Cost Control Measures for Competitive Edge in Food and Beverage Operations

Managing Profitable Food and Beverage Operations

Title- Critically evaluate the role of purchasing and supply chain management
in restaurant and bar operations while considering how this, and a
proactive approach to cost control, can provide these businesses with
competitive advantage in a crowded marketplace.
As per the view of Evranuz (2012), role of purchasing and supply chain management
(SCM) assists in becoming potential and valuable way of securing competitive advantage in
order to enhance the business performance (Evranuz, 2012). It is essential for food and beverage
business to maintain good relationship with suppliers by providing them timely payment so that
they deliver best services to businesses. However, Lui and Lai (2010), argued that purchasing
department within the food and beverage business began to realize that it is not enough to
enhance the supply chain of business and attain competitive advantage. It can be evaluate that
supply chain and transportation network design technology assists in enabling food and beverage
companies to stimulate SCM and reduce the cost and attain competitive edge over rivals (Lui and
Lai, 2010).
According to Rutherford (2010), within food and beverage (F&B) industry,
manufacturing strategy is one of the crucial decision that firms face and thus it helps in making
and distributing their products so that best decisions can be taken. Another crucial decision
within such stage is that different challenges faced by F&B operations in relation to lower down
the cost operations so that competitive edge can be attained in marketplace (Rutherford, 2010).
Companies focuses upon tapping target market and providing them low price food and beverage
options so that it gains high profits and success. There are different factors that helps in reducing
the cost factors such as transportation, inventory, raw material costs and tax etc. Tsai (2012),
stated that it is also essential for firm to implement innovative technology so that they can serve
the customers effectively and attain satisfaction. Further, through adopting merger and
acquisition strategy it assists in integrating new supply chains into an existing network so that
such initiatives fails to meet the expectations of shareholders (Tsai, 2012).
As per the Bottani and Galati (2010), F&B companies also focuses upon undertaking
merger and acquisition strategy so that they can develop a new business supply chain initiatives
which fail to meet the needs of shareholders. It can be assessed that food and beverage
companies mainly try to minimize their cost so that competitive advantage can be attained.
1

Furthermore, using cost to serve analysis is the best method through which food and beverage
businesses identifies the value of the product and thus decide the price so that profits can be
attained. Here, purchasing and supply chain department plays a crucial role in identifying the
cost of the products which needs to be lower down so that competitive edge can be attained over
rivals (Bottani and Galati, 2010). In the current era of globalisation, there are various competitors
available within food industry which give tough competition to each other. Therefore, it is
essential for businesses to introduce innovative products or control its cost so that target market
can be attracted towards firm in order to enhance the market share (Díez-Leturia and García-
Jalón, 2011).
McGinnis and Kraak (2006), stated that F&B businesses plans to improve its production
capacity planning by utilizing existing capacity for lowest total cost so that firm can perform
more effectively in order to produce quality good and bar products in order to enhance customer
base. Firm also aims to lower down its cost and ensure producing fresh products so that quality
of firm can be enhanced among rivals and attain competitive edge (McGinnis and Kraak, 2006).
Food and beverage industry identifies the significance of fostering an environment that stresses
the best communication and teamwork among all the departments within the firm. Hotel business
involves purchasing and supply chain management as an crucial department that helps in
controlling the cost so that supportive and collaborative environment allows business to support
each other while working towards department and company goals. However, Suh and Eves
(2010), argued that supply chain is used in order to describe the collaboration of different
businesses in regard to assist firms and move products or services from suppliers to customers.
Food and bar options involves different suppliers of raw materials, producers of final products
and the end users in regard to develop relationship with suppliers and purchasers so that it does
not impact upon the overall success of firm. Adopting cost control measures and advantages
obtained from building best relationship and partnership in the industry helps in attaining desired
success (Suh and Eves, 2010).
Further, F&B business aims to develop purchasing functions by adopting effective raw
materials and develop relationship so that best responsibilities can be attained. Here, in order to
reduce cost, company identified different supplier opportunities and paying attention to industry
trends and develops new products so that competitive edge can be attained over rivals (Julien,
2011). Hence, it is crucial option that helps firm to focus upon through purchasing and attaining
2

supply options so that cost can be minimized in relation to obtain success. Hotel businesses
focuses upon their purchasing and supply chain management in restaurant and bar operations so
that it assists them to control the cost within firm and thus provides chance to firm to obtain
competitive edge in terms of high market share as stated (Davis and et.al., 2012). Food and bar
operations within hospitality firm aims upon managing its purchasing and supply chain
management functions so that they can carry out the best responsibility towards firm and satisfy
individual needs. For instance, purchasing raw material assists in identifying the development of
new raw materials in order to develop product development professionals so that best
relationship can be developed (Dimitriadis and Stevens, 2008).
As per the opinion of Drake and et.al., (2013), internal relations assists in identifying the
different business functions which must work together in order to achieve maximum efficiency
and thus attain optimal profits. Hence, the purchasing department should work with the
accounting and finance department in order to secure the funds and track payments for material
purchases and try to minize3 cost so that competitive edge over rivals can be attained (Drake and
et.al., 2013). However, Ferreira and et. al. (2012), argued that purchasing department must also
work with production and forecasting teams in order to make sure that they timely delivery of
materials and thus involve marketing and sales department so that hotel can enhance its market
image and thus improve the efficiency so that desired goals can be attained (Ferreira and et. al.
2012).
Moreover, in order to maintain customer satisfaction helps in attaining ultimate goal so
that change can be implemented within marketplace and attain customer service. French, Story
and Fulkerson (2002), stated by firm possess the ability to adopt essential information and
desired products in order to give tough competition to rivals in the market. Also, businesses are
able to obtain effective food and service department helps in improving the business success.
Attaining competitive advantage helps business to enhance the market share and attain
satisfaction (French, Story and Fulkerson, 2002). Purchasing department is responsible for
procuring supplies and thus it largely involves order placing and influences the people to
improve the market share. However, Gomes and Lobstein (2011), argued that purchasing and
supply chain within restaurant and bar operations assists in improving the competitive advantage
so that success can be attained in an effective way. Business uses effective purchasing and
supply chain so that cost control needs to be practised in relation to attain satisfaction. Another
3