Three hats fit fine for Wingstop's top purchasing executive
VP of purchasing at popular restaurant chain talks about the challenges of midmarket procurement.
By David Hannon -- Purchasing, 4/10/2008
If someone asked you if you could write a spec for a chicken wing, would you be able to? Does demand for your product fluctuate with the success of the Dallas Cowboys? Has your company ever sold three million of anything in a 13-hour shift?
Such are the challenges for Andy Howard, executive vice president of marketing, purchasing and R&D for restaurant chain Wingstop. With 350 restaurants in 28 U.S. states, mostly franchises, Howard manages the purchasing and supply operations in a complex supply chain from Wingstop's central office in Dallas, along with two other purchasing staffers.
Howard's team bids, negotiates and establishes contracts with all of the company's suppliers as well as its regional distributors across the U.S. Suppliers could include everything from a potato farmer in Idaho to food products giant HJ Heinz.
But about two-thirds of the company's total spend is on chicken wings, which are bought from major poultry suppliers such as Pilgrim's Pride and Peco Foods. Prices for chicken wings change monthly based on a commodity sheet for chicken and when those prices go up, Wingstop feels it. But finding new chicken wing suppliers is not easy. Howard's spec for a wing is 9-11 wings/lb. which is becoming more challenging because most poultry suppliers are growing bigger birds to get more breast meat. So Howard and his team spend a lot of time evaluating poultry suppliers to see which can supply wings that meet their spec at the right price.
In some cases wings and other supplies are delivered direct from a supplier to a franchisee, but in most they are shipped to a distributor which then ships to stores as ordered. Franchisees order products online from the distributor in their region to get the benefit of the volume-based pricing that Howard negotiates, but also receive faster delivery from a regional distributor.
"Online ordering lets the franchisees order when they can find the time 24 hours a day," Howard says. "And it reduces the number of errors in orders."
With so much shipping going on, freight and fuel costs have been a major challenge for Wingstop as well. Some suppliers use their own trucks, but for the most part, Wingstop's distributors are contracting with trucking carriers and building those costs into what Wingstop pays. Howard says franchisees often need some education on ordering practices to ensure they are "filling up the trucks" instead of incurring higher freight charges by ordering more often in smaller quantities.
To help manage the logistics and relationships with the distributors, Howard uses a supply chain consultant focused on the food industry called CRM in Parsippany, N.J. CRM audits distributor pricing and adjusts ordering when rates are expected to increase.
Like purchasing pros at a lot of midmarket companies Howard wears a lot of hats. But he says heading up marketing, R&D and purchasing helps streamline and match priorities in the company's product development pipeline.
"When we first look at a new product, we're on top of cost factors from the very start, before we get too far into product development," he says. Wingstop chose to introduce a boneless wing to its menu after a cost analysis showed they are more profitable than bone-in wings.
Wingstop also relies on its major suppliers for new product ideas. Recently Pilgrim's Pride brought a new product idea to Wingstop that may well work its way onto the menu, although Howard wasn't at liberty to discuss details yet.
By also heading up the company's marketing efforts, Howard can better understand which new products might fly as well as forecast demand increases from promotional events.
"Two words: Super Bowl," Howard jokes when asked about forecasting demand. It's far and away the company's busiest day (three million wings sold in a 13-hour shift) and Howard's team spends a lot of time leading up to it making sure suppliers, distributors and franchisees are aware and well stocked for the big day.
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For more information: Scale Up Archive For a list of case studies on procurement best practices at midmarket companies, click here.

















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