Page 40 - February 2020

RLI LEISURE INSIGHT

Why the hotel industry

needs to digitise purchasing

Gone are the days when Excel lists, faxes and e-mails were
essential to procurement functions in the hospitality
industry. Here, Dave Brittain, Head of Amazon Business
UK argues how digitisation is becoming increasingly
important to companies who want to secure their future.

t’s safe to say that purchasing departments are benefiting hugely The purchase of sMall-scale
from the cost and productivity advantages that these modern- producTs drives up cosTs
day processes bring – especially those in the hotel industry. It’s easy to forget about the “tail spend”- i.e. the purchase
I We still live in a world of paper where documents are of non-production materials, which usually takes place outside
printed, and some invoices are sent by post. Procurement teams the formal procurement processes. In hotels, this mainly includes
will know all too well, the thick paper catalogues that are used small-scale product orders such as office, restaurant and hotel
to source new products. But while many hotel procurement organisation supplies, administrative materials or IT accessories.
departments still follow these analogue processes and methods, Generally speaking, these items account for the majority of
they don’t do much to optimise cost and resource efficiency. suppliers, which means that they’re often also responsible for a
Advanced digital technologies and systems are making their large portion of procurement expenditure.
way into purchasing, but not without consequences. For instance, According to the latest study by the Hackett Group, companies
work and release processes have to be adapted to support new in every sector, including hotels, could reduce their purchasing
online structures and the actions of individuals become more costs by around a quarter by making business purchases online.
transparent. But while these issues may need to be addressed by
businesses that introduce digital shopping, they’re easily addressed. significanT increase in producTiviTy
The role of the purchasing manager in hotels is changing too Through digiTal purchasing
– as purchasers take on more responsibility, they also contribute Digital platforms have many advantages for hotels. All divisions
towards the sustainable success of the business, through the and branches can purchase via one account - without complex
procurement systems they use. processes and long approval loops. The ability to store an order
number with every order makes the process more efficient. Hotels
The role of Millennials in therefore benefit from leaner processes, lower process costs and,
hoTel procureMenT thanks to the marketplace concept, also from the best prices.
It’s no secret that hotels and restaurants have to shop The result is often a significant increase in productivity, as the
regularly, from everyday necessities to major purchases such time required for catalogue negotiations, supplier qualification
as furnishings and software solutions, but a lesser-known fact is and the creation and checking of contacts is reduced. The fact
that Millennials play a major role in these purchasing decisions. that spontaneous purchases become possible also simplifies tail
According to a study by the Merit agency, more than 70 per cent spend management, which is often faced with time challenges,
of 20 to 35-year-olds are now involved in purchasing decisions, especially in the hotel and service industries, where speed of
and about a third are even solely responsible as chief buyers. response and flexibility are often indispensable.
It’s safe to say that the Millennial generation, born between 1980 Online shops for businesses are a key element of digitised
and 1999, are in favour of digital processes. Because Millennials purchasing and a powerful automation lever. For purchasing
have grown up being exposed to shopping apps, comment managers, they should therefore be a central factor in shaping
functions and product reviews, they’ve become accustomed to the their procurement strategy.
benefits of online shopping – such as a wide selection, transparent
comparison options and fast delivery. Now the Millennials are hoTels of all sizes can benefiT
rising to leading positions and naturally they are bringing their froM digiTalisaTion
personal shopping experiences into the business world. In smaller hotel chains, there is often only one person
responsible for purchasing, who is therefore also responsible
for a wide range of tasks relating to procurement - from price
negotiations to purchasing to incoming goods inspection.
If purchasing is regulated via an online shop, the process can
be considerably simpler. If it is determined together with each
specialist department, which suppliers to work with and which staff
members can purchase certain products and within what scope,
then each department head is able to act independently and
quickly as required. This way, the chief buyer can still hold the reins
and fully exploit the economic interests of the hotel on the market.
Larger hotels also benefit from deciding to buy electronically
at an early stage. Decentralised purchasing, but with central
controlling, is particularly suitable for hotel chains with hotels
spread across many locations and national borders.
Often buyers from these chains are unfamiliar with regional
requirement of each hotel. With online procurement, the chief
buyer can allow the purchasers from each hotel to buy items
independently, within a defined purchasing framework.
No matter the size of the establishment, it’s safe to say that digital
procurement plays a meaningful role in saving hotels time and money.

40 reTail & leisure inTernaTional FEBRUARY 2020