Food banks play an essential role in the U.S. food system as aggregators of value. Like a wholesaler or regional distribution center for a retailer, the food bank orchestrates bulk inputs to hunger relief, breaks bulk, and redistributes that value in right-sized quantities to and through their affiliated agencies. The value in this case comes in many forms: cash or food donations, volunteer support, community engagement, cost savings, etc. In this “aggregator of value” role, we find that many food banks leave a sizable opportunity on the table to reduce supply chain costs with their agency partners.
Also, as the missions and roles of hunger relief organizations evolve, food banks are actively building programs to increase nutritional value, support cultural preferences, and satisfy the complex requirements of diverse healthcare initiatives. To meet these specific needs, reliance on the massive variation in food donation timing, product mix, nutritional value, and shelf life is at best specifically impractical and broadly impossible. The scalable solution ultimately requires buying food products that are fit for purpose. Through our consultative work over the past 20 years, VAFS has worked with dozens of partners to build Agency Cooperative Purchasing Programs (ACPPs) that reduce costs while providing superior choice for agencies.
This consultation process requires consideration of organizational goals (nutritional, volume, financial, philosophical) along with grass roots assessments of demand, market factors, retail alternatives, operational capacity and more to create a customized offering for agencies, with action steps needed to implement and sustain the program.
When optimized, ACPPs positively impact the entire hunger relief value chain: from growers and manufacturers to clients by creating consistency, reducing time and product waste, and aggregating purchasing at the food bank level. Specific benefits include:
Client Value: Client dignity is at the core of any effective hunger relief effort. Optimizing an ACPP accommodates the preferences and unique needs of each agency and client. By looking past cost/pound metrics and focusing on real demand at the household level, ACPPs can provide:
- Nutritional improvements without additional cost
- More nuanced shopping experiences (cultural, medical, demographically specific)
- One-stop convenience that meets household needs
Agency Value: Agency engagement and adoption with food bank ACPPs increases exponentially when offerings are aligned with their needs. By taking a demand-based approach to assortment, the food bank can reduce costs for agency shoppers by typically 10% to 20% relative to retail alternatives. Agency volunteer and staff time is spent serving clients rather than shopping from multiple venues or orchestrating multiple suppliers.
Food Bank Value: Food banks with well-run ACPPs simply matter more to their agencies by providing better service, making a dollar go farther and food acquisition easier, and value more obvious. In addition, with the right products in the right quantities at prices well below retail, the program moves product so quickly that inbound costs are lower, inventory turns faster, and the food bank share of value created fully funds operational costs. The resulting program is a sustainable, scalable partnership that benefits both the food bank and affiliated agencies.
Systemic Value: When purchasing processes are aligned and sustainable agencies become more heavily engaged, food banks become better wholesalers, and food suppliers are able to serve them more cost efficiently with fit-for-purpose products. The operational value chain gets simpler and leaner, providing the resources and attention of stakeholders at each layer to do harder, higher value, and better work.
At Value Added Food Sales, (VAFS) our time spent working exclusively with dozens of non-profit hunger relief organizations has taught us that there is no “silver bullet” ACPP model that can be successfully implemented in every organization. It is the nuance of aligning programs with the needs and capabilities of the community and organization that makes this work so interesting and ultimately impactful. Whether your ACPP program is well established, nascent, or non-existent, there is cause for intentionality in its development.
A snapshot of what this work can achieve is highlighted here in a recent case study summary:
Performing the value aggregator role converts purchasing effectiveness from a “necessary evil” into an integrated, strategic portion of your share of the hunger relief system. If your organization is interested in developing or improving your Agency Cooperative Purchasing Program to better meet the needs of your agencies and neighbors, VAFS is ready to help.
Together … we can bring more to the table.
Contact Tyson Miller to begin the conversation.
This article is a sponsored post provided by Value Added Food Sales.
