Online Custom «Sherwood Food Distributors» Essay Sample
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Supplier selection is extremely vital for the long-term viability of any company. In the hospitality industry, supplier selection can affect the daily operations of restaurants. Burger King is a large restaurant chain and it has to select its suppliers carefully to ensure long-term competitiveness in the hospitality industry. Sherwood is one of the distributors that can be chosen be the restaurant chain as its sole distributor.
1. Brief Overview of Sherwood Food Distributors
a. Sherwood Distributors is one of the major distributors of both meat and food in the country. Established in 1969, it has grown tremendously and now has over 500,000 customers who range from retailers, wholesalers, institutions, to cruise liners (Sherwood Food Distributors, n.d.). Originally, its founders Alex Karp and Earl Ishbia had named it Regal Packing Company but they changed it to Sherwood in 1987 (Sherwood Food Distributors, n.d.).
b. Currently, it transports approximately 16 million pounds of food every week through its distribution centers in areas like Miami, Atlanta, Cleveland, Detroit, and Walton. It accomplishes this by using its large fleet of trucks that are currently more than 250 (Sherwood Food Distributors n.d). Although it is headquartered in Detroit, it possesses refrigerated warehouse space of approximately one million feet in all its distribution centers. This space is used to store millions of cases of stock that they distribute across the country (Sherwood Food Distributors, n.d).
c. The company distributes meat and various foods to different areas. Concerning meat distribution, it offers beef, lamb, veal, pork, seafood, and poultry. It also distributes processed meats. Regarding assorted food distribution, it distributes baked goods, food produce, dairy products, and deli foods (Sherwood Food Distributors, n.d).
d. In spite of its success in the distribution industry, it faces stiff competition from other establishments that are in the distribution business. Companies like Sysco and Quirch Foods are the main competitors that it has. Sysco deals with the distribution of diverse foods and has over 194 locations both in the United States and overseas. It serves about 425,000 clients in these locations. Thus, it mainly distributes to restaurants, hospitals, as well as health and educational facilities. On the other hand, Quirch Foods deals with the import, export, and distribution of food products. It is regarded as the largest distributor of food in South East United States, Latin America, and the Caribbean. Its customers also range from chain supermarkets, processors, manufacturers cruise lines, and restaurants (Quirch Foods, n.d).
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2. Comparison with Distributor’s Main Competitor
Quirch Foods and Sherwood deal with the distribution of virtually the same products. They both distribute seafood, beef, deli, poultry, and pork. Quirch offers cheaper products as compared to Sherwood. For instance, their turkey bacon is $0.99 cheaper than Sherwood’s one. The quality of this bacon is, however, worse than Sherwood’s and, therefore, Sherwood offers a better value of the bacon (Sherwood Food Distributors, n.d). This price difference is also apparent in seafood, beef, and tomato puree. Quirch offers a cheaper price for each of these products but Sherwood continuously displays a better quality and, therefore, better value as displayed in table 1 below (Quirch Foods, n.d).
Comparison between Products of Sherwood and Quirch
|Item||Sherwood’s Price||Quirch’s Price||Sherwood‘s Quality||Quirch’s Quality||Sherwood‘s Value||Quirch’s value|
|Turkey Bacon||$1.99 per unit||$1.80 per unit||High||Average||High||Average|
|Catfish 3-5 fillets||$3.99 per lb||$3.49 per lb||High||Average||High||Average|
|Breaded shrimp||$2.99 per unit||$2.40 per unit||High||High||High||High|
|Beef thin slices||$50.16 per case||$40.18 per case||High||Average||Average||Average|
|Tomato puree||$26.90 per case||$29.90 per case||High||High||High||Average|
3. Sherwood’s Payment Policy
a. Sherwood’s payment policy encourages early payment by offering discounts to people who pay early. The main objective of this policy is to safeguard the company’s and the customer’s interests and to provide a comprehensive and clear guide to the company’s payment process.
b. Early payment does not have significant costs to the company because it provides money that it can use to increase its stock (Feinstein & Stefanelli, 2002). As for customers, early payment may limit their purchasing power due to the liquidity issues.
c. According to Feinstein and Stefanelli, (2002), the costs of late payments depend on the situation to which they are applied. In Sherwood’s case, the penalties for late payment include charging interest, as well as charging penalties for all the customers making late payments.
d. Sherwood’s bill payment mechanism is mainly invoices. Using this process, suppliers that work with Sherwood need to understand how invoices work and they should be willing and able to pay Sherwood within the obligatory credit period that is 45 days. Many companies will make these payments using credit cards because they are convenient and they allow quick payments to be made. Credit cards are also preferable because they enable proper tracking of the orders’ paperwork and reduce the operational costs of the business (Feinstein & Stefanelli, 2002).
Online orders can be made on Sherwood’s website. One creates an account for their business and then browses the online catalog to pick the items they want to order. A bill for the account is created and invoice is given to the customer on delivery. The customer is then obligated to pay for the goods within 45 day credit period. Alternatively, the customer can make the payment immediately with the credit card, which makes the payment process much easier and gives the company more security in terms of payment (Feinstein & Stefanelli, 2002).
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e. According to Feinstein and Stefanelli (2002), large restaurants have a higher chance of having discounts than smaller restaurants. The discounts range from cash and promotional discounts to quantity discounts. Although discounts are preferable, customers should not rely on discounts heavily because they will lose sight of the real costs of the goods they are purchasing.
