You don’t need us to tell you how tough things are in the Hospitality and Leisure (H&L) Industry right now. The fall-out from the Pandemic, the war in Ukraine, energy costs, food inflation, the cost of living crisis, high-interest rates, and staffing all impact the entire sector, as well you know.
From our position as specialists in indirect procurement (loosely defined as goods and services not for resale), we absolutely see the current focus as being one of controlling the controllables. There are some areas of spend outside your sphere of influence right now; that will change. But there are things you could and should be reviewing as a matter of urgency, contracts-permitting.
Here are our suggestions of some issues to consider to help get your spending back under control.
1. Information Technology
Is your upcoming hardware refresh compatible with your existing point-of-sale software? Are you introducing a new ERP system; if so, have you confirmed your requirement to ensure you have the right balance of capability v cost? Many businesses opt for the platinum solution offering capability that is unlikely to ever be required. For your e-commerce activity, have you a cyber solution that is fit for purpose? Have you negotiated software pricing with your reseller?
2. Facilities Management
How do staff report repairs and how do you manage scheduled maintenance? Does everything come as a surprise and fire-fighting is thus the order of the day, or is it triaged based on impact on the business? If your FM is delivered by a third-party provider then do you have visibility of rates? Is there a fixed fee per job regardless of the site? What is charged out at additional time? ERA’s FM Team recently tendered the requirement for a 70-site client, resulting in a streamlined reporting system for repairs, delivered under a single umbrella provider and realising savings of £170,000 pa.
Do you know the weight of your waste? How often is it collected? These will determine whether your waste solution is optimal. Do your staff segregate waste to make it easier for waste companies to collect it and are you receiving any income for items with a residual value? When considering your sustainability journey, doing the right thing goes hand in hand with choosing the right waste solution. Do you reduce waste at each opportunity or is your focus purely on disposal? A recently implemented solution maximized recycling, reduced weight, and delivered a 34% saving to a H&L client.
If your cleaning is provided by an external company then meet with them to review your needs and ask what new ways of working may better suit. Output-based specifications allow greater customising of solutions and encourage innovation. If cleaning is delivered in-house then consider using alternate products after trialing them to ensure they are suitable. Hold stocks centrally to ensure you haven’t got a huge inventory milling around your site with little or no control. Review your ordering process.
5. Managed Print
Perhaps your pricing for copiers is OK but servicing is a nightmare, with spares few and far between and machines offline for days. Do contracts rollover because they fall into the ‘all too difficult’ pile. Every supplier will tell you they’re doing a good job at market-leading rates but have you ever benchmarked alternatives? ERA implemented a recent renewal for 35 devices at a leisure provider that not only saved 55% on the previous solution but also included no rental charges in Years 4 and 5.
Your Procurement Process
In addition to what you might do in certain vertical spend categories, look horizontally too at your own processes. Is your system helping or hindering? Remove unnecessary admin and improve control. Does your delegated budgetary authority encourage heads of departments to develop their own solutions and undermine economies of scale? Align them to a single solution to leverage your spending power.
Consider what value setting spend thresholds actually adds to the process; does this lead to numerous retrospective purchase authorisations. Consolidate suppliers to reduce the workload required to process numerous small-value invoices. Does your ERP system support purchasing or is the tail wagging the dog?
And if you need that resource or catalyst to get things moving to deliver options within a few short weeks, then speak to us here at Expense Reduction Analysts. The chances are, our team of 90 UK specialists has likely helped a similar business to yours, perhaps a competitor, with the exact same issue that is giving you cause for concern right now. Opportunities are out there. Control the controllables.
You want better procurement efficiency? We get it.
For more information, contact us today.