Event Preview: Hotelier Procurement Summit

The second edition of the Hotelier Middle East Procurement Summit is set to take place on Tuesday 4 November, and in preparation for the event we gathered together some of last year’s event speakers to discuss the key purchasing topics on their minds.

Meet the experts:

- Bhanu Pratap Singh, director of procurement at Atlantis The Palm, Dubai has been in his role since 2009.
- Madhu Gopal, director of procurement, Anantara Hotels & Resorts Abu Dhabi has held his position since 2012.
- Wissam El Cheikh Hassan, managing partner Al Dar Sweets, a home-grown Arabic Sweet company based in Abu Dhabi.

Ahead of the second Hotelier Middle East Procurement Summit, to take place in Dubai on Tuesday 4 November, Hotelier met with Bhanu Pratap Singh, director of procurement at Atlantis The Palm, Madhu Gopal, director of procurement, Anantara Hotels & Resorts Abu Dhabi, and Wissam El Cheikh Hassan, managing partner at Al Dar Sweets, all of whom spoke at last year’s event.

This year’s Procurement Summit is expected to welcome more than 100 procurement professionals from across the GCC to discuss the challenges and strategies of one of the most important, yet overlooked departments in a hotel.

Staff procurement departments often find it a challenge being listened to and having the final say in purchasing decisions. How can procurement managers make their voices heard?

Bhanu: I am trying to do my best but people never listen to me and almost all of my colleagues have a similar type of experience — they want to contribute more.

It’s important to understand the other perspective of the people who you’re dealing with. For example, if you’re dealing with a CEO, whether indirectly or directly, he has expectations. Similarly the GM has some expectations of the function since it is part of the business he manages and he has certain limitations.

Wissam: I think purchasing differs a lot between one property and another. But all companies are generally directing toward outsourcing everything that is not core, and as painful as it might sound, purchasing is not core; it’s a support function. So how can we make purchasing matter? I know this probably sounds easy but at the end of the day it’s about how you handle the business.

You can say “Boohoo, I don’t have support” or you can say “I’ll do it this way and get the saving justified by finance and send it to the GM and let everyone know I have done this”. And then people will ask you what you think they should do, rather than not getting support. It depends on how seriously you take your job; let them notice. So how can you make purchasing matter?

Bhanu: Inside a hotel, the procurement manager can only go to the director of finance, they can’t go to the GM.
Wissam: Then you go as high as you can go and you say “I want to make a contract for a supplier”. If you have the support from upper management, do a blind tasting session [to test the difference].

Madhu: The purchasing managers in this region don’t have any authority — how are we going to make people understand what we are paid for? Most of these people are not even allowed to question. Instead of being instructed to just go and buy something, we should question it saying “so why are we getting it at this rate when we can get this price?” That is not there at the moment.

Bhanu: Definitely, it’s a struggle that procurement is not able to make its place. There are two reasons for it — stakeholder values. The CEO expects the purchasing manager to do the necessary deeds. We have to move from savings, which have been primarily given to our job; “this is your job how much money will you save?”

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How do you align purchasing decisions with the priorities of kitchen staff?

Wissam: Everyone struggles with this and I understand how it happens from a purchasing side. For example chefs think they’re artists and that they’re superior. I can call a client and say “I can come over” and he says “I’ll see if the chef is available” and I say “look you’re not the chef’s assistant — you are the purchasing manager”.

Madhu: I’ll tell you why the purchasing manager always has to ask the chef’s opinion. When it comes to food if you order something and it’s not the right thing, then you’re responsible.

Wissam: I know a chef and they had a blind tasting session and brought in four suppliers and both chefs agreed on ‘Supplier A’.

But one had monkey business with ‘Supplier B’ and one had monkey business with ‘Supplier C’ and then what happened was they talked with the purchasing manager and he said ‘you both agreed on Supplier A’ they both said “no we don’t want this guy”. Chefs think they want chicken from ‘Supplier A’ but at the end of the day they just want chicken.

Bhanu: The process needs to be made a bit clearer, a bit more transparent. For example, if we talk about chicken, in a blind tasting session we say “it’s up to you”. Quality is a top priority, it has the impact on the decision making. The second factor is the service of the supplier, how good his service is and the third factor is price.

We do an online bidding and the purchasing manager and other companies don’t know what others are bidding. So we tell the chef“give us your quality check”, and we do a performance rating and we do benchmarking from the entire session. So although we want quality, if we can’t afford something it’s up to the chef to decide on what they want and then we sign a contract for one year.

