Vendor pricing
How to compare vendor prices properly
To compare two suppliers, divide both quotes down to the same single unit before you look at either number. Most vendor comparisons are wrong not because somebody did the arithmetic badly, but because the two prices were never in the same unit to begin with. Here are the four traps that cause it, and what a fair comparison actually needs.
The arithmetic is easy. Getting the units right is not
Take a simple case. One supplier quotes $195.50 for a carton of 600. Another quotes $169.95 for a carton of 600. That one is genuinely easy: same count, so the second is cheaper, and per item it is about 33 cents against about 28 cents.
Now change one number. The second supplier sells cartons of 500 instead, still at $169.95. The sticker price is still lower, and the item price is now about 34 cents, which is worse than the one you started with. Nothing about the screen tells you that. You have to divide.
This is the whole discipline: price divided by count, on both sides, before you form an opinion. Everything below is a variation on the same failure.
Four traps that make a worse price look better
Trap 1
Different pack sizes
A case is not a unit. One vendor sells 600 to a carton, another sells 500, and the sticker prices are almost never in the same ratio as the counts. Until both are divided down to a single item, the two numbers are not comparable at all.
Trap 2
Grams against ounces
The most expensive mistake in this whole category. A price entered per ounce and compared against a price per gram is out by a factor of about 28. It does not look like an error on the screen, it just looks like an unbelievable deal or an outrageous one.
Trap 3
Per case against per each
Packaging and disposables are usually where this bites, because both forms are common and both look plausible in a spreadsheet. A per-case price sitting in a per-each column quietly makes an item look far cheaper than it is, and that flows straight into your plate cost.
Trap 4
Delivery terms hidden outside the price
A lower unit price with a higher minimum order, a delivery fee, or a longer lead time is not automatically cheaper. It is cheaper on the line and possibly more expensive in the week, especially if the minimum forces you to hold stock you did not want.
Compare against what you actually paid, not a catalogue
A quoted price is what a supplier would like to charge. The price on your invoice is what they did charge, after whatever your account, volume and history actually produce. Those are not always the same number, which is why a comparison built from your own paperwork is worth more than one built from a price list.
In Smooth Ops that is what Sourcing does. Every line the Invoices module reads becomes price history for that item, and Sourcing normalises those to a common unit so the same product from two suppliers can genuinely be set side by side. Where a vendor has not invoiced you yet, you can add their quote by hand and it joins the same comparison.
What this cannot tell you
A comparison needs at least two sides. If only one supplier has ever invoiced you for an item, there is nothing to compare it against, and the honest thing to show is one vendor rather than a benchmark somebody invented. Plenty of items in a working kitchen sit in exactly that state, and that is fine.
It also will not tell you whether the cheaper product is the same product. Unit price is where the investigation starts, not where the decision ends. If you want the related problem of prices moving under you on a single vendor, that is catching vendor overcharges, and the free vendor price book template is a way to start the same discipline in a spreadsheet.
Vendor prices, answered
How do I know if I am overpaying a vendor?+
Divide every quote down to the same single unit before comparing anything: per gram, per each, per ounce, whichever suits the item, as long as it is the same on both sides. Most apparent savings disappear at that point, and the real ones become obvious. Comparing sticker prices on cases of different sizes tells you almost nothing.
What is the most common mistake in vendor price comparison?+
Comparing prices that are not in the same unit. A price per ounce read as a price per gram is wrong by roughly 28 times, and a per-case price sitting in a per-each column can make an item look several times cheaper than it is. Both look completely normal on screen, which is what makes them dangerous.
Is the cheapest vendor always the right choice?+
No, and treating it that way is how kitchens end up with quality problems. A lower unit price attached to a higher minimum order, a delivery fee, a longer lead time or a less reliable product is not a saving. The unit price tells you what to investigate, not what to do.
How does Smooth Ops compare vendor prices?+
It builds the comparison from your own invoices rather than from a catalogue. Every line the Invoices module reads becomes price history for that item, and Sourcing normalises those to a common unit so the same product from two suppliers can actually be set side by side. You can also add a quote by hand for a vendor you have not bought from yet.
What can Sourcing not tell me?+
It cannot compare a vendor it has never seen. If only one supplier has ever invoiced you for an item, there is nothing to compare it against, and the honest answer on screen is one vendor rather than an invented benchmark. Adding a quote from a second supplier is what turns that item into a real comparison.
How much does Sourcing cost?+
Sourcing is free with the Food Cost and Invoices modules, which are $25 a month per location each. Everything together is $99 a month per location. Month to month, 30 days free, no credit card.
Put both suppliers in the same unit
Sourcing is free with Food Cost and Invoices, and builds the comparison from your own invoices.
30 days free, no credit card