Advancing Procurement Value in Hospitality

In the hospitality sector, procurement generates value by providing the optimal quality and quantity of goods and services as a customer service function.

FREMONT, CA: In the hospitality sector, procurement engages a place of special significance. Within most other sectors, procurement gives value by providing the organization with efficiency. In the hospitality sector, procurement generates value by providing the optimal quality and quantity of goods and services as a customer service function.

Following are five ways procurement professionals can advance in hospitality without obligation.

1. Enhance demand projections

In any strategic procurement case, it’s essential to understand your market and be able to project your requirements. If you purchase too little of something, you’ll exhaust too quickly, and people won’t be able to get what they require to manage the guest experience. If you acquire too much, it will sit around, occupying valuable space without use.

Whether too little or too much, either case finally causes a loss of money for your organization and holds the risk of adversely affecting guests. Examining and learning the requirement for each item you acquire will support you in predicting precisely how much you require to purchase at a time and when you are required to restock to ensure that delivery occurs just in time.

2. Build strong vendor connections.

It’s simple to consider vendors as the essential intermediary between you and the commodities and services you’re procuring — a contentious relationship where your target is to pay the minimum price, and theirs is to charge the greatest. But when you consider your suppliers as business partners, the relationship becomes more collaborative than combative.

In an association type of relationship, you can support the vendor to grow quality and service. The vendor learns that they will notice a renewed contract with guaranteed sales by doing this. To create partnerships, initiate by negotiating fairly and openly, paying them right away as per terms, strategizing over sourcing new items, sharing your procurement forecasts, and questioning their recommendations for lower prices. Strong vendor relationships allow you to assure consistency in products and services — consistency your guests are reliant on.

3. Utilize supplier catalogs

All your hard work to institute selected supplier agreements presenting the best terms and pricing is tested when someone in the organization requires to acquire something. Guided buying catalogs are a simple and effective means to guide users to the right items, the right policies, and your favored suppliers.

Generate catalogs by vendor, location, division, or type of item to make it easy for shoppers to place the items they seek. Confining the purchase of many routine items to your preferred list of vendors and products can rule in maverick spending and reduce the requirement for procurement department participation—both of which encourage efficiency, add value, and bring more spending under your direct control.

4. Centralize purchasing

Centralized purchasing is one of the most important ways to reduce unmanaged spending. When purchasing is decentralized, your organization lacks the visibility to make smart, strategic determinations. Also, if you can’t properly analyze what is being consumed, on what, and by whom, how can you handle it?

Centralizing expenditure improves your company’s acquisition power and allows you to attain economies of scale. It makes it easier to provide scrutiny of suppliers and their contracts. And it speeds up and streamlines internal fulfillment functions, so you can optimize your inventory.

5. Concentrate on value rather than savings.

While cost control will often stay a paramount objective of the procurement division, procurement experts can contribute to the process — by concentrating on value.

Choosing affordable products or a vendor solely according to pricing usually costs more money than it saves. The cheapest products will fail quickly and must be replaced more frequently. Bargain vendors may be less likely to stand behind their products if they have quality problems. So, shop around, research, and find out which products are the best value and which suppliers can deliver quality products at competitive pricing. You may pay a bit more initially, but it will support you to save much more over a long time.