This entire distribution is managed through refrigerated trucks.

Likewise, Subway and Krispy Kreme have tied up with local vendors with the help of its logistics and distribution partner, to use fresh ingredients in their regular menu.

Akhil Puri, the man behind the effective supply chain process, is introducing the Sbarro Pizza in north Indian market and is planning to leverage the networks of the suppliers for the existing brands.

“We are in the supply chain space for eight years now and we distribute products across 130 cities rightnow. So, we have a network where we can source the product locally to maintain freshness of handmade pizzas of Sbarro,” notes Puri.

Hence, supply chain which is never known to the masses in general and is managed on the backend, is the most powerful vehicle in expansion of a brand. To bring out the best flavours in the food, the focus on sourcing the best ingredients available, is the right mantra for running a successful business. Besides this, restaurateurs use best practices implemented internationally in establishments around the world in terms of food production, preparation and storage.  

Supply chain management process involves the supply and demand of commodity in your restaurant. In the current economic scenario, the suppliers are becoming hungry and this presents a rare opportunity for restaurants to drive costs and efficiencies in order to avoid passing rising costs to their customers. Describing the importance of supply chain in a restaurant, Mr. Doug Brooks, Chairman and CEO, Brinker International Inc, says, “Supply chain is a new and emerging area. It used to be known as ‘the purchasing guys,’ and not necessarily recognised as something at the forefront of a brand. But the fact is: supply chain is responsible for sourcing everything from raw materials to doing contract provisions. They handle everything you need for your restaurants and make sure you never run out or run long. Your supply chain is the key to a successful operation.”

Mr. Shyam Sunder, F&B Manager, Novotel Convention Center, Hyderabad says, “You should always look for a local supplier while dealing with supply chain management of the restaurant. We avoid imported stuff in our restaurant and try to be local because it not only saves the energy, but also keeps the food fresh. We get all our commodities and raw materials from metro-multiple solution stuff.”

The Indian restaurant chain Subway has a different way of managing supply chain and logistics facility. Talking about supply chain and logistics, their website details, “Pink Papaya Foods Pvt Ltd Franchisee owns vehicle to source from central warehouse and inter outlets; the orders are placed on Tuesdays and received on Fridays. Whereas the logistic for home delivery is done in such a way: orders are taken up by the centralised call centre, from where information is passed on to the nearest Subway outlet and the delivery is done by the staff members as there is no delivery boy. Each outlet has three delivery bikes.”

Mr Bruce, Owner, IMBISS, a small German Restaurant, Mumbai, says, “We get all the raw materials from the local suppliers, GUK- supplies French fries, Alframs-Sausages and all other food materials from the local market. Stocking the material from the local market not only saves the energy, but also keeps the food fresh.”