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Managing supply chains for a variety of distinct operations is complex and highly analytical yet often lacks the prestige of the rooms division, front office, F&B or spa. Still, it’s essential; if housekeeping represents the proverbial ‘heart of house’ then perhaps procurement is its ‘gastrointestinal tract’, the processing center for all raw goods ingesting.

While I ponder how to give this department a less graphic analogy, what matters for 2025 is to look at how the latest and greatest in procurement systems can help reduce supply chain management (SCM) costs. And as we are investigating through this campaign with Amazon Business, there is no single panacea for procurement challenges. Rather, achieving enhanced cost controls is a matter of incremental improvements – 1% here, 2% there – that will compound over several years of managed and tail spend.

So, with the key objective of streamlining procurement, uncovering hidden sources of expense inefficiencies and freeing up the procurement team’s time, there are a number of individual issues that can be tackled. Think of them as waypoints along the journey towards a well-oiled, data-driven SCM machine.

Some of these challenges that we will examining and that you should also look to resolve for the year ahead include:

  1. Centralized data. In all of my conversations at conferences or online with hotel executives over the past year, structuring data and building a cleaner data pipeline is the top task. It thus makes sense that integrated data from procurement systems will help to spotlight glaring sources of cost overruns or make reporting more time efficient. Above all, what I would stress is that better data allows you to ask better questions, and given the full extent of SCM in hotels, these are legion.
  2. Portfolio benchmarking. Less a concern for independent properties but foundational for any small group or management company through to the largest of hotel chains, comparing costs and deliveries across distributed locations is a key area for better analysis and actionable insights. Having greater visibility across all hotels can help teams to select the most effective universal suppliers (balancing cost with other benefits) as well as make decisions as to where localized sourcing will be more controllable.
  3. Cash flow. This one might seem obvious but there are numerous features and business intelligence (BI) tools available to optimize reorder scheduling, derive more labor efficiencies in accounts payable and improve forecasting to reduce unanticipated or unbudgeted expenses. Need I also mention that ongoing inflation is still causing problems here?
  4. Sustainability. Achieving environmental, social and governance (ESG) goals inevitably involves different product sourcing and working with local sellers. Beyond more expensive per-unit costs (in most cases at present time), this can increase time requirements because of more varied delivery schedules, difficulties in compiling reporting or needing to get employee buy-in for sustainable purchases. Another significant challenge to consider is finding out whether a product or seller has a certain certification – sustainability certifications or sellers with diversity certifications, as two examples.
  5. Tail spend management. As many procurement officers are well familiar with already, this intermittent 20% of total purchase (that is, the tail spend) can often represent 80% of one’s energy to effectively administer. Or, they can occur outside of the procurement department’s control. Given how diverse the needs of any single operation are, tail spend in hospitality is exceedingly hodgepodge, which can mean higher costs, inefficient sourcing and a lack of proper visibility on total expenses incurred or benchmarking within a hotel portfolio.

These are but five big areas that we will explore over the next few months so that all hoteliers, not just those working in procurement, have a clearer understanding of the SCM challenges we presently face. Again, there likely won’t be a singular solution that will immediately generate double-digit cost controls year-over-year, but rather it will come down to a series of smaller tasks that will add up to something far greater. Lots to look forward to, so stay tuned!