You are not alone.
Have you ever calculated the time it takes to find a reputable vendor, select the right products and negotiate the best terms and prices? We have. The process can take more than 20 hours for a single vendor. Given that in the hospitality industry, it can require up to 400 independent external resources to manage its operating supplies and services, that’s 8,000 hours just to set up the vendor base. And that figure doesn’t include putting in place systems to track and monitor costs—including pricing, discounts and rebates—as well as vendor performance and all the other components of a comprehensive procurement program.
Clearly, such an investment in time and effort is not sustainable or scalable. Owners and operators are hampered by being “small fish” in a big purchasing pond, lacking the collective buying clout required to be able to negotiate the best prices. They’re discovering that “do-it-yourself” procurement is not as simple as they had hoped it would be, and are now realizing that they don’t have to do it alone.
We Do the Work, You Call the Shots
A savvy partner can take over purchasing processes under the operator’s direction to ensure the best prices and the highest product and service quality, as well as providing a host of other outsourcing benefits. The operator remains in charge of the brand promise, customer service and profitability, all of which are critical to the success of the hospitality enterprise. Such an arrangement offers multiple benefits, including cost savings, flexibility, and comprehensive purchasing analyses.
Many operators mistakenly use the traditional “Bid Process” approach and switch vendors on a regular basis, as prices change, when, in reality, the long-term fluctuations and administrative costs associated with changing vendors usually outweigh the cost saving benefits. In contrast, Purchasing Services Organizations (PSOs) use their experience and industry knowledge to understand the impact of price changes and make calculated predictions about their longevity.
That knowledge, combined with their supplier relationships and pre-negotiated volume-discounted contracts, enable PSOs to provide operators with the most cost-effective buying strategies.
Another benefit of partnering with a PSO is that you will still control your purchasing environment while procurement specialists manage the details. The program is flexible enough that you can continue working with your own manufacturers and suppliers, if you choose to. Furthermore, there is no cost to participate and the agreement can be terminated without penalty as early as 30 days after you are enrolled in the program.
Additional benefits include:
- Dashboards showing market conditions and price index reports to help operators adjust menus and see potential savings with same-quality products, along with side-by-side product feature comparisons
- On-call support from procurement specialists with extensive experience in hospitality procurement and operations
- Periodic assessments of both supplier and distributor performance
- Ability to manage safety and regulatory compliance
- Rebate capture and allocation
More Time to Do What You Do Best
Without the burden of procurement oversight, operators like you are much less distracted and can focus more of their time and energies on:
- Ensuring that brand standards are always aligned with promises
- Evaluating new industry developments in products, services and technologies, to discover new ways to enhance your guest experiences
- Guarding the brand promise from competitive undermining or encroachment
In sum, partnering with a PSO allows you to source more and better products, secure lower prices, and streamline your operations for maximum efficiency. You’ll increase customer satisfaction and achieve greater profitability in each of your locations.
Best of all, you’ll avoid up-front costs, ongoing fees, compliance minimums and long-term contracts.