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Intangible parameters for purchasing management in the 21st century

The trend in hotel purchasing departments when it comes to managing furniture, fixtures and equipment, encompassed under the acronym of FF&E, as well as OS&E (operating supplies and equipment), entails not overestimating these elements and knowing how to measure their useful life and their depreciation, and also anticipating demand in order to plan and negotiate profitably with suppliers.

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The trend in FF&E and OS&E requires an understanding of how to measure the useful life and depreciation of furnishings (source: equipatuhotel.com)

This area represents between 12% and 16% of the total financial outlay at the start of a hotel business, according to digital magazine Investopedia.

However, the way in which negotiations with suppliers has changed, and the priority metrics are no longer static figures but rather intangibles, such as differentiation, sustainability, innovation and quality, all attributes that harmonise with the brand philosophy.

The economic boom and the positive progress of the sector in the last few years have led to a shift in how purchasing is considered, which is now defined as an investment rather than an expense.

We interviewed some leading hotel chains, establishments with fewer than 50 rooms, consultants and suppliers in order to chart the path that will define the medium to long term trends in purchasing management departments.

The Room Mate Hotels chain (22 hotels in 12 cities with more than 1,700 rooms in total) is improving its cost control by centralising demand.

‘What isn’t measureable can’t be improved.’ Based on this principle, Room Mate Hotels has gone for German SAP MM technology (materials management) as a purchasing tool with satisfactory results. This software, which belongs to the world’s leading supplier of business applications, provides scalable solutions. It has 12 million users and more than 1,500 partners.

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Room Mate Hotels is improving its cost control by centralising demand.

But before negotiating with suppliers, planning is needed which should match the budgeting process of the hotel, which in this case is done by Kike Sarasola in the last quarter of the previous year. ‘We try to optimise purchasing by good planning. This enables us to handle larger volumes and increase our negotiating capacity,’ says the purchasing manager. Planning ahead as a tool for optimising time, processes and costs is the key to the success of the process.

A relationship with suppliers that treats them more like a partner than an outsourced element is fundamental to find solutions and the optimum support. ‘We seek to innovate and move forward along with our suppliers, as we value their expertise in their particular field. In the same way that customer loyalty is important to us, so is that of our suppliers.’

With regard to the type of professional profile who will be responsible for these areas in the future, Room Mate Hotels looks for people who ‘not only have negotiating skills and in-depth knowledge of the categories involved, but increasingly people with mathematical and analytical skills. The more that technology becomes the central axis of purchasing processes, the more that data interpretation skills are becoming a must for these departments.’

Suitech, the company that specialises in technology and software for hotels, highlights the lower price of purchasing management applications that are now being offered in pay-per-use form and centralised in the cloud, which offers integrated and functional platforms available in any location and device.

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These are some of the characteristics that an efficient purchasing programme should offer, according to Suitech:

• A simple, transparent interface for merchandise reception.

• Communication between the warehouse and the PMS.

• Communication between the PMS and the POS.

• Sales integration with the warehouse.

• Traceability of product entry-expense.

• Batch and expiry date processing.

• Catalogue of products by establishment.

• Accounting integration of stock, whether billed or unbilled.

• Debt control of suppliers.

• Stock control by warehouse.

And the trends that are expected in the medium term include:

Artificial intelligence with which we can predict consumer demand (who and what has been consumed in order to evaluate a client type) to be integrated as a tool in behavioural marketing.

Internet of Things at an energy supply level.

• Real-time negotiation and auction platform.

• Segmented demand forecasting.

• Integration between manufacturers and distributors.

When the company cannot afford an analytic purchasing department or software that can anticipate trends, it resorts to the ‘wish list’ of recommendations and suggestions from customers gathered over the previous year, or new strategy initiatives devised by the management. Once the list has been quantified, it is submitted to strict cost control to analyse its feasibility.

These kinds of hotels draw up their planning in January, ‘the worst month of the year for such a seasonal destination as Asturias,’ to thus curb any chance of getting carried away when planning purchases: a bit like avoiding going to the supermarket on an empty stomach.

The trump card of more modest hotels such as the San Miguel de Gijón with 43 rooms, is the support of professional associations such as the Asturias Hotel Association (OTEA) whose list of suppliers and prices offsets the amount of time a family hotel would have to spend searching for these suppliers.

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The more modest hotels, such as the San Miguel de Gijón use the support of professional associations when it comes to purchasing management.

Loyalty to suppliers is the key ingredient to achieving competitiveness, according to the supplier Equipa tu hotel: ‘not just in terms of mass produced components but also, above all, for customised elements that need specialised industrial processes, because the joinery required to equip 200 hotel rooms is not the same as a cabinetmaker who creates bespoke furnishings for a boutique hotel.’ It is therefore essential to have expert partners on hand at every production level.

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Bespoke elements for boutique hotels need the input of expert professionals (source: equipatuhotel.com)

Planning from the perspective of suppliers involves various aspects:

• Purchases of furniture and decorative elements, customised objects, etc.

• Deliveries that need to be coordinated with the assembly team.

• The assembly process itself.

For all of this one needs to consider factors such as accessibility or storage capacity to determine the necessary equipment and fulfil the agreed deadlines, which calls for workers who are able to respond in a short space of time.

Quantum css, which since 1997 has belonged to the purchasing department of Hotels Catalonia and was relaunched in 2013 with a new vision oriented towards global cost control, focuses on identifying anomalies and deviations in the cost structure of its member hotels, which amount to more than 700, to improve consignments.

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The Purchasing Department at Quantum css

The company emphasises the difference between FF&E and OS&E when it comes to negotiating: ‘many of the factors under the OS&E umbrella are repetitive; we’re talking about minibars, safe deposit boxes, mattresses, televisions, bathroom equipment and so on. Normally these items are standardised so there is an established price with the supplier; in this case, apart from the selection and negotiation phase, purchasing is just about replenishing. During the negotiation phase of these articles there is a series of technical characteristics (dimensions, consumption, compositions, etc.) that allow you compare more or less equivalent products. On the other hand, FF&E tend to be one-off, non-repetitive purchases, and as there are more design and technical components involved there is the addition of subjectivity in the negotiation which makes it difficult to make a purely objective decision. That’s why OS&E tends to be a clear competence of the purchasing department while FF&E very often spills over those boundaries.’

Perhaps for this reason the trend is to create an independent FF&E section, though still aligned and working as a team with the purchasing department.

The trend in terms of professional profiles and working methodologies, according to Quantum, is a combination of technical buyers and design departments in order to combine two visions that sometimes might not be conveniently in tandem.

The cloned corporate designs that set the trends decades ago have been overturned by the inclusion of elements that give hotels a unique identity, differentiating factor and personality.

One of the most powerful companies in the realm of textile supplies for hotels, Resuinsa, informs us that the current trend in demand with hotels in terms of textiles is theming. Consequently they have set up an Atelier service by Carmela Martí, which consists of a group of designers who address the identity needs of the establishment with a view to differentiating it through its textile products without relinquishing the most essential characteristics: sustainability, resistance to the aggressive processes of industrial laundries, materials that are free from chemicals that might affect people’s health, and fireproof fabrics.

Atelier

Differentiation through textiles is one of the most common demands made of suppliers.

The goal now is to achieve sustainable purchasing models without the implicit additional cost that this concept has involved up until now.

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28TH - 29TH SEPTEMBER 2020
PALAU DE CONGRESSOS DE BARCELONA
MONTJUÏC VENUE

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