As the hospitality industry increasingly becomes more competitive, cost management and streamlined procurement processes are keys to success. For hotels, restaurants, casinos, and other hospitality establishments, one of the most effective ways to achieve this is by collaborating with Group Purchasing Organizations.
Understanding Group Purchasing Organizations
Group Purchasing Organizations, or GPOs, leverage various organizations’ collective purchasing power to negotiate better prices and terms with suppliers. They operate as a third party between buyers and suppliers, creating a beneficial situation for both parties beyond what any single company could attain.
GPOs are common in various industries, including healthcare, hospitality, and manufacturing. In the context of the hospitality sector, GPOs serve to streamline the procurement process and improve efficiency throughout the overall supply chain.
As the membership of a GPO expands, its ability to deliver enhanced value to its members also grows, and suppliers benefit from the increased volume and improved compliance.
Additionally, these entities offer considerable cost savings across various product categories while offering various complementary services, including quality assurance, auditing, sustainability initiatives, product education, and operational consulting.
The GPO Landscape
Consider arguably the top three international hospitality GPOs:
1. Avendra. Founded by Marriott in 2001 and acquired by Aramark in 2017, Avendra serves over 8,500 hospitality clients, including more than 500 luxury and lifestyle hotels across North and Central America and the Caribbean. Formed by Aramark in 2020, Avendra Group is an umbrella brand that consolidates its various group purchasing units, including Avendra (hotels/resorts), HPSI (healthcare, education, sports/recreation), and IPS (K-12). HPSI currently provides strategic procurement services to more than 31,000 senior living, skilled nursing, education, and other food service clients nationwide. At the same time, IPS offers rebate processing services for K-12 clients for more than 110,000 brand-name rebated products.
2. Entegra. Established in 1999, Entegra, a Sodexo subsidiary, specializes in helping businesses optimize their food service facility procurement. With a current purchasing power of $36 billion, it is the world’s largest group purchasing organization. Entegra offers cost-saving solutions for products, supplies, services, and equipment and valuable data and digital tools to enhance clients’ business performance. Their services also include data and digital tools to boost client business performance, advisory/client support services, and assistance with sustainability and inclusivity programs. Entegra most recently secured a national food and beverage contract with the National Cooperative Purchasing Alliance, a public agency cooperative with members in all 50 states.
3. Hilton Supply Management. Originally known as Hilton Equipment Corporation when it was established in 1967, Hilton Supply Management underwent a name change in 1999 following Hilton’s merger with Promus Hotel Corp. HSM is Hilton’s own GPO, which has expanded its services to other hospitality companies and making it a go-to resource for a diverse clientele. With a global network of over 3,000 suppliers in 140 countries, HSM manages an impressive $11 billion in spending, showcasing its extensive reach and expertise in procurement services.
In the fast-paced and competitive world of the hospitality industry, managing costs while maintaining high-quality standards is crucial. GPOs are proven partners for hospitality businesses, helping them streamline procurement, cut costs, and improve overall supply chain efficiency.
BirchStreet Systems’ top recommendations, including Avendra, Entegra, and Hilton Supply Management, represent trusted partners in the hospitality procurement landscape. Furthermore, BirchStreet equips businesses with the tools and resources for successful procurement.
With the increasing prominence of GPOs in the US and globally, hospitality companies can count on GPOs and BirchStreet Systems to help them navigate the intricate procurement world while reaping financial advantages. By harnessing collective purchasing, hospitality businesses can maintain their competitive edge and focus on their core mission—delivering unparalleled service to their customers.