Many hotel and resort businesses are bleeding money in ways they don’t expect. That’s because they’re neglecting their procurement processes.
Poor procurement is often a hidden but significant drain on hotel efficiency and profitability. If you can identify procurement problems and solve them, you can make a major impact on your operation’s success.
Spotting Poor Procurement
What does ineffective procurement look like in a hotel or resort? It may look normal to many operators who haven’t had the benefit of improved systems. An unhealthy buying strategy can be characterized by:
- Fragmented purchasing across locations and departments. When different groups place orders separately, you open yourself up to redundancies, shortages, and higher prices.
- A lack of transparency with partners. Without a system in place to monitor routine spending, price changes, and product availability, you open your business up to issues.
- Time-consuming processes for internal associates. If your procurement team is bogged down in manual order and analytics processes, they may not have enough time to dedicate to identifying solutions to problems.
Poor procurement processes may all look different, but their impacts are the same. Financial losses can occur from over-buying and unchecked pricing inconsistencies, as well as missed savings opportunities. Customer satisfaction levels may drop when under-ordering supplies or ingredients. Staff burnout is also a concern when your teams find themselves overwhelmed with recurring procurement problems and outdated processes.
Furthermore, inefficient buying processes can leave your company vulnerable to supply chain disruptions. While every team hopes for smooth sailing, supply chain challenges can arise unexpectedly and have detrimental impacts. Making updates to your existing processes isn’t just about immediate benefits, but about the long-term health of your business.
How to Identify the Gaps
To make a change, you first need to identify your current procurement strategy’s weaknesses. An in-depth procurement strategy audit can help you spot pain points and take the next step toward solutions.
You should begin by reviewing ordering patterns across locations and departments. While you may not have the bandwidth to assess your entire sourcing portfolio, you can start with areas where you invest the most money. For many operations, that means your broadline food and beverage programs.
Look at which programs you encourage purchasing from and try to determine how aligned your locations are with these guidelines. When inconsistencies arise, try to find out why. Are there issues with distribution centers or suppliers, or are your associates just ordering outside of your plan?
It’s also important to assess the tools and technology behind your most vital processes. Do your associates handle buying manually? Maybe they use an eProcurement platform, but it’s missing features that would add efficiency or help with saving money. Many operators now use procure-to-pay systems. Could this be a fit for your business?
Finally, include your teams in conversations around purchasing. They may have insights into inefficiencies that you aren’t aware of. This may begin with your purchasing team, but it can help to include location managers and chef teams who see consumer behavior and supply use firsthand.
Making Changes That Work
Once you’ve identified areas that need attention, it’s time to make changes. While your fact-finding mission will guide this, it can also be helpful to involve a third-party procurement partner, like a group purchasing operation (GPO).
GPOs can streamline your procurement process by acting as an extension of your existing team. They have existing supplier and distributor relationships, as well as negotiated rates on products and services. You can leverage those benefits, reducing the load on your internal staff.
Additionally, many GPOs now offer exclusive eProcurement and data analytics tools to help you place orders and identify potential savings. You can even look into order guide technology to standardize ordering across locations.
Procurement might not be the flashiest part of your operation, but it could be one of the most powerful. By addressing the hidden inefficiencies in your current processes, you can unlock savings, streamline operations, and free up your team to focus on delivering exceptional guest experiences. Whether you invest in better tools, centralize your buying, or partner with a GPO, smart procurement strategies can turn a behind-the-scenes function into a key driver of profitability and resilience.
Sponsored by Foodbuy Hospitality.
