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Growth Strategies / food and beverage

Why Optimized Procurement is Key to Upping India's Food & Beverage Industry

With an optimized procurement service, there would be quality control and standardized products across every outlet along with reliable consistent supplies
Why Optimized Procurement is Key to Upping India's Food & Beverage Industry
Image credit: Shutterstock
Co-Founder, ADURCUP
3 min read
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The Indian food service industry, according to National Restaurant Association of India (NRAI), will be worth around INR 5 lakh crores by 2021. Despite the fact that this service industry is soaring with a rather big future, there are several problems faced within the industry which must be solved in order for the industry to realize its full scale growth. There are four categories in the current Indian food service industry:

  1. Unorganized market - making up more than half the industry at 67% this category are mostly made up of non-registered vendors where taxes aren't paid and is projected to fall to 59%.
  2. Organized standalones - this is the registered and tax-paying category making up 23% of the industry and is likely to increase to 28%.
  3. Chain market - This category is projected to rise from 7% to 10% in the industry. For example - Nazeer Food Works, DIL, Tpot, Wow momo.
  4. Restaurants in five star hotels - this category are projected to remain stagnant at its 3% share.

The Industry's Major Problems

All four categories face several similar problems which include:

High product price versus low buying capacity, multiple point liasioning for terms and relationship with the sellers, lack of product options in the market, low storage capacity and high logistics costs, lack of product knowledge, lack of quality control and standardization, inconsistent supplies, fixed cost of procurement through tenders in case of restaurants which are often high in quantity leading to huge losses if prices drop; mismanagement.

The Game Changer: Optimized Online Procurement Service

For a solution to the difficulties faced by the industry, there is the need to focus on the major differentiators - customized requirement fulfillment, multiple dependency, shared warehouse facility, organizational transparency in purchase, technology infrastructure for operations, internal supplies management, etc.

With optimized online procurement service comes the following advantages:

  • Single point procurement solution in the form of online market place for restaurants to shop across categories and plan expenses.
  • Product at best prices solving the problem for low buying capacity and high prices.
  • Storage and logistic costs are also optimized with doorstep delivery across multiple outlets along with analytics to plan each and every expense.
  • Options are less limited; reordering is also made much simpler and faster with order history. Also, feature for credit purchase is quite a boon to many buyers short of finance at the moment.
  • Mobile based application to monitor inventory, trigger purchases and manage end to end supply chain.
  • Shared external warehousing decreasing the storage costs to a large extend.
  • With an optimized procurement service, there would be quality control and standardized products across every outlet along with reliable consistent supplies.

The clients needs to understand that in order to focus more on the core competency of their business and make customer experiences more memorable, they would have to outsource the procurement and delivery of all their products, the regular and uninterrupted supply of which is critical to ensure that customers check out of the hotel with smile on their faces.

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