- How do you get high-quality products and services at the lowest price for the longest term from your suppliers?
I believe that getting a lowest price for products is a very subjective term. A slight variation in quality specifications can increase or decrease the price and while the change in quality may not be immediately noticeable. We feel, that it’s crucial that a brand stays true to its quality specifications. We have noticed that once the vendors understands that there will be no change in quality specifications for short term gains, then they are happy to offer long term competitive rates. Another important aspect according to us is making payments on time as no vendor likes delayed payments and their working capital being blocked, a quicker payment cycle also helps in getting highly competitive rates.
- Does the management team get actively involved in the procurement division from a strategic point of view?
Yes, most certainly. Procuring the right material at the right price is key to managing costs, especially for hotels where a lot of consumption is of materials that have dynamic pricing such as groceries, vegetables etc. We review our restaurant menus & recipe costing periodically based on the cost forecast by purchase team and make changes where necessary, this helps us in keeping the food cost in check.
Also, in certain areas such as property maintenance and AMC’s, the management evaluates all vendor contracts for performance and pricing regularly.
- Has the management started viewing the procurement team as a value center than a cost center?
We have always considered procurement team as axis point on which operational efficiencies depend, with frequent inputs from our procurement team we have been able to shave off few percentages in cost which directly impacted the bottom line. We follow the morals of the old idiom; ‘a penny saved is a penny earned’, hence while the procurement team may not be customer facing in terms of earning revenue, but the impact they have in saving costs is very valuable.
- How do you map service level agreements with vendors to warrant lower TCO?
A well-defined and detailed SLA’s are important to clearly mark the responsibilities of the vendors. The vendor should always see merit in adhering to the SLA by way of long-term contracts and performance incentives.
- How do you work with various departments, like the finance and technology teams, to incorporate innovations and save costs?
We live in very interesting times as there are ongoing innovations and product improvements happening, across sections in hospitality. Our purchase team has a mandate of attending all large hospitality, technology and other related trade fairs & exhibitions. As they attend these events, they collect information on latest developments and in our fortnightly purchase meetings, we evaluate merit of new products both in terms of improving operational efficiencies and cost management. We have recently shifted diesel based hot water plants to electricity-based heat pumps which have helped us not only in reducing cost but also reducing our carbon foot print.
- What new systems and methodologies have you started in your hotel to enhance processes like vendor-managed inventory, cyclic buying, etc., and improve efficiency?
Since several products in hotels are perishable in nature we have to be very careful in procuring them as there is a risk of wastage if we buy in large quantities. If we don’t get vegetables in time and of the right quality that we want, then it will negatively impact the customer experience, hence the purchase team in coordination with kitchen department works on a ‘Just In Time’ principle which helps us get fresh produce and avoid wastage.
- What are your top 3 successful strategies for the business?
1) The pandemic has been a great teacher and has taught us all to keep a hawk like eye especially on costs. Rather than monthly cost review we now do weekly or fortnightly review of all our past and future expenses. This has helped us in re-evaluating all our processes and efficiently shaving off non-essential expenses.
2) Saving costs is not just the prerogative of top-management, it is important for everyone in the organization across hierarchy to be aware of cost of each product, cost of wastage and importance of ongoing improvements in processes. Once every member of the team is sensitive to these factors the ideas and suggestions that flow are astounding.
3) We are always on the lookout for newer technology and products which help us to be more efficient in our services. Any business that is slow to change or adapt will get left behind. So, it’s imperative to invest in on going product improvements.
