In today’s current economic environment, your procurement strategy could make or break your business. Having worked for a number of years in procurement with hospitality operators, I have seen what it takes to enhance profitability by leveraging cost control best practices when it comes to buying.
A well-optimized procurement strategy reduces waste, improves efficiency, and ensures that you get the best value for every dollar spent. From leveraging technology to working with group purchasing organizations (GPOs), making procurement more strategic can significantly impact your bottom line.
Take for example a U.S. hotel chain that realized over $200K in annual savings from streamlining their procurement process through access to real-time reporting, menu development, and standardization via order guides. Operators across the lodging industry can realize significant benefits from a more streamlined buying process.
Strategizing on a National Level
If you manage multiple properties, the best way to streamline your procurement process is to take a top-down approach. When locations manage sourcing individually, inconsistencies arise. Different locations sign onto programs at various price points, sometimes choosing non-optimal programs or making frequent product changes. The result is higher overall procurement costs.
Additionally, fragmented buying can lead to inconsistencies in brand image and quality. If one location arranges for routine facility maintenance services and stays on top of ordering new uniforms but another location neglects these categories, you risk weakening your brand’s image.
A national-level approach to sourcing strategies allows you to identify the most optimal programs for each product and category and communicate these to your locations through order guides, shopping lists, or general guidelines. The strictness or looseness of this guidance all depends on your company’s local and regional needs, allowing you to accommodate specific requests from locations if needed.
Plus, when you leverage purchases utilizing scale, you have greater bargaining power with manufacturers and distributors, helping you secure better programs at competitive costs, especially in your top categories.
Using Technology to Streamline Decision Making
You want to make informed decisions based on data. However, running routine reports on product, supplier, and distributor spend manually is time-consuming and prone to inaccuracies. Operators are now leveraging data analytics technology to streamline the decision-making process.
Data analytics software connects procurement teams with updated spend reporting, without manual logging processes. Operators should look for platforms with custom report generation features, as well as the ability to review pricing by item, manufacturer, and distributor. Foodbuy Hospitality’s MPower platform is a great example of a resource that allows for data slicing and dicing and convenient report generation.
When supply chain challenges arise, spend transparency will help you remain nimble. The COVID-19 pandemic taught operators that the supply chain can be affected in extreme ways without much warning. Whether your buying plan is affected by a global pandemic, increased inflation, or product outages, accurate and up-to-date data on your purchasing behavior is a valuable asset.
The Benefits of eProcurement Technology
Similar to data analytics software, eProcurement technology provides greater transparency to spend. However, these solutions also streamline the purchasing process itself. They allow your teams to place and review orders online, making updates as needed.
This is an especially valuable tool for implementing a top-down purchasing approach. Once your procurement teams are all aligned to one eProcurement platform, it’s easier than ever to monitor which products are collecting the highest spend on a national level. Furthermore, some solutions offer order guide management tools to encourage locations to buy certain products. This can help your company make a bigger impact with every purchasing decision, as the benefits are felt across your locations.
Procure-to-pay platforms, such as OneSource, can provide further benefits, as they cover the entire purchasing process, from requisition to purchase to invoice. This allows for comprehensive insight into your buying, as well as a simplified overall process.
Leveraging Group Purchasing
Finally, hotel, resort, and leisure venue operators can gain a powerful advantage in an increasingly competitive market by partnering with a GPO. By leveraging the collective buying power of a vast network of businesses, GPOs negotiate lower prices on essential goods and services, from food and beverage supplies to linens, furniture, and operational equipment.
While this provides obvious cost savings and access to exclusive supplier programs, it also has the benefit of streamlining procurement. Procurement teams can leverage the existing tools and relationships that GPOs provide to save time on decision-making, vendor management, and, ultimately, purchasing itself. The result is more time and resources available to enhance the guest experience.
Unlocking Efficiency and Savings Through Strategic Procurement
Optimizing the procurement process is more than just a cost-saving measure. It’s a strategic investment in operational efficiency, brand consistency, and long-term profitability. By adopting a national-level sourcing strategy, leveraging data analytics, and using data analytics and eProcurement technology, operators can streamline purchasing and improve decision-making. Additionally, partnering with a GPO provides access to better pricing, supplier programs, and industry expertise, reducing both costs and administrative burdens.
Refining your procurement strategy ensures that your business remains agile, competitive, and well-positioned for sustained success.
Sponsored by Foodbuy Hospitality.
