Purchasing: The buying game

04 April 2014
Purchasing: The buying game

A decade ago, most restaurant and catering operators would have balked at the thought of purchasing online, but 10 years on it's become the norm. Elly Earls finds out why, and looks forward to the technological innovations that are set to transform hospitality purchasing still further

Even 10 years ago few people would have predicted that they would be carrying round a pocket-sized device offering such endless connectivity and entertainment. This technological revolution has driven change across business too, with working practices dramatically altered with the explosion of the internet. The hospitality sector is no exception, with purchasing in particular having undergone a transformation in the past decade.

"When I started doing this 12 years ago people would look surprised if they discovered that hospitality operators were doing purchasing online," explains iTradeNetwork European sales director Alex Walters. "There has been a fundamental shift in people's opinions; people now see online as the norm."

Juliette Joffe, co-owner of restaurant chain Giraffe, agrees that hospitality purchasing has "come on in leaps and bounds". She says: "We've gone from phone ordering to telesales to emailing purchases. And now everything is done online."

And it's not before time, according to Walters. "I think this shift has been driven because of the fact that around four or five years ago online became the norm in the consumer environment," he explains.

Many restaurant and catering operators now take the benefits of online procurement for granted, Walters believes, as they have been ordering over the internet potentially for the past several years.

"Operators now realise the cost savings in terms of both man hours and the ability to monitor supplier costs more accurately," agrees Neil Gazzard, senior operations manager at Cheshire-based gastropub chain New Moon Pubs. He says that the technology means it's easier to control sites' spend and reconcile invoices.

"EPoS solutions, which have been available for a while, provide pretty much real time sales data, but now systems exist that can use this data to suggest orders based on past levels and then effectively compile an order for you. 
The order is then sent at the click of a button, streamlining the process and saving costs," 
he adds.

According to Oliver Cock, managing director for commercial at Compass Group UK & Ireland, the streamlining of the purchasing process has a knock-on effect on the customer experience. "Online procurement makes life easier for our managers by taking away the administrative burden of placing orders, 
giving them more time to focus on serving great food and providing excellent customer service," he explains.

For Walters, though, the biggest impact online purchasing has had on operators' costs is the advantages it offers in terms of visibility and control at head office level.

"Managers simply can't buy off contract unless they've got permission to do so," he says. "That ability to pick up the phone to a local supplier and tell them what they need has been taken away. Head office has the control over spend that they want and can ensure that units are buying the right products."

Cock adds: "It gives us much more control and visibility of what is being bought in the organisation, the ability to direct this demand towards the right suppliers, and allows us to ensure the traceability and integrity across all our spend."

For chain operators, this is particularly important. "If you're eating in a chain, you expect to get exactly the same experience from one outlet to another, but if units are buying from different suppliers, it can heavily impact that," says Walters.

The convenience 24/7 ordering offers operators is another key selling point of online systems, and one that, again, has benefits at both unit and head office level.

At PizzaExpress, it has been restaurant managers that have really felt the difference. Indeed, since implementing iTradeNetwork's Multiple Operator Portal solution, not only have outlet managers been able to place their orders whenever is convenient, instead of being called off the restaurant floor at busy times to dial in orders by phone, they can also see which items are out of stock immediately after ordering, making finding a replacement much quicker and more convenient.

"Managers can also order from wherever they are, so if it's order day and they're not at work, they can place orders from home if they want," Walters remarks.

Wherever the order is being placed from, though, head office knows about it. "They're seeing live orders and if something isn't right, they've got that instant ability to check it out," Walters says. "When things are being done over the phone or with people walking through the door, that just doesn't exist."

"You get increased speed, accuracy and control, which stops losses," Joffe summarises, adding that with online procurement systems everything links into the stock in real time, leaving less margin for error.

The future's mobile Increasingly, operators are taking advantage of the whenever/wherever benefits of online procurement by placing more and more orders on their smartphones. Indeed, according to Walters, analytics on the iTradeNetwork websites have shown that 20% of interaction on the company's European sites takes place on some form of mobile device.

