How to make savings in your hospitality procurement process

Here at Access Hospitality, we help our customers to surface key business data that helps them to identify areas of underperformance or high cost within the procurement process so that they can create laser-focused strategies that help them drive savings, cut costs and source products with the right availability and delivery timescales to maximise business efficiency. 

In this article, we’ll apply all that knowledge to provide actionable guidance on the different methods to make savings in your hospitality procurement. After reading, you should know exactly which approaches are best to implement in your hospitality business to reduce costs and gain efficiencies.  

The benefits of automating and centralising procurement processes

With the potential returns of effective procurement being so important, an automated system will undoubtedly secure better rewards through reduced admin costs, 100% accuracy and visibility, defined control measures, and a proactive approach to increasing profit margins. Where a business relies on manual procurement processes, the time taken to submit spreadsheets and reports from various sites, added to the potential for human error, can result in a significant time delay and inaccuracies in interpreting the data, so you are always a step behind the curve. In contrast, using a technology solution to manage the process gives immediate visibility of multiple KPIs across the business, enabling you to take a proactive approach to increasing business performance and profitability. 

However, if your supply chain is managed, it is important to have a robust system in place and identify some simple areas to focus on if procurement savings are to be maximised, with changes having a positive impact on reducing costs and increasing gross profit. 

Review your current purchasing requirements 

A procurement process that has been in place for some time may be out of date and not fit for purpose within an evolving operation. If bad habits have been allowed to creep in, ordering more stock than is needed will result in a high outlay, amplified storage costs and a potential increase in wastage. Buying what is needed, when it is needed is the most efficient way of handling supplies which do not require immediate replacement, but there may be opportunities to consolidate purchasing requests and the frequency of orders to reduce delivery costs and production of necessary documentation. 

A regular review of specifications can also rationalise expenditure. Rather than sticking with the status quo, procurement teams should evaluate if lower-cost substitutions can deliver comparable quality and performance, as maintaining existing higher-spec supplies without assessing alternatives misses potential savings. 

Supplier strategies 

Supporting local and small businesses and being loyal to suppliers is admirable if their pricing is compatible with overall quality and availability but a regular review can highlight potential cost savings. By altering purchasing patterns, additional discounts may be available for higher quantities whilst consolidation of suppliers or delivery arrangements can also present lower rates. 

Ensuring that all suppliers have been pre-authorised and their goods and services are clearly defined within procurement technology removes the potential for duplication or inconsistency across several providers. Channelling all spending for one product through nominated suppliers will create higher discounts and remove uncontrolled one-off purchases, which generally attract higher price points. 

Using a preferred supplier list on the right technology platform enables them to upload products and prices directly, with any changes automatically updated to highlight how your business might be impacted. You retain control over each product and can switch off the whole defined category spent by a particular supplier and even adjust approval processes for individual items. 

Raconteur.net reports comments and analysis from academics and experts on the role of procurement in strengthening supply chain resilience, and although large manufacturing plants are particularly vulnerable, their advice can equally apply to the hospitality industry. “Knowledge from previous crises suggests that close collaboration with suppliers can provide early warnings of problems that may arise in the future,” says Dr Christos Tsinopoulos, a professor in operations and project management at Durham University Business School. 

Simplify the process 

The more links in a chain, the more likely it is to break, so automating all elements of the supply chain reduces the risk of errors. A technology solution can handle every step, from sourcing and agreeing terms with a supplier, creating and approving a purchase order, and matching the receipt of goods against the order placed and corresponding invoice to the delivery. All with the added benefit of saving time and money by using a paperless procurement process. 

By removing complexity, technology simplifies the procurement process, and details such as capturing cost centres in one location and assigning purchase orders to the correct location with accruals collected at the end of the process become automatic. 

Manually processing invoices can be a time-consuming and labour-intensive task. On that brief alone, giving time back to your people for other, more productive work by using purchase-to-pay software can make a significant impact on total overheads. 

Capture those credits 

With time at a premium, capturing credits might never reach the top of the ‘to-do’ list because cross-checking prices is laborious and often not worth spending valuable resources on. Within the hospitality sector, only about 0.2% credit capture is typically achieved, whereas the average, when using purchase-to-pay technology, rises to 1.5%. Suddenly, without any extra effort, the results can be transformational. If you know your F&B spend, you can quickly get an idea of how much your credit capture should be using our ROI calculator. 

Data reporting 

The impact that procurement has on the wider business operation is of such importance that detailed reports are increasingly made to company owners or directors to demonstrate transparency in areas such as ethical operating practices, preventing bribery and corruption, and doing everything possible to avoid modern slavery. Waste and sustainability are also key issues for responsible businesses, and creating easy-to-use monitors helps all members of a team to understand common trends and identify how and where waste can be reduced. 

An ideal procurement technology solution will provide group-level reporting with live data giving significantly improved visibility across all aspects of generating revenue, controlling costs and managing all aspects of the purchasing and supply chain. The ability to identify trends, monitor peaks and troughs in the operation and compare performance across different sites provides a rounded overview of the whole business. This enables response mechanisms to be put in place so that immediate actions can be activated or reviewed should nominated tolerance levels be broken.  

We can signpost companies that, between them, have secured millions of pounds of efficiency savings through the implementation of the right Purchase-to-Pay solutions for their business. Through streamlining procurement, reducing indirect spend and automating invoice processing they have benefited from cost savings that contribute to long-term sustainability and help strengthen their position in a challenging market. With the stakes so high, making your procurement process work for you should be a top priority in any business plan, and the quicker it is implemented, the sooner the advantages will be felt. 

Ready to make savings in your procurement process? 

In this article, we’ve looked at some of the key areas that you should look at to identify pain points in your procurement processes. 

Streamlining procurement through automation and centralisation can drive major cost savings for hospitality businesses. However, maintaining status quo processes or basic software may seem sufficient in the short term. While a basic system could provide a temporary band-aid, the long-term benefits of a robust automated platform make it a strategic investment. 

The ideal solution depends on your unique needs and readiness. Factors like budget, existing systems, staff bandwidth, and other priorities will determine the best approach. Access Procure Wizard is a powerful purchase-to-pay tool that can help drive savings through automated procurement technology. Given our experience in optimising hospitality procurement, we can assess your situation and guide the most impactful next steps. 

If you would like to learn more about how we could help your team, why not arrange a demo?  

Webinar: Navigating procurement savings in hospitality's ever-changing landscape 

Finding procurement savings should be a priority for operators looking to meet their needs efficiently, take control of their spending and make much-needed savings.  

Procurement is an area where - with the right technology, real savings can be made to your operations- both in the short and long term.

From leading to cost savings, improved quality, and efficiency to ensuring sustainability, an effective hospitality procurement is essential for the ongoing success of your business. 

An ideal procurement technology solution will provide real-time visibility into costs and streamline all facets of the purchasing and supply chain while significantly contributing to cost-saving efforts. Automated ordering, a key feature, reduces human errors and ensures precise orders, preventing costly mistakes such as over-purchasing the wrong quantities or products. 

Our award-winning software, Access Procure Wizzard, is the leading provider of purchase-to-pay and food and beverage software in the hospitality sector. Working closely with our customers, we have developed a calculator to show you the potential savings in each area of your operations based on over 10 years of data from Access Procure Wizard customers. 

Watch our webinar as we highlight the areas that you can expect to make a difference, including: 

• Increasing credit capture 
• Time saved on manual processes 
• Reduction in avoidable waste 
• Decreasing stock holding 
• Product management 
• Price file rationalisation