External influences represent Global Market indicators across various categories. These influences have a direct bearing on how we manage our respective categories.
1. Category Analysis
External Factors
Mitigation Elements
Range %
Range Risk
- Wages
- Service Competition
- Supply Chain Shortages
- Suppliers Reworking Business Models
- Demand for Net Zero targets on Food service operations
- Price increases
- Modifications to Services and Labour
- Technology
- Innovation
- Hybrid service models
- Collaborate with suppliers to develop alternative food delivery programs
- Avoid design & build projects
- Commercial Equipment availability
- Food supply
Mitigation Elements
Range %
Range Risk
External Factors
2. Supply Chain Impact
5-15%
3-5%
FS-004 Ver 2.2 (May 24)
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Food Services
External Influences
Market Intelligence
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High
Low
Supply constraints
- Wages increasing 10-25% in key categories
- Overall US inflation for 2023 8.8% easing in 2023
- Global supply chain disruption
- Port delays easing
- Import costs remain high
- Less-than-truckload, Full truckload transportation constrained by driver shortages, truck shortages due to semi-conductor chip delays, container shortages
- Small Parcel (UPS, Fedex, DHIL etc) impacted by driver shortages and increased rates, demand is
outpacing supply
Mitigations
Headlines
–Labour
–Supply Chain Logistics
- Space management – with low office occupancy, isolate areas and reduce cleaning/security regimes
- Re-solutioning
- Optimize SOW’s
- Explore technology / innovation solutions
Overall US Inflation for 2024 (Mar)
Overall GLOBAL Inflation for 2024 (Mar)
3.36%
5.8%
Food Services
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Food Services
Inflationary Components
Market Intelligence
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FS-004 Ver 2.2 (May 24)
Since COVID-19 , trade policy shifts, workforce scarcity, energy transition, and extreme weather events have upended long-running trends that have benefited the global economy for several decades. The Russian invasion of Ukraine continues to cause a humanitarian crisis in Europe and other Global economies. This is now coupled with the Israel and Hamas conflict.
The McKinsey & Company report (June 2023) outlines the impacts and possible inflationary mitigation offerings that can assist in the long-term strategic development of procurement outcomes.
12 Month Snapshot
Procurement Enablement Questions and Planning
Higher input prices:
- Prices of essential goods and services are continuing to increase at rates unseen in a decade or more
- Brent crude oil is now trading under$100 per barrel.
Consumer price inflation:
- The US consumer price index peaked at 8.87% in 2022, esing in 2023
- Continued upward pressures on wages remain driven by the Ukranian war and global shortages
- The leisure and hospitality sector, in which staff shortages have been particularly acute, wages have been rising at a 7.2 percent annualized rate
- Central banks around the world are putting in place measures to reduce inflation
- Have we quantified the potential impact of inflation, volatility, and supply chain disruptions at the commodity and supplier level?
- Do we deeply understand our suppliers’ industries and their dynamics?
- How are we sharing our insights with other functions to help protect revenues and margins?
- Do we have a road map to protect margins and mitigate supply risk via pricing, technical, demand, inventory, process, design, financial, and commercial levers?
- Do we have a proven playbook to recover and then control costs as inflationary pressures subside, volatility trends change, and supply chains are redesigned?
- How are we embedding the learnings and improvements from this challenging period into our go-forward operating model?
- How can we incorporate noneconomic factors in our decision making?
Identify Lessons learned
from last 12 months
Quantify inflationary
pressures affecting
spend
Build a cross-functional
data enabled infrastructure
to enable informed responses
Identify possible outcomes
and opportunities to protect
margins and costs
Embed learnings. invest
in new solutions that deliver
sustainable resilience
and efficiency
Understand the impact
of Inflation
Key Focus Points
Align budgets and food delivery options to align with Inflationary movements
Understand Risks of
exposure before locking
in cost structures
Proioritize actions to
meet objective targets
Review and amend to
ensure consistent output
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Food Services
Macro Economic Sentiment
Market Intelligence
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FS-004 Ver 2.2 (May 24)
Introduction
Small Local Independants:
Non Union markets
- Bureau of Labor Statistics – +3.4% - +3.60% (2024)
- Actual wages adjusting +9% - +11%
- Factors / increased pressures / Living wage drivers
- Average US / UK - $15.00, Drive to $17.00+
- Amazon / UPS impact - +$23.50+ and sign-on bonuses (increased 30% YTD)
- Market / large employers adjusting
- Social consciousness / competitive advantage
Supplier's redefining business models
Major & Large Suppliers:
Union / CBA Controlled markets
- Typically follow near or above union rates for good qualified individuals
- Market drivers / geographical influences
- Leverage – social consciousness
- Non-union wage gap – maintain / expand
- Designed to achieve higher margin / EBIT
- Offering Hybris solutions
- Danger of resetting the category market
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Food Services
Wage Demands
Market Intelligence
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FS-004 Ver 2.2 (May 24)
Overall US Inflation for 2024 (Mar)
Overall GLOBAL Inflation for 2024 (Mar)
3.36%
5.8%