Risks and opportunities

This is Bidcorp

Bidcorp is 'all about the food'. This gives us focus and a unifying mission, no matter what our geographic location. The positioning is an implicit invitation to collaborate with customers and suppliers who share our obsession.

This can help us strengthen relationships and assist us when partnerships with like minded businesses are necessary in the pursuit of shared objectives. However, any claim to specialist positioning imposes certain obligations. We must be quality driven, knowledgeable and innovative, always at the forefront of developments in our chosen field. Our people must be skilled and highly trained.

Our products must be known for exceptional quality and the ability to assist our customers as they address market shifts and business challenges. New product development must anticipate market trends rather than lag behind changing dynamics.

Getting executive management attention

Getting local management attention

Managed via day-to-day operational internal controls

			High reliance on technology

			To effectively serve our customers, IT systems able to support our operations are required. Technology improves communication, engagement and efficiencies in customer service.			Our response Our decentralised model ensures we do not have global dependency on a single system, but are locally independent. Therefore a material group-wide system failure impact is unlikely. We have invested in and continue to develop our technology, business continuity and disaster recovery plans.

			Cyber security
			We rely upon IT networks and systems to process, transmit and store transactions in our business processes. Managing cyber security risks is a key focus.			Our response We have rolled out a group-wide rapid response plan and implemented measures to protect our data and to prevent security breaches and cyber incidents. Insurance policies have been purchased and awareness programmes instituted. Continuous vigilance in the face of potential attack is at the heart of our risk management programme.

			Product cost volatility

			The foodservice industry is characterised by high-inventory turnover at low-profit margins. Volatile product costs directly impact margins, reducing profits.			Our response We do not to enter into long-term customer agreements on pricing. Our businesses can therefore react quickly to changes in product pricing. In our decentralised model, purchasing decisions are based on the quality and price of the local product, according to customers’ ever-changing needs.

			Outside “group purchasing organisations” (GPO)

			Some customers purchase through GPO to reduce prices per product. Informal buying groups use peer-to-peer apps, for example WhatsApp to engage directly.			Our response We offer innovative, real-time engagement with customers through our bespoke industry-leading ecommerce solutions. We are small enough to remain 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.

			Intense competition

			Foodservice distribution is highly competitive, with low barriers to entry. Drivers include local presence, product offerings, cost efficiencies and flexibility to meet changing customer requirements.			Our response The group structure, although decentralised, provides a channel into markets not available to competitors. Each local Bidfood operation has access to a global platform, enabling teams to present new culinary trends, unique product ranges and introduce a variety of cuisines.

			Environmental, health and safety compliance

			Compliance is non-negotiable. We face a broad range of ever-changing international, national and local laws and regulations managed by our local teams.			Our response The cost of compliance is significant and, though we are committed to ensuring we remain compliant, the risk is ongoing. We invest in assurance teams and compliance tools and engage outsourced professional standard setters to promote the highest levels of food quality and safety.

			Timely infrastructure investment

			Timely investment in the development of a robust infrastructure is key to creating the capacity demanded by growth.			Our response Expansion requires that distribution centres and depots be large enough to be economically viable, yet small enough to ensure we remain agile and customer focused. To remain ahead of the demand curve, we invest in assets with state-of-the-art sustainable capabilities.

			Driver development

			The role of the driver and driver recruitment have become global challenges. It is vital to recognise the importance of the role and support drivers with tools to enable them to do the best possible job.			Our response We invest in driver training programmes while providing incentives and better work environments. With onboard tracking and monitoring systems we improve driver safety.

			Fuel and other transportation costs

			Fuel costs often negatively affect consumer confidence and discretionary spending. Increasing fuel costs increase product prices and delivery costs. These factors affect our sales, margins, operating expenses and returns.			Our response Ongoing communication with customers about pricing changes and product sourcing challenges is key to our success. We have a record of successful problem-solving in pursuit of mutually beneficial solutions. This stands us in good stead with customers, strengthens relationships and builds trust.

			Extreme weather conditions and natural disasters

			Some of our facilities and our customers’ facilities may be subject to extreme weather conditions. Such extreme weather conditions may interrupt operations and impede access to market.			Our response Robust disaster recovery plans are established in all businesses. In the event of business interruption, our decentralised network of smaller warehouses and distribution centres allows us to assist affected sites. We have the necessary global insurance policies in place to protect our assets and address business interruption risk.

			Product liability claims

			As a reseller of food products, we may be exposed to liability claims. The impact could be significant. It is critical that we source from the best possible suppliers.			Our response We generally seek supplier contractual indemnification and insurance coverage. We have group liability policies in place. We only select suppliers who respect our standards and provide the transparency required in the rigorous evaluation of procedures.

			Debtor collection

			Economic conditions are tough and this impacts the timing of payments received. Even when contracts are in place, the inability to meet obligations may adversely affect our collections.			Our response Finance teams around the world monitor and manage our businesses’ ongoing financial risk. By staying close to the customer, monitoring the detail and maintaining a robust internal control environment we have been able to effectively manage this risk.

			Reputational damage from adverse publicity

			A good reputation is critical. Any event that damages the reputation of the quality, safety or integrity of our products could quickly affect our results. Instances of foodborne illnesses, food tampering or other health concerns, even those unrelated to our products, can dramatically impact our performance.			Our response Prevention is better than cure. Therefore, at an operational level, quality controls are stringent and training continuous on food safety and the correct handling of all food products. In addition, Bidfood continually monitors social media platforms to gain customer feedback and insight on product and service experience. We have an independently managed tip-offs 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 address any material issue reported.

			Growth through organic expansion and acquisition

			Bidcorp may selectively pursue opportunities to supplement organic growth with strategic acquisitions. These acquisitions present opportunities for growth and changes the scale of Bidcorp’s operations and exposure to new risks.			Our response A global executive management team provides insight on all transactions. We ensure full and proper due diligence is complete before any acquisition is finalised. New acquisitions are conducted in line with the decentralised Bidcorp governance framework by local management teams who are close to and understand their markets.

			Succession planning

			Bidcorp’s ability to operate effectively depends largely on the experience and skills of its senior management team and their succession plan.			Our response With a robust and significant global footprint, international opportunities are provided to those eager for career progression. Experienced management skills underpin the growth and ongoing development of our teams to ensure a strong succession plan exists.

			Economic, political or social instability

			Bidcorp is a geographically diverse business exposed to changes or instability affecting the global economic, political or social environment, which could affect investment in Bidcorp.			Our response Our globally diverse footprint, although exposed to high-risk environments, is a risk we monitor on an ongoing basis. We continue to grow in these markets and have a successful track record to date.