"It's growing all the time, and on some of our sites, we see almost half a percentile growth each month," he says, adding that he believes the shift to mobile is just going to accelerate, moving forwards.

This will drive the need for online procurement systems that not only work on mobile devices, but also offer additional features for smartphone users. "For example, you might see suppliers implementing special mobile applications for their key operators," Walters suggests. "You can also imagine regional managers within those operators having access to a mobile site where they can just check and approve orders where necessary, without even logging onto the main website."

iTrade Network is prepared for its customers to start demanding increased mobile functionality, according to Walters. "We continue to evolve and improve our sites to make sure we're supporting the correct range of mobile devices and mobile operating systems," he notes. "But we're also looking at the next stage, where it might not just be about representing your site on a mobile, but about how you can actually use mobile to drive increased efficiency into the supply chain."

Gazzard would certainly welcome any innovation that saves time for managers. "I'd like to see a bit more automation," he says. "Any system that frees up my managers to spend more time on the floor or spend more time with their staff developing them would be brilliant."

For Cock, it would also be useful for online purchasing solution providers to continue to take inspiration from consumer shopping sites as they develop - and the simpler the better. "I'd like to see today's system providers take the lead from the digital consumer shopping landscape, adapt the look and feel of their solutions to develop more intuitive tools for the user and hide all the complexity that sits behind them," he says.

More integration between systems, Joffe believes, would also be beneficial for hospitality operators: "The more the purchasing system integrates with every other system, the more accurate it becomes."

In the meantime, online procurement is just going to become more popular, Walters concludes: "The move to mobile will continue to accelerate and online is set to put other forms of order capture into the past."

Compass Group UK & Ireland: Involving the right people in decision-making to ensure success

he key to successful purchasing, according to Oliver Cock, managing director of commercial at Compass Group UK & Ireland, is involving the right people in the decision-making process.

"We involve our chefs in signing off on product quality and specifications for their part of the business, as each has different requirements," he explains. "But at the same
time, it is important to have central control over supplier standards, quality specifications, terms and conditions, payment terms and pricing.

"Great purchasing is about choosing where to add value, understanding the risks associated with each category of spend, managing these and finding the right solution to meet the needs of your business."

Over recent years, the company's purchasing process has evolved in many ways as management has striven to strike the right balance. "Firstly, we have put our executive
chefs at the heart of the purchasing process," Cock notes. "They determine the quality standards of our food and we are in constant dialogue with them about the products they need, constant improvements and new suppliers and products. Building our relationships and trust levels internally is a continual process."

Secondly, Compass has transformed the relationships it has with its suppliers: "This is both in terms of the transparency of our processes, so they understand clearly what we need, what's important to us and how we make our decisions. And at the same time, we have looked much more collaboratively at the relationships with our core suppliers and how we can grow each other's businesses.

"We've also looked closer to home, within the team to focus on nurturing the talent of our procurement colleagues and developing their skills."

Consumers' increasing awareness of sustainability issues has also impacted Compass's purchasing practices over the past couple of years. "Sustainability is undoubtedly
taken into account more now as clients and consumers want different things in this area - a greater focus on local provenance, animal welfare and ethics in general across the whole supply chain," Cock explains. "We revised our sustainable sourcing policy in October 2012 to reflect this."

Of course, many buyers in the hospitality sector have worked in this way for a long time, realising that being greener not only adds to their sustainability scorecard, thereby
impressing consumers; it can also boost their bottom line.

"By supporting local suppliers and helping our suppliers manage and grow their business in a sustainable way, we ensure that they will thrive in the long term and provide the best quality," Cock adds.

Online systems, too, have benefited Compass's procurement department. "Our teams love it because it makes life so much easier for them and we love it because of the data and clear line of sight it gives us centrally," Cock notes.

And he sees a bright future for online hospitality purchasing. "I think the future for online procurement is very positive," he concludes. "I think the revolution that is now happening with online consumer shopping will continue to shape online procurement in business, so more companies will adopt it, more suppliers will adapt to it and more and more users will see the benefits."

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