Organic Food | Suppliers | Pricing Trends , Best Practices

Strategic Sourcing Guide to Organic Food Procurement

Overview

Food and Beverages market around the world is undergoing rapid transitions that have a massive potential to influence the way companies strategize for Organic Food procurement and the cost they have to incur. Several macro level trends such as slowing economic growth, trade conflicts, rising wages and technological disruptions have put pressure on managers to reduce their spend on Organic Food without affecting the performance.

A balanced approach to procurement of Organic Food has emerged, where buyers with multiple locations first outsource at individual locations and gradually move to standardize and consolidate the services across facilities.

Suppliers have historically gained handsome margin-on-margin by sub-contracting a part of their work to another contractor. However, Buyers are now delving deep into the business models of suppliers and negotiating hard to avoid further sub-contracting. In cases where it is imperative to sub-contract, category managers are employing should-cost models to keep supplier margins on sub-contracting to the minimal.

Organic Food Procurement Best Practices

It has become imperative for category managers to remain as agile as possible in terms of their procurement practices. However, it is not always easy to quickly spot and implement alternative practices in a category like Organic Food. To help quick decision making, this report advises on several procurement best practices that have worked well for category managers.

For example, Buyers require industry-specific services to effectively operate their production facilities. Thus, they should opt for service providers that can offer customization and bring in years of experience in serving the needs of that industry.

Benefits of an integrated program are more apparent over a period of 5-7 years, and the goal in such relationships is to achieve cost savings and improve performance in the long run. Buyers should opt for suppliers that have a track record of long-term engagements as this will increase the probability of these suppliers sustaining in a mutually beneficial relationship for a longer duration.

Investing in benchmarking studies that help category managers enhance their knowledge on pricing or billing rates of suppliers allows them to not only save costs, but also negotiate better with suppliers. For example, while negotiating for bundled services, they can save significantly on a single service by cross-verifying rates quoted by suppliers against industry benchmarks.

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Risks in Organic Food procurement

Organic Food procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for Organic Food procurement. Some examples include:

Rising cost of labor, irregular evaluation of asset condition, and improper maintenance of the assets at the facilities increases cost of facilities management. Also, poor planning of maintenance and contingency budgeting results in an increase in the budget to the category managers
Irregular inspections of facilities and installations can lead to the failure of electrical and maintenance-related equipment. This leads to downtime and interrupts the day-to-day operations of the buyers, thereby resulting in huge losses
Contract-related risks where unfavorable credit terms may severly penalize buyers for delayed payments or entitle the supplier to demand pre-payments or shorten the payment terms are not very common in the category but they do exist in certain situations where buyers' liquidity or financial health is in question

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Who should read this report

The report is intended to serve as a one-stop reference guide for Organic Food procurement strategy and offers a perfect blend of category basics with deep-dive category data and insights. Therefore, it is ideal for category beginners looking for “Organic Food: Procurement Report 101” as well as for category experts actively tracking the global Organic Food procurement market.

You may have just initiated your research to design a winning Organic Food procurement strategy, or you may be a category expert looking for strategic insights and updated data.Either ways, the report has your requirements covered.

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Key questions on Organic Food procurement answered by this report

Procurement decisions can prove to be costly in the absence of careful deliberation and evaluation of every available option. In fact, more than 90% of the decision makers we work with acknowledge that timely availability of up-to-date category intelligence can help them make better purchasing decisions. More than 80% of them believe that in-house category intelligence needs to be updated periodically to achieve full benefits. If you have read so far, we are quite sure you agree!!

The Organic Food procurement report helps take more informed decisions by placing all the critical information and advice at the fingertips of a decision maker. It also specifically answers some of the key questions that we have been routinely asked during our industry outreach initiatives:

What is the spend potential in the Organic Food market?
What is the correct price to pay for Organic Food? What are the key trends and factors that influence current and future pricing?
Which selection criteria are the most important for Organic Food Suppliers Market?
Who are the top Organic Food suppliers? What are their cost structures?
Which negotiation levers can reduce Organic Food procurement cost ?
What are supplier margins in Organic Food market?
What are the best practices for Organic Food procurement and what are the potential risks?

SpendEdge Insights has helped procurement professionals and sourcing teams manage multiple spend areas and achieve more than $2 billion in savings. Activate your free account today!

Organic Food Category Insights: What is inside

The Organic Food market report offers a complete picture of the supply market and analyzes the category from the perspective of both buyers and suppliers. Analysis of the category trends, procurement best practices, negotiation levers and overall category management strategy advisory are interspersed with in-depth data and commentary on spend outlook, pricing ecosystem and supplier landscape drilled down to a region-level coverage.

Data

A key highlight of this report is the in-depth outlook created on Organic Food procurement spend and pricing trends. The report further delves deep into the aspects of cost structure, total cost of ownership and supplier margins for Organic Food. A dedicated section to supplier profiles and evaluation helps decision makers cast a wider procurement net and identify gaps in existing relationships.

Insights

Along with specific category and supplier intelligence, the publication also includes curated insights on Organic Food market trends, price influencers and inherent risks. These insights help the decision makers prepare for market shaping trends in advance and create alternative strategies for changes in the market conditions.

Advisory

Additionally, the report also advises on the best practices and strategies to manage the Organic Food category efficiently. Negotiation levers and opportunities are explained in detail along with quantification of their potential. Benchmark KPIs for supplier and buyer performance management are also aggregated to better organize the category objectives. Other themes of advisory include ideal procurement organization structure, enablers to achieve KPIs or category objectives and ideal SLAs to have with suppliers.

Category Ecosystem

Buyer and supplier ecosystem
Competitiveness index
Buyer and supplier power
Threat of new entrants and substitutes

Global and Regional Sourcing Insights

Category spend
Spend growth
Dynamics
Opportunities

Pricing and Cost Analysis

Pricing outlook and data
Drivers of pricing
Cost structure and inputs cost
Total cost of ownership
Pricing models and margins

Cost Saving Opportunities & Negotiation Strategies

Buyer and supplier side levers
Quantified cost saving opportunities
Negotiation strategies and quantified outcome

Procurement Best Practices, Strategy and Enablers

Procurement excellence
Sustainability and innovation
KPIs and category enablers
Risk management and outsourcing

Vendor Analysis

RFx essentials and selection criteria
SLAs
Supplier evaluation metrics
Detailed supplier profiles

Our research is complex, but our reports are easy to digest. Quantitative analysis and exhaustive commentary is placed in an easy to read format that gives you an in-depth knowledge on the category without spending hours to figure out “what does it mean for my company?”

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Category Research Framework

SpendEdge presents a detailed picture of Organic Food procurement solutions by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key category influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.