4. Supplier Selection
a. Supplier selection is an important function for any business, including Burger King. The purchasing function is a critical activity for any firm and has a direct effect on the viability of the company in the long-term. It has a huge impact on the quality, customer satisfaction, and a company’s market share. According to de Boer, Labro, and Morlacchi (2001), companies have progressively attempted to make improvements in the purchasing trends. These improvements are important in the current competitive environment because they can help to ensure that the company maintains a competitive edge over competitors.
In supplier selection, buyers have to consider the procurement policies that are best for them. While going over supplier lists, they have to keep their requirements in mind. According to Feinstein and Stefanelli (2002), large corporations have a better chance of formulating their buying policies and then cooperating with the suppliers based on these policies. Smaller corporations are not likely to have such a leeway and they will have to adhere to the buying procedures that the suppliers prefer.
b. The supplier selection process is vital to any organization (Feinstein & Stefanelli, 2002). The main objective of creating a selection process is the reduction of purchase risk, maximization of the value of the purchaser, and the development of long-term and close relationships between suppliers and the purchaser. Coming up with selection criteria for distributors will assist Burger King in the current competitive environment.
A large number of distribution centers and the large fleet of vehicles make Sherwood reliable in terms of delivery. According to Feinstein and Stefanelli (2002), restaurants depend on the prompt delivery of produce due to the nature of the business. As Sherwood is a distributor with multiple locations and effective transportation system, Burger King will be able to rely on it to deliver goods promptly. Sherwood’s multiple distribution centers will also ensure that all Burger King restaurants located in various states will be able to receive the goods they require promptly.
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Cost-plus purchasing criteria can be used to assess Sherwood’s suitability for being a supplier. The Burger King chain will want to pay the cost of acquiring the goods by the suppliers plus a prearranged profit markup. Feinstein and Stefanelli (2002) argue that large buyers like restaurant chains are in a better position to negotiate for such a procedure. Sherwood’s willingness to use this kind of purchasing procedure will make Burger King more willing to buy from it because the goods will be cheaper.
Sherwood’s ability to offer one-stop shopping for buyers will appeal to Burger King because it provides simplicity and, consequently, the restaurant will be able to purchase a wide variety of items from Sherwood. Feinstein and Stefanelli (2002) advocate for one-stop shopping because it reduces ordering costs and makes it possible for the buyer to qualify for volume discounts. Sherwood stocks a wide variety of foods and meats, which Burger King will be in a position to have in one location.
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If Sherwood allows for stockless purchasing, it will be ranked highly according to Burger King criteria. Stockless purchasing allows a buyer to purchase goods in advance, meaning that these goods are stored by the supplier (Feinstein & Stefanelli, 2002). These goods will be delivered to the buyer in small amounts depending on the buyer’s needs. Due to its large storage space, Sherwood is in a position to allow Burger King to buy large shipments and will be able to store the goods in its premises until they are required.
Further, Sherwood’s ability to offer standing orders to the restaurant will rank it highly during the selection process. According to Feinstein and Stefanelli (2002), standing orders are preferred by restaurants for items that have a standard usage pattern, including milk, bread, and meat. If Sherwood is willing to offer this concession to the restaurant, Burger King will prefer it as a distributor.
The use of technology by a distributor can also be used in the selection criteria (Cheraghi, Dadashzadeh, & Subramanian, 2011). If the supplier has software that allows the buyer to place orders without having to access physically distributors, it will be preferred. In Sherwood’s case, it has an option for online shopping, which will allow Burger King to place orders online. Thus, this is advantageous to Burger King because the order process will become simplified.
Sherwood’s delivery schedule will be factored in ranking distributors. As a hospitality operation, Burger King has preferences concerning the time and days during which they want deliveries to be made. If Sherwood is willing to adjust its schedule and adapt to Burger King schedule, its ranking will be high. Sherwood’s ordering procedures will also have an effect on its ranking in the selection process. Convenient ordering procedures offer a competitive edge to the distributor, which will raise its ranking in the supplier selection (Feinstein & Stefanelli, 2002).
The credit terms that Sherwood offers will also have a huge impact on the distributors’ ranking. Sherwood’s ability to avail cash discounts, quantity discounts, or volume discounts will make it more preferable for Burger King. In addition, credit periods, billing procedures, and the interest charged on late payments will be put into consideration while ranking the distributor (Feinstein & Stefanelli, 2002).
The minimum orders that will qualify Burger King for ‘free delivery’ will be factored in while ranking Sherwood. If Sherwood’s minimum order is less than its competitors, its ranking will be higher. Sherwood’s ability to offer a wide range of products will also improve its ranking (Feinstein & Stefanelli, 2002). It offers products from various manufacturers, which will allow Burger King to have a wide range to choose from.
c. According to Feinstein and Stefanelli (2002), the most important selection criteria for the restaurants are the quality of the products and the supplier dependability. Burger King needs to receive consistently quality products from the distributor it selects. Due to its wide variety of products, Sherwood is in a better position to ensure constant quality products than Quirch Foods because Sherwood has a wider range of products as compared to Quirch Foods. Concerning the dependability criterion, Sherwood will also rank higher than Quirch Foods will because Sherwood has a large fleet of trucks that guarantees speedy delivery. Sherwood also has a larger number of distribution centers as compared to Quirch Foods. These distribution centers will enable Sherwood to make deliveries to all Burger King restaurants around the country.
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Although Quirch Foods provide low-cost products, it does not meet the key criteria used in selecting the supplier because it has fewer distribution centers as compared to Sherwood. It means that it is less dependable in terms of delivering goods to all restaurant locations in the country. Quirch Foods’ ability to offer consistent high-quality products is less than Sherwood’s because Sherwood has products from multiple manufacturers and producers and, therefore, it has a wider variety of products to choose from as compared to Quirch Foods.
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