Feature: Procurement under the spotlight

Posted under Interviews & Features.
by Patrick Ryan | Published 12 months ago

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Hotel News Middle East invited some of the region’s leading experts on procurement to take part in a special roundtable discussion at Dukes Dubai which was sponsored by Guest Supply.

DSC_9851Taking part in the panel discussion were Joseph Fonseka, purchasing manager, La Ville Hotel and Suites, City Walk Dubai; Pranab Pathukulangara, assistant purchasing manager, Mövenpick Hotel Jumeirah Beach;  Jean Manuel, purchasing manager, Anantara The Palm Dubai Resort; Saji Idaculla, procurement manager, Dukes Dubai; Sonja Allen, hospitality specialist, Guest Supply and Sandeep Thomas, director of finance, Radisson Blu Dubai Deira Creek.

What are the latest challenges facing the hotel procurement sector?

Joseph Fonseka: Today it is such a huge market, you have to be so careful about what you are buying, reliability is the key.

Sandeep Thomas: The run-up to 2020 means there is more focus on pre-openings in procurement. There are 100-plus hotels being added in the next couple of years.

Saji Idaculla: Compare the market here to the likes of the UK where there is limited access to suppliers; for us it is a global market. I have 150 food suppliers which is unbelievable.

Pranab Pathukulangara: At Mövenpick we had 99% of suppliers registered, all Mövenpicks use the same system as it is good for the hotels and each department. You can see the benefits of buying from this supplier or that supplier. By registering them on the system, it helps you with getting a better rate.

Jean Manuel: Procurement is like working in HR, I need to check their background and if it is a good price. If I pay an advance payment I will be in trouble with the finance department.

Sandeep: Another issue is that the entire operation should not come under the finance department. Their forte is not negotiation, finance is asking if they have the right forms, if they are up to standards, if they are credible and so on.

Jean: Finance will see the figures only. In terms of price there will be a clash. What about the quality? We need to balance it.  It’s about quality and price.

Joseph: There is an issue with deliveries – when buying in bulk can we get it in one truck instead of having 10 or 20 trucks on the road? Traffic is also an issue and again it depends on pricing and manpower.

What are the issues you have when it comes to orders?

DSC_0949Jean:  For example, one department emailed me to ask for an ashtray. Is it made of glass? Is it stainless steel, what shape? Some departments don’t even know what they want to buy, they will send a copy and pasted image, how can I send that to the supplier? I need the size… I need the texture.

Saji: That’s the approach of some team members, once they send an email to purchasing they see their part as being finished.

Sandeep: That’s time that could have been spent negotiating with a supplier but instead it is spent getting the specs and it can take days, going back and forth.

Joseph: If you get the wrong product, everyone will try to blame purchasing.

Jean: Not all purchasing managers are technical people, so I always put the IT and technical people in the loop, be it to buy TVs or alarm clocks.

Will the extra hotels being built for Expo 2020 change the procurement landscape?

Sandeep: I see a lot of break offs with all the extra hotels being built. You will see people who have worked under a company deciding to start their own. The product will probably be the same but they will undercut it, that will make it difficult as two people are going to be offering the same product.

Saji: I can definitely see that happening. Reputed suppliers who worked for years in the same company will see an opportunity in the market to start their own company. People who usually deal with companies in Europe will go to the Far East and try to manufacture the same product for less.

Sonja: It’s interesting to hear the challenges you are facing, they are exactly the same challenges we are facing as suppliers. We are a global company, but we get told by hotels they can get cheaper products, but then they are not guaranteed the network and supply we have. Other suppliers come in and undercut the market, hotels think ‘great, it’s cheaper’. But then they aren’t getting the same quality.

Sandeep: Inferior products hurt a hotel as after a few years they have to be replaced, which affects the cash flow. You have to replace something before you expected. Even with pillows or bedsheets, you have to be aware of the wear and tear of constantly being washed.

How do you identify the right suppliers and products?

Jean Manuel, purchasing manager, Anantara The Palm Dubai Resort

Jean Manuel, purchasing manager, Anantara The Palm Dubai Resort

Saji: A supplier has to be transparent. Communication will help us, so they should let us know if there’s a delay. They have to be able to deliver what they promise.

Jean: I will tell you the truth – some suppliers will try and take me out to dinner to discuss a deal, but I don’t see the point. You can see what a supplier is like through body language and how they talk. I can smell if something isn’t right… I will throw them out of my office if I have to. The finance director is relying on you and put their trust in you.

Sandeep: You have a lot of suppliers looking for advance payments, so the trust issue comes in. They can ask for AED 250,000 in advance payment and you never know if he’s going to run away.

Jean: If a department, F&B or housekeeping, wants to buy something, some departments even have their own favourite suppliers. When it comes to comparing samples though I don’t look at the name, I look at product A, B and C and see which is of the most benefit to the property.

Sandeep: As long as a favourite supplier can deliver the right products at the right price it’s okay.

What are the areas of procurement where money could be saved?

DSC_0882Joseph: We spend a lot on maintenance. This is an area that’s being dictated by engineering. If you had a person with engineering experience in purchasing you could make huge savings. I worked in engineering so I know.

Sandeep: During pre-opening you spend a lot on tools. When you go to IT they talk about gigabytes and megabytes. Along with engineering, these are two areas of a hotel that can wear you down if you’re not aware of it.

Joseph: That’s where networking comes in, it just takes a call to a sister hotel and you can find if they have been using their services or if it can be done cheaper.

Jean: We need to be able to inspect food suppliers and where food is stored, twice a year we are doing a supplier visit, when they give us a delivery it is good, but how are they storing the food? If there is food poisoning the first place they will go is to purchasing and ask where the food came from.

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