We tell the supplier that if their price is going up and down they can come and talk to us, which gives them the freedom to do that. I then have the chef, finance and myself sign the document and then the buyer who is actually buying has the decision to sign the document. So we have less problems because we’ve defined the right quality, the right price and the right service.

When it comes to food purchasing, how do you ensure food is safe?

Bhanu: It’s very important. When we started we wondered, how can we make sure it’s safe? There are companies that do safety audits and suppliers are certified as being safe. If there was a company all the hotels wouldn’t have to do the same exercise again and again, we could have one agency’s final feedback — is it good or not?

Wissam: You could have a website where you rate all the suppliers and if there’s any food complaint you could upload it there and then if you want to find out about ‘Supplier A’ you could go to the website.

Bhanu: We waste close to AED100,000 ($2722) every year on this exercise. Why is there no agency in Dubai that would do this rating for suppliers? There are companies that do it but just for individual hotels.

Madhu: It is happening in our hotels. There is someone employed to go to all of the suppliers and to tell the suppliers what the hotel standards are. But as Bhanu said there needs to be someone in the market to certify.
Dubai and Abu Dhabi municipality certify each and every company and that is one of the major concerns on the supplier side, and some of the companies are not following the system. So we need a company that certifies each supplier.

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What can suppliers and procurement managers do to streamline the purchasing process?

Wissam: You can share information, consolidate, benchmark. The other thing is contracts. There’s a very big gap when it comes to having contracts. I know some hotels that do contracts with suppliers but hardly anybody does it. Some hotels have been dealing with suppliers for the last six years based on appeals.

I see it left, right and centre — chefs trying our product and saying “ok we’ll be in touch”. You’re already set on a supplier but you don’t have a contract with him, but you agreed to see me so you wasted my time and your time. The amount of time I waste following up with chefs. If something is not ok they don’t tell the supplier why, it just stops. They’re always jumping back and forth; just give me a contract already!

Bhanu: That’s very counter-productive for everyone. You need to document it so that the supplier knows “this is my obligation” and as a buyer you know “this is my obligation and my responsibility”. Once you know the rate for a certain period that’s fine.

Without that there’s a sense of insecurity between the buyer and supplier — I’ve seen people come and say ‘I’ve been thrown out by this buyer because my rice was AED 20 fils less or more’.

It’s a very short-sighted approach. If you have a contract, the purchaser knows they have a particular type of chicken for the next 12 months and the supplier has to maintain a certain stock and a certain quality. That creates sustainability in your relationship.

Wissam: Yes you actually did your homework, you checked out the supplier, you had a blind tasting selection. At the end of the day I want to sell something because it’s good.

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How can purchasing managers ensure they add value while saving money?

Bhanu: For the CEO, it’s important that the purchasing manager adds value to the business and so helps the end customer. How much value do you add to the business? It’s about specifically linking procurement to what the company wants to achieve.

It’s not just about saving money, it’s about what your end-customer is getting: the food in the restaurants, the towels in the rooms. So it’s about building long term partnerships with suppliers. Even in the same hotel group, purchasing managers are all working differently.

For example, if any hotel came and said “we want to collaborate with Atlantis” then from that point of view, the supplier would also get what they wanted because they would get more business. From how can we get the best possible price we move to how can we get the best value for the business.

Madhu: But it’s not practical because each brand has their own view and they don’t want to share their things with other companies. That’s how some groups are doing it but if all the hoteliers in Dubai got together and said “I’m only going to buy from one supplier”, it’s not practical.

Wissam: But you don’t compete on what you buy. It makes sense to share information. For example if we send a car to Atlantis, and it stops by other hotels, what difference does it make to stop at more than one of them?

Bhanu: There are companies emerging in Dubai that are logistics companies. For example, it doesn’t make any logical sense that if a company is working in Dubai Investment Park (DIP) and is bringing six suppliers’ goods to our business — all six are coming on the same day and all six are coming from the same place.

So think about a scenario if DIP became a common where all the business is coming from, but each supplier needs a separate truck.

What if they consolidate their requirements and do one delivery for you? And that can be done from a logistics company.

Ultimately it will save traffic on the road; The Palm is having more hotels open up and it’s choking. So it’s just about putting this idea on the table — currently we have more than 100 trucks coming every day, what if just 10 trucks come?

Madhu: I fully agree but that’s happening on a different level because they are still appointing 10 or 15 suppliers but they are appointing one company to do the logistics for them — it’s a third party. Yes it will reduce traffic but it won’t reduce your costs.

Bhanu: I’m just saying if you put the idea on the table something practical will come out of it.