The procurement process for food and beverage supplies is far more complex than just stocking the pantry and the bar. Good procurement strategies and contingency plans also include monitoring expenses, ensuring there are no overstocks or shortages, complying with safety regulations and labor laws, and a host of other endeavors to identify every bit of profit promise.
Increasing Collaboration, Minimizing Waste
“The recent economic challenges and supply chain disruptions have intensified our commitment to local sourcing and sustainability,” said Kevin Coulter, executive chef of Marguerite at Hotel Verdant in Racine, Wis., which opened in last August. “We have increased our collaboration with local growers and artisan producers, which has helped buffer against global supply chain issues. By focusing on seasonal produce, we can adapt our menus based on availability, which also helps reduce food waste. We've implemented more robust menu engineering practices to ensure efficient use of ingredients, minimizing waste and reducing costs.”
According to Coulter, Hotel Verdant’s suppliers must submit a sustainability policy or have other documentation proving they consider environmental and social issues. Avendra, the hotel’s procurement services partner, and its iBuyEfficient system helps Coulter’s team ensure that suppliers have processes in place to integrate sustainability into their businesses, from a supplier code of conduct to sustainability policy requirement and sustainability questionnaires. Avendra also requires suppliers in higher priority categories to go through a third-party sustainability survey and scoring.
“We take sustainability into consideration throughout the operation, whether it is reducing plastic bottles by buying glass, recycling cardboard, grinding glass bottles, or buying products grown as close to us as possible,” said Maurice Constantin, director of food and beverage at La Quinta Resort & Club (a Curio Collection by Hilton property) near Palm Springs. “We are not in the storage business, so buying only what we need on a timely basis promotes freshness and reduces the dormant dollars tied up on back-room shelves.”
Executive Chef Andrew Cooper added that successful food procurement at La Quinta involves keeping track of where the food is coming from and knowing what’s in season to ensure they are only buying the freshest ingredients possible. Familiarity with the region around La Quinta enables the team to build relationships with local purveyors and keep the carbon footprint low instead of sourcing items from remote places. Cooper’s culinary team meets daily to plan menus, assess business levels, and review purchasing needs while making the best use of the hotel’s purchasing budget.
Data-Driven Decisions
“A good purchasing and inventory system helps us with food and other cost tracking in real time,” explained Constantin. “It eliminates the need for a central storeroom team, allowing the food and beverage director, chefs and managers to see where they are with their expenses against their budget goals. [When looking for partners or procurement technology], we look for flexibility of choices, versatility, ease of use, instant comparison of price/quality withing a provider or multiple providers. I like that our system shows me the spend to-date per outlet and where it stands against budget, giving me the ability get an accurate food cost any day of the month and keep our culinary team abreast of where they stand against their goals.”
“Inventory management plays a pivotal role in enhancing procurement practices in the long run because it allows us to optimize stock levels and minimize excess inventory, reducing carrying costs and the risk of spoilage,” said Kasey Smith, head of operations for customer experience at Graphite Connect, a supplier management platform. As former director of procurement and purchasing for Club Med, he led sourcing and supplier management for over 3,500 vendors across 30 countries, responsible for managing the balance of vetting and verifying new vendors while maintaining consistent data for the company’s AP and finance teams.
“Effective inventory management facilitates accurate demand forecasting, enabling us to align procurement activities with actual consumption patterns,” Smith said, noting implementation of the right procurement management software empowers a management team to make data-driven decisions. This streamlines the entire procurement process, from vendor selection and invoice reconciliation to providing real-time visibility into supplier performance, pricing trends and inventory levels. It also helps evaluate a prospective vendor's reputation, track record and customer support services.
“By leveraging data-driven insights, [management can] make informed decisions about when and how much to reorder, optimizing supply chain efficiency and reducing waste,” he continued. “As sending the wrong payment or falling victim to vendor fraud can be costly, using the right platform strikes that right balance of risk and speed. We assess the scalability and flexibility of the solution to accommodate our evolving needs and accommodate future growth. Integration capabilities are also essential, as seamless connectivity with existing systems enhances efficiency and data accuracy.”
During his time at Club Med, Smith and his team traveled to different properties to stage procurement “summits,” with the property-level procurement leaders meeting up quarterly or semi-annually. They used a “cluster” system, which allowed senior procurement leaders to manage multiple properties located near each other geographically and the Club Med headquarters team to implement effective procurement strategy and change more efficiently.
Tech for Success
As guests’ preferences are evolving, so are the ways needed to procure supplies. “The exceptional focus we have placed on our food and beverage offerings has been a pivotal factor in our properties’ transformation of the all-inclusive sector,” said Fernando Mulet, CIO at all-inclusive operator Playa Hotels & Resorts, comprising 24 resorts and over 9,000 rooms and partnerships with Hyatt, Hilton, Wyndham Hotels & Resorts, Marriott International and IHG Hotels & Resorts.
