Five Ways PSOs Make Purchasing Easier

Hoteliers know that their guests won’t be satisfied with a marginal quality steak – or inferior-grade vegetables, low-quality waffles, or any unsatisfactory meal presented to them.

Sourcing high-quality, well-priced food from reliable vendors is challenging for today’s hoteliers. It’s complex. It’s time-consuming. It doesn’t allow hoteliers to win financially, achieve operational independence, or concentrate on delivering an unrivaled guest experience and increasing customer satisfaction.

It’s time to move that marginal steak to another plate.

Selecting the right vendors and food products that will meet and exceed guest expectations can involve navigating an overwhelming maze of companies and considerations, but there is a smart solution in the hospitality marketplace to simplify the process – tapping into the expertise of a Purchasing Services Organization (PSO).

Pam Brackins, the Director of Finance for Oak Tenn Lodging, Inc., which oversees five Tennessee properties, appreciates the challenges of cost-control, sourcing high-quality food and beverage items, and bolstering her own professional productivity. A trusted food and beverage vendor suggested she seek the assistance of a PSO for a comprehensive suite of procurement solutions. Ready for a revamped plan of action, Brackins signed on with one in April 2015, and she was quickly astounded by the results.

“I was previously doing all the purchasing on my own because I was unaware that a viable alternative was out there with such impressive access to vendors nationwide,” explained Brackins. “My goals were to ensure the acquisition of first-rate products and save money, and I swiftly realized savings of thousands of dollars by the end of the first quarter.”


The Modern-Day PSO

Group purchasing organizations are old news. Modern-day purchasing services organizations have emerged as multi-dimensional companies that successfully:

  • Manage group purchasing by negotiating contracts with national and regional manufacturers and distributors (spanning hundreds of companies across thousands of popular branded food, beverage and supply products)
  • Ensure quality assurance by doing product testing, research and performance reviews
  • Safeguard purchasing control by auditing prices, verifying compliance instantly, and outlining savings opportunities 

Here’s how these full-service organizations can add some ease and convenience back into the life of today’s hoteliers.

# 1 – Let’s Talk Money Savings

Money savings are crucial. Hoteliers can allocate those “found funds” to other aspects of enhancing the guest experience. When partnerships align with a hotel company’s business needs and produce positive, visible results on the bottom line, then it’s a win-win situation.

Brackins experienced nearly $3,000 in rebates alone (on top of the lower discount price) from a single food vendor in the first quarter. Andy Laubscher, Corporate Director of Food & Beverage for Cooper Hotels (encompassing 21 properties across the U.S.), sees a total savings of approximately 7-10% - equating to $250,000 a year.


#2 – Harness the Power of Buying Volume

A PSO, such as Source1 Purchasing, standardizes, consolidates and leverages buying volume so hotel companies can purchase smarter and obtain the products they desire at the best prices, through their preferred choice of supplier.  It eliminates the need for hoteliers to lock-in to a price or source local bids.

“The most important aspect of the program, in addition to cost savings, is that if I need some items, I simply contact my PSO customer sales representative with the information, and in a timely fashion, I receive price quotes so I can make quick, yet educated, purchasing decisions,” shared Brackins. “I remain in awe at how seamless the entire process is from start to finish.”


#3 – Set Brand Standards & Take Back Control

Guest expectations are high – and they need to be consistently met – to build customer satisfaction and foster company growth. PSOs guide hotels with setting brand standards by identifying products for purchase that are consistent with the brand and will build quality. Once these standards are set, all locations are asked to comply, leading to more consistent product delivery to the guest and very often, positive bottom line impact.  

The core food and beverage items are the same for the 21 U.S. properties in the Cooper Hotels’ portfolio, but there are individual product preferences across different brands within the group. “From the savings reports generated by a PSO, I can see that our hotels [which do individual purchasing] are compliant to the standard specs we’ve outlined,” noted Laubscher.

Tightening-up the purchasing benchmarks for top-quality goods, and fostering product uniformity to meet guest expectations, makes smart business sense. Setting brand standards means fully embracing the potential of revenue generation, efficiency and control.

#4 – Examine Purchasing History to Shape the Future

Working tirelessly on your behalf, a purchasing services organization can help analyze a hotel’s product and service requirements, determine enhanced efficiencies and opportunities, and recommend the best fit for the most value. Whether dealing with a boutique hotel, a mid-size chain or a large brand, these companies generally offer different levels of programming to fit a company’s individual needs.

According to Brackins, “The product match reports we receive from our PSO show what items we could switch to in order to save more on our weekly invoices. They come to us with these suggestions, which is great because I don’t have to focus on doing the research. We almost always switch to every suggested item on the report, and we’re confident that quality never suffers in the process.”


#5 – Reports as a Reference Tool

A PSO procurement solution allows hoteliers to see the “big picture” so they can ultimately improve purchasing performance. Manufacturer rebates and growth allowances are tracked and verified. Through item tracking systems, PSOs verify that distributors act in compliance with locked-in manufacturer costs. Comprehensive, customized management reports allow an organization to take advantage of opportunities and source the most effective product. This gives clients control (to consolidate purchases and adjust accordingly) and a competitive edge (by continuously evaluating programs).


Cultivating Client Value

“Partnering with a Purchasing Services Organization has tremendously impacted our bottom line, and the benefits were visible to me by the second quarter we started working with one,” said Laubscher. “It has been three years since we embarked on this partnership, and the rewards of cost-savings and time-savings have been worthwhile.”

Brackins concurs. “Now, myself and company management can concentrate on other aspects of running our hotel operation, particularly ensuring improved quality and an elevated guest experience.”