Procurement: Tendering in turbulent times by Alastair Roy, Aro Procurement

Editor's Picks, News

The world rumbles on irrespective of circumstances and as the seemingly endless list of restrictions currently aimed at the hospitality sector shows no signs of abating, businesses are being forced to innovate on an almost a daily basis just to keep going.

Although probably well down the list of things to do for most business owners and operators at the moment, tendering can offer an opportunity to innovate in a different way by helping stimulate new ways of delivering value. 

Although many of your suppliers are hurting, they too can benefit from the tendering process as a means of objectively looking at their own business processes to improve value for their customers and hopefully themselves at the same time. It does not always follow, that a tender will result in the incumbent supplier losing the contract for the goods and services they provide. However, a tender process will often inject new ideas and vitality to the hotel’s supply chain – in addition to providing improved commercial terms and added value services.

   It might seem like a daunting prospect to start a tender but when the process is handled correctly, it helps clarify the needs of the buyer, sets clear guidelines and ensures a fair and purposeful review of options.

Benefits of tendering include:

Realignment of the buyer and supplier relationship to ensure the balance of power is weighted firmly in the buyer’s favour.

Due diligence to confirm if your supply chain is operating at an optimal level providing the best possible value for money for every £ of expenditure and identify how it can be improved.

Demonstrating to the marketplace that complacency is not an option and there is always the possibility of an account moving to a new supplier – thus keeping all suppliers vigilant

Improved value in terms of cost reductions, higher quality specifications/products, better service and other add value benefits including improved credit terms and prebates/rebates.

Engagement from key stakeholders to recognise the value of the process.

Gaining an understanding of innovation and improvements in the market which can benefit your hotel’s bottom line and potentially the service offering too.

Tendering is most appropriate when the spend value is relatively high and the benefits gained from the competition process outweigh the cost of approaching the market. Where a monopoly market is in operation, single source supplier is determined to be the best fit or when market standards are so varied as to prevent a direct comparison, tendering is probably not the best option. Other strategies can be deployed in those situations.

Some areas to consider tendering include:

Utilities

Telecoms including mobiles

Linen & laundry

Food including fresh meat & fish, fresh produce, ambient and frozen foods

Beverage including wines, spirits, beers and soft drinks

Chemicals and Janitorial

Maintenance contracts

Credit and debit card commissions

Maintenance consumables

Guest consumables

Capex items including plant, machinery and equipment or any assets that typically have a life of more than one year, should also be tendered to ensure you are getting value for money every time.

While many of you will have a procurement function working on these categories on a day to day basis, not every business has the knowledge and experience to manage a tender process. If you would like to tender any of your high value, mission critical supplier categories and need advice on how to proceed, contact alastair@aroprocurement,com to help deliver a better deal.    www.aroprocurement.com

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Hotel Magazine Scotland News Team

Hotel Scotland is a new publication (2017) from the publishers of DRAM – Scotland’s leading on-trade magazine. Hotel Scotland is a newsy magazine which covers all aspects of the industry in Scotland. From who’s who, to industry issues and refurbishments.
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