Procurement is the backbone of a hotel
Hotelier India speaks to Nitin Nagrale, General Secretary for Hospitality Purchasing Managers Forum and Director of Procurement at Sofitel Mumbai BKC about his efforts to bring together the community of hotel procurement managers and to better their lot.
What are some of the main challenges procurement managers face?
Nagrale: They face a challenge of the products not being specified by the user departments. This is a challenge because unless the manager is an expert, experienced manager, he won’t be able to be ready to offer the right products.
Another one is that suppliers go to different hotels with different prices; it all depends on the relationship between the organisation and the supplier, the goodwill and credibility of the organisation, and the pricing which will vary.
If the procurement manager does not use his negotiating skills and relationship management intelligently, he will lose out on the right price.
Next is the availability of good quality fabricated products in India, there are potential vendors but they need to be guided and the forum will groom them to follow that path.
Several times, we get last minute requirements which becomes a sore point for us because it means we have to go ahead and just buy.
The research, the analysis, cost calculation and cost engineering may not happen for those products but then our industry is such that we have to be prepared for such last minute requirements.
To tackle such situations is to have annual contracts, fixed rates and standing orders for products which are normally used. This forum will ensure that all of us are connected to each other, so we can approach each other for special requests.
Could you name a few of the top trends in the market?
Nagrale: We are trying to move towards paperless technology, towards ecommerce, towards web procurement and we put our purchasing orders which we make on the system itself and they go to the vendor directly, we don’t have to take a printout.
The supplier supplies and it is routed through the system. There are several such software, which have been developed. One of them is Market Boomer, which was launched in UAE, and it allows purchasing managers to get into the details of every step of the manufacturing of the product, which is a fantastic trend.
Another change that is happening in the last four or five years is that we are moving away from isolation and coming together to talk about new substitutes and new vendors, etc.
Then there is the green initiative, we are very particular to be eco-friendly, we do not use things that have been banned by the government, we have specific norms and we follow government regulations.
What are the top ten things to be aware of during the procurement process?
Nagrale: A successful procurement manager needs to know his job well. He needs to know sources for products, alternatives for products, etc. Ours is a profession where people’s perception is that our job is really easy.
A lot of purchasing managers use a technique called the Beggar’s Technique but the intelligent managers do a cost breakdown negotiation techniques and a cost analysis, and this is what managers do to grow in their jobs.
With regard to HPMF (Hospitality Procurement Managers Forum), this is the first time an organisation like this has been formed in India. What are the benchmarks you hope to set?
Nagrale: First of all, HPMS is a forum of Purchasing Managers in hospitality. The procurement department is always treated as a back office, as the backbone of the hotel but it never receives any recognition.
So all of us Purchasing managers decided to get together and ensure that we should get a certain level of acceptance and respect and recognition that is due to us, is obtained. The first benchmark is creating an awareness of our department, because although we support operations, we have never been included in the operations department.
The second one is that we’re trying to create an awareness of this forum, to bring in those local suppliers who have the potential to serve many other hotels instead of just one hotel.
Through this we ensure that the local community also gets business. We will also ensure that the training and development of the purchasing managers is done to an extent that makes them reach a level to be called professional purchasing managers.
We are trying to raise the level of expertise of purchasing managers.
What are the criteria for joining this forum?
Nagrale: One has to be from the hospitality industry and has to have a purchasing manager’s background, and should be an assistant manager or above.
This forum is not yet open to executives or assistants, or people below because we’re trying to groom the managers and raise the levels of expertise within them. Down the line, we will open the forum to all in the next two years.
What are the tie-ups HPMF has with similar international associations?
Nagrale: We don’t have any at the moment but we are planning this in the near future with several international associations such as the American Purchasing Association, which is 96 years old and the Sourcing and Purchasing Club in Vietnam, etc.
What are the plans to include smaller, independently managed producers?
Nagrale: This forum is all about that, it is one of our core objectives, development of local potential vendors. During our bi-monthly or quarterly meetings, these vendors would make presentations to showcase their products to the purchasing managers, and then the managers would be requested to have a one on one with them.
Through this we will have employment for the local community and we are developing a vendor who would one day meet world class mandates. In fact through this he would also do a lot of CSR activity.
We are talking to a couple of organisations like the Cancer Patients Association so that it would serve the people at that level. Through this forum we want to actually help people.
What are the government policies affecting procurement managers? Apparently alcohol is among the toughest concerns…
Nagrale: Government policy is one aspect that is a completely technical aspect because the government makes notification and rules, which we have no option but to follow.
Duties are part of the game, the government has helped hoteliers because of the foreign exchange earnings, we are able to get duty free wines, we are able to get products on EPCG (Export Promotion of Capital Goods) license, all of this helps the purchaser, in fact the sales tax changed to VAT and that made our life easier.
It’s easy for anyone now to calculate the VAT, and to