Think Reducing Costs and Enhancing the Guest Experience are Mutually Exclusive?
By Tina Stehle Senior Vice President & General Manager, Agilysys Hospitality Solutions Group | January 27, 2012
To truly affect the bottom line, leading hotels are examining every link in their supply chains to find the best ways to implement cost controls that offer long-term financial benefits without sacrificing the quality of the guest experience. Many hotel operators are surprised to learn that during the purchasing, receiving, and inventory management process, profits can erode despite their best efforts to negotiate the best price and control costs.
Why It's So Important to Automate
As a hotel owner or manager, everything in your training tells you that operational inefficiencies result in a higher cost of doing business. But once your hotel has found the magic formula of finding the right products, at the right price from reliable suppliers, it's sometimes hard to upset the apple cart if internal process owners don't relate to your bottom line concerns.
Wouldn't it be ideal if your inventory and procurement system could provide you the right product, price and reliable suppliers in the most efficient manner possible? Our inventory and procurement customers report typical savings through efficiencies and direct cost reductions in the range of 5 to 15 percent. One example of a direct cost reduction is driving down the cost of products and services by implementing an automated bid system. An automated bid system allows hotel operators to quickly and easily increase the number of potential suppliers and facilitates the process of identifying low-cost, preferred, and un-preferred vendors.
As you know, it is becoming increasingly important to control operational expenditures in the hospitality industry. While many hotels still rely on manual or semi-automated processes to identify, evaluate, and select suppliers and award contracts, increasingly the most forward-thinking hotels are finding ways to automate and optimize their supply chains. This tight alignment ensures the hotel organization and its budget process support its procurement strategy.
In most hotels, the cost of purchases can range from 15 - 30 percent of sales, depending on the type of hotel. This can have huge implications on your bottom line, not to mention the day-to-day purchases of non-perishable items such as office supplies, guest amenities, housekeeping supplies, and other highly consumable items which are critical for the successful operation of your hotel.