By Howard Graham, Director, Tenzing Consulting
A question for procurement and sourcing professionals: Have any of your suppliers sent you a notice of across-the-board price increases in the last 12 months? If so, whether you managed to push back or not, it probably left you wondering, how do I keep hitting my savings targets in this environment?
We’ve seen this scenario play out again and again with many of our clients. Some lean heavily on negotiations, others look for alternative suppliers. However, the response that didn’t occur often enough was, “how do we collaborate to find win-win opportunities?”
The Limits of Traditional Sourcing Tactics
Food producers are no strangers to margin pressure. Tariff uncertainty, inflation fears, and fluctuating ingredient costs have put suppliers on the defensive. Many adopt a “just in case” pricing posture, raising costs even when market data shows only modest increases.
For producers, this creates a frustrating situation: suppliers won’t cut prices, yet leadership still expects cost savings. Traditional sourcing tactics—like squeezing suppliers for concessions—can only go so far. In fact, they often create tension, strain relationships, and risk cutting into quality.
This is why procurement leaders need to think beyond price and begin exploring collaborative procurement strategies.
Why Collaboration is a Smarter Path to Cost Savings
The best opportunities for cost savings in food production often come not from harder negotiations, but from rethinking how products are designed, packaged, processed, and delivered. This is where collaboration with suppliers creates real value.
Instead of trading margin points back and forth, producers and suppliers can sit down together and ask: What functions in our product or process could be delivered differently, at lower cost, without sacrificing quality or consumer appeal?
Real-World Opportunities for Collaborative Savings
Here are a few ways food producers and suppliers can uncover cost savings through cooperation:
- Packaging optimization: Redesigning packaging to use less material, switch to flexible formats, or explore sustainable alternatives that lower costs while meeting consumer demand.
- Ingredient substitution and blending: Using alternative varietals or blends that maintain taste and consistency but reduce exposure to volatile ingredient markets.
- Shelf-life extension: Exploring natural preservatives, packaging atmosphere adjustments, or cold chain improvements that cut spoilage and waste.
- Labor and processing efficiency: Rethinking product formats (for example, pre-sliced versus whole) or automating sorting and grading to reduce manual labor.
- Waste reduction: Using byproducts in creative ways or standardizing sizing to minimize trim loss.
Each of these changes requires cooperation between producers and suppliers. And while they may take more effort than a price negotiation, the payoff is larger, longer lasting, and less disruptive.
Why This Approach Matters Now
Supplier changes are costly, time-consuming, and often the biggest roadblock to realizing savings. By working with current partners in new ways, producers can not only reduce costs but also strengthen relationships and build resilience in the supply chain.
At the same time, consumer expectations are evolving. Buyers want affordable products, but they also want sustainability, transparency, and consistent quality. Collaborative approaches like value engineering allow producers to meet both goals: protecting margins while delivering products consumers trust.
Final Thoughts
Cost savings will always be critical in food and beverage production. But the path to those savings is changing. Organizations that rely solely on negotiations risk short-term wins at the expense of long-term partnerships. The real opportunity lies in collaboration—working with suppliers to innovate, cut waste, and uncover efficiencies that benefit everyone involved.
In other words, collaboration is no longer optional. It is the smartest strategy for food producers looking to stay competitive in a volatile market.
