Volume leveraging can lessen anticipated Gauteng highway toll food price increases

Despite government’s suspension of gazetted tolls for Gauteng’s highways, their implementation on June 23 will have an inflationary effect on food in Gauteng, Gordon Henry, General Manager of the Catervest Buying Group tells SmartProcurement.

“At this point I would be guessing [about the level of inflation], but it will be detrimental in Gauteng,” says Henry.

Catervest Buying Group supplies the food service and hospitality industries with a procurement solution based on leveraging collective purchasing power to lower costs.

Independents in the food service and hospitality industry are likely to see their negotiated savings shrink as the majority of suppliers will pass on the cost of tolls.

“Experience of large food and contract catering organisations has made it clear to me that you can negotiate almost anything through massive leverage. The food and hospitality market is full of independents that cannot negotiate or bargain collectively,” he says.

Collecting these independents under one umbrella and combining their volumes to negotiate better prices offers to delay or reduce Gauteng price increases that will likely occur after the toll implementation.

In addition to leveraging volumes, negotiating collectively offers great scope for managing relationships with suppliers, says Henry.

“Contracted suppliers can approach Catervest Buying Group when there are gazetted changes that would influence the price food items. Price contracts can be amended if they give a reasonable notice period and supporting documents for the price adjustments.”

Catervest Buying Group is able to secure three-month price contracts on items such as dry and frozen foods and monthly contracts on items subject to greater price volatility.

Its suppliers are subject to service level agreements for areas including distribution and the food storage environment.

“Independents may well have negotiated their own distribution service levels, however, it’s a sure fire way of subjecting themselves to the toll prices, as suppliers will be reluctant to use alternative routes if this risks failing to deliver on time. Volume leveraging offers to maintain savings while transport costs in Gauteng increase,” notes Henry.

Benefits

In addition to offering procurement solutions to clients with smaller procurement offices and limited procurement expertise, Catervest Buying Group delivers procurement tools for major buyers, enhancing the capabilities of their existing procurement teams.

The Group offers a number of benefits to all participants, including the choice of a large database of products, customised sourcing services, cost savings and improved cash flows for clients, and a solid regular client base for supplies, concludes Henry.

For more information on Catervest’s services, email Gordon Henry on gordon.h@catervest.co.za