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Risks and opportunities
Responsible procurement
and marketing
Product cost volatility
Foodservice distribution is characterised by high
inventory turnover at relatively low profit margins.
Volatile product costs have a direct impact on
margins. Our profit levels may be negatively
affected by product cost deviation.
We do not to enter into long-term
customer agreements on pricing. As such,
our businesses are able to react quickly to
changes in product pricing.
We adopt a decentralised model where
purchasing decisions are based on the quality
and price of the local product, and according
to customers ever changing needs.
Group purchasing organisations
Some customers purchase through group
purchasing organisations (GPO) in order to reduce
prices paid on the foodservice orders. Recently this
includes the emergence of “informal” buying groups
using Peer to Peer apps such as “WhatsApp” to
facilitate communication and price comparison
between customers.
We offer innovative, real-time
engagement with our customers through
our bespoke industry leading e-commerce
solutions. We are small enough to be agile and
meet the most demanding requirements; but
global enough to source even the most hard-to-
find product. Fundamental to our success is the
strength of the real personal human connection
we strive to develop with our customer.
Value-add processing and
bespoke manufacture
Intense competition
Foodservice distribution is highly competitive, driven
by local presence, geographic reach, private label
offerings, purchasing power, cost efficiencies and
meeting varied customer requirements. The cost
of switching is very low as are the barriers to entry
in this market.
The group structure although
decentralised provides a channel into
markets not available to competitors. Each
Bidfood local operation has access to a global
platform to present new culinary trends, unique
product ranges and introducing a variety of
cuisines.
Embracing e-commerce
solutions for customer
and product engagement
Industry disruptors
The ever changing landscape of how we engage
in the world today, combined with the real-time
immediate gratification requirements of business
to date has seen new technologies and entrants
into our market, changing the expectations of our
customer base.
Bidfood has invested in solutions
development capability, driving online
innovation to an established customer base.
By listening to their needs, we have adapted
our approach and continue to develop
solutions, not being stuck with “the way it has
always been done”. We are vigilant in this task
ensuring we remain ahead of the competition
curve.
Service
excellence
Key:
Managed via day-to-day
operational internal controls
Getting local management attention
Getting executive management attention
Customer engagement
Reputational damage from adverse
publicity
A good reputation is critical particularly in selling
our own brand products. Any event that damages
our reputation such as adverse publicity about
the quality, safety or integrity of our products could
quickly affect our results. Instances of food-borne
illnesses, food tampering or other health concerns,
even those unrelated to our products, can result in
negative publicity about the foodservice industry
and dramatically reduce our sales.
Bidfood continually monitors the social
media platforms where we gain customer
feedback and insight on product and service
experience. We have an independently
managed tip-off line for any dissatisfaction to
be reported. We ensure a quick direct response
is triggered as soon as contact is made and
will seek professional guidance to amend any
material issue reported.
Product liability claims
As a reseller of food products, we may be exposed
to liability claims should our products cause injury
or illness. The impact, if we do not have adequate
cover for a liability related to defective products,
could be significant. It is critical that we source
from the best possible suppliers both locally
and internationally.
We generally seek supplier contractual
indemnification and insurance coverage.
We have group liability policies in place. The
selection of our suppliers is based on ensuring
they respect our standards and provide the
transparency required in the rigorous evaluation
procedures completed.
Annual integrated report 2017
Bid Corporation Limited
8
GROUP REVIEW