Tech platforms the Playa Hotels & Resorts team uses to monitor procurement transactions include the Fair Market Quotation System, SAP’s Ariba (integrated within the SAP strategic module), and SAP Analytical Clouds. The Fair Market platform enables the team to connect with multiple vendors simultaneously to obtain and compare quotations, facilitate informed decision making and ensure fair market value. The SAP products, meanwhile, allow for a structured and efficient approach to supplier engagements and negotiations.
In day-to-day operations, Mulet points to “menu engineering,” where menus are planned to take advantage of local seasonality and capitalize on locally produced ingredients, which he says translates to delivering higher-quality food and beverage products to guests, minimizing food waste, promoting ethical labor practices, and championing environmentally conscious initiatives within the properties’ supply chain.
“[While these resorts] are historically known for expansive buffets, when quality is placed above quantity, we have been instrumental in reversing this trend, elevating the standard with innovative concepts, à la carte dining and superior-quality food,” he explains. “We have actively sought to support small-scale local suppliers and businesses, fostering mutually beneficial partnerships that contribute to the economic sustainability of the communities in which we operate. Also, we give priority to sourcing from local suppliers, using eco-friendly packaging and supporting sustainable companies whenever possible.”
HARPing on Sustainable Procurement
Marriott International; EcoVadis (a global provider of sustainability ratings); several leading global hospitality organizations (Accor, Hilton, IHG Hotels & Resorts, Radisson Hotel Group); and two global hospitality group purchasing organizations, Avendra and Entegra, joined forces to launch the Hospitality Alliance for Responsible Procurement (HARP). The initiative addresses core challenges faced by collective supplier sustainability programs and accelerates sustainable practices by fostering collaboration and building transparency with trading partners.
To achieve these goals, HARP is leveraging EcoVadis’ sustainability rating methodology, scorecards and improvement platform. The EcoVadis Sector Initiative features are built as an antitrust-compliant network and allow for more efficient supplier onboarding, transparency, collaboration, and analytics. Together, these capabilities deliver HARP visibility across the hospitality supply chain's sustainability performance and allow HARP members to align on the top priorities of their industry. This results in a positive message to the supplier community and a more coherent direction to enable targeted improvement.
“As companies seek to engage their value chain partners in their sustainability efforts, they realize the complex scope, as well as common challenges, in their sector," said Richard Eyram, EcoVadis chief customer officer. “It is through partnerships and industry-wide collaboration that the hospitality industry can maximize its collective impact. By joining forces, aligning focus and sharing best practices, HARP members can achieve positive outcomes that pave the way towards Net Zero targets and a more sustainable future for all.”
"As a founding member of HARP, Avendra is committed to driving positive change in the hospitality industry," said Avendra Vice President and Head of Strategic Sourcing Patrick Mayhew. "Through collaborative efforts with our suppliers, clients and other industry leaders, we strive to enhance sustainability practices across the entire supply chain. Our partnership with HARP reflects our dedication to environmental responsibility, social impact, and ethical sourcing.”
Bringing a common voice, standard and platform around sustainability for the industry value chain, the HARP initiative addresses core challenges faced by its collective supplier sustainability programs such as accelerating suppliers’ performance improvement curve, enhancing the relevance of those engagements, and scaling up visibility by strengthening supplier engagement rate, starting with the supplier assessment.
For more information about HARP, visit https://sector.ecovadis.com/the-hospitality-alliance-for-responsible-procurement-initiative-harp.
Procurement by the Numbers
- Kasey Smith advises selecting a procurement platform that digitizes a spreadsheet, adds in automation to identify irregularities, and has technology to monitor every vendor in detail. When onboarding is 70 percent faster through the platform, suppliers are more willing to do it and companies can spend less time chasing them down.
- A solid procurement platform can help a hotel pinpoint when a long-time vendor has a larger-than-average invoice or another signal that could help a team identify fraud before it happens. Suppliers going through the Graphite procurement platform’s onboarding process, for example, have ongoing data validation to ensure that international sanctions lists are checked regularly, and vendor identity is verified with government ID scans for over 200 countries.
- Higher standards for standardization: According to Playa Hotels & Resorts’ Fernando Mulet, standardizing procurement specifications has resulted in a notable reduction in time and costs associated with the procurement process, streamlined operations and improved efficiency, leading to a more agile and responsive procurement system. Other significant benefits include reduced paperwork, administrative burdens, improved operational efficiency and cost reduction. The ability to leverage bulk purchasing has led to substantial cost savings and improved bargaining power with suppliers.
- Marriott and the seven HARP founding members collectively rated more than 2,000 suppliers upon the initiative’s founding. HARP plans to further expand this number to gain greater insight into the sustainability performance of its supply chain and drive maximum improvement.