Event season is ramping up and the Ardent team will be making a few appearances at user conferences and other industry shows. We are, however, not going to host the CPO Rising Summit in Boston this Fall. We are planning several roundtable events, so stay tuned for news about that.
These little news announcements got me thinking about events and how great they can be and what we’ve all missed by not having them. As excited as I am about the return of business travel and great procurement events, I am certain that those working in hospitality are even more excited. That is because no industry has been harder hit by the pandemic than the hospitality industry. And while we’re not ready to state that the pandemic is over and we can all get back to business as usual, there is an extraordinary pent-up demand for travel and vacations that will put Hospitality Chief Procurement Officers and their teams back in the center of business.
In the hospitality industry, a strong performing procurement operation can be what separates the high rollers from the low-stakes players. To help these teams get back to business quickly, we’ve laid out some strategies for success for them below.
Procurement in the Hospitality Industry
The hospitality industry is filled with many large, independently-owned and/or operated businesses that place large amounts of enterprise spend on food and beverages – often from a variety of vendors in order to cater to a variety of customers. These hotel and restaurant chains, resorts, casinos, and bars can frequently derive greater value from their supply management platforms than businesses in other industries because of the nature of their industry – one that places customer experience (“CX”) and, more specifically, customer delight, at the center of its business model.
In order for procurement teams to succeed in the hospitality industry, they need to “earn a seat at the table” by establishing a dialogue and building partnerships with key stakeholders, being more collaborative than prescriptive, and influencing without authority. They also must have effective sourcing, P2P, inventory management, and capital projects management processes and systems in place to manage their direct spend, build flexible and resilient supply chains, have clear visibility into inventory, and be able to manage long-term CX initiatives to continuously delight customers.
Strategies for Success
Procurement transformation does not happen in a vacuum, nor does it happen overnight. It concerns multiple stakeholders inside of the organization (procurement, AP/Finance, IT), as well as the supplier base. Chief Procurement Officers and procurement teams in the hospitality industry must manage multiple areas successfully in order to accomplish a comprehensive and impactful procurement transformation, including strategic sourcing, P2P, inventory management, and capital project management. With so many chips on the table, delivering a procurement transformation in the hospitality industry may seem a long shot, but with the right focus, resources, and strategies, the payouts can be great. To increase the odds of success, Ardent Partners recommends the following strategies and steps for CPOs and other procurement leaders to take as they commence a procurement transformation initiative.
- Collaborate early and often with key stakeholders, including AP/Finance, IT, business leaders, and even suppliers when planning and designing the transformation and desired future state; actively seek their buy-in.
- Ensure that contracted GPOs are providing the reliability, pricing, and quality needed to stand out and deliver in the competitive marketplace; conduct regular price and compliance audits to ensure the GPOs’ interests are properly aligned.
- Standardize and link key sourcing, P2P, and inventory control processes, to create a seamless and holistic workflow.
- Migrate processes and systems to the cloud for turn-key, on-demand, and mobile-first / mobile-ready business tools.
- Prioritize P2P platforms that offer native eProcurement, ePayables (AP automation), and inventory control / management applications.
- Leverage existing vendor relationships that exist across the larger enterprise for a more efficient and expedient capital project management experience.
Conclusion
In the hospitality industry, the primary objective is to deliver memorable experiences that leave customers happy, fulfilled, and eager for more. The stakes are high because bad customer experiences can spread like wildfire and quickly erode a brand’s reputation, placing pressure on profitability. While procurement departments in many other industries are viewed as operating from the back lines of the business, nothing could be further from the truth in hospitality. Leading hospitality CPOs know that the proper blend of talented people, efficient processes, and enabling technology is needed for their procurement departments to deliver full enterprise value and deliver top-notch service. And, leveraging this blend across each of the key areas – sourcing, P2P, inventory management, and capital projects – is fundamental to both short-term and long-term success.
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Tagged in: Chief Procurement Officer, CPO, Finance, P2P, Performance, Strategy, Transformation
