According to the American Hotel & Lodging Association’s State of the Hotel Industry Report 2021[i] direct hotel operational jobs will remain nearly 500,000 jobs below the industry’s pre-pandemic employment level in 2021. Given diminished staffing levels will continue for the foreseeable future, it is clear that hospitality operators will have to stay lean and operate efficiently to make up for lost labor capacity.
Working with our partners in the hospitality industry, we have identified operational areas ripe for efficiency gains and automation, and will be addressing these in a series of blog posts, starting with today’s post on procurement.
Procurement
When buyers are strapped for time and correct procurement procedures are unclear or unenforceable, buyers are going to take the path of least resistance, which often means picking up the phone. If they are empowered to order by phone and don’t need to produce a P.O. before invoices are paid, what’s to prevent them from directing spend to non-approved vendors? In an environment without a cloud-based procurement system, even when buyers are trying to follow corporate purchasing guidelines the work is highly manual and error prone, and requires juggling spreadsheet after spreadsheet to figure out which vendor is approved and at what rate.
For example, take Four Seasons Hotels & Resorts. Prior to their implementation of BirchStreet in 2012, Four Seasons had no system of record in place and limited global standards to enforce, and as a result individual locations operated with little oversight. This led to unnecessary costs in the back-office and in F&B operations in particular. As the Four Seasons’ corporate team investigated how to cut down on these costs and make their locations more profitable, they quickly realized the only viable solution was to implement a cloud-based Procure-to-Pay (P2P) system. The BirchStreet solution aligned perfectly with the company’s goals: the eProcurement and AP 3-Way Auto Match tools offered the ability to digitize the P2P process and increase visibility and spend control. By implementing these automation tools, Four Seasons saw an increase in spend compliance of 50%, and a 10% savings on consumables.
“Companies who can master the art of procurement are benefitting from faster order cycle times, higher process efficiencies, larger bottom-line savings and lower overall costs” according to CapGemini’s Digital Procurement Research 2021.
Adopting an eProcurement solution that automates much of the buying processes unlocks these benefits and more, by aligning purchasing teams to best practice processes and approval workflows, which cuts down on time spent and paper touched. Additionally, by housing spend across multiple locations in a single system, teams unlock strategic enterprise spend analytics and compliance reporting. This provides the tools to correct rogue spend, and obtain the data-driven leverage required to negotiate more effectively with vendors.
Whether your company partners with a GPO or manages buying independently, eProcurement software is the foundational building block for supply chain automation. With an eProcurement solution, procurement teams have the visibility and controls necessary to ensure buyers are purchasing the right products from approved vendors at the best possible price.
Insight: eProcurement technology is the essential building block of effective supply chain management and provides a highly compelling ROI in both cost saving and efficiency gains.
Interested in learning how much your organization could save by automating procurement functions?
[i] https://www.ahla.com/sites/default/files/2021_state_of_the_industry_0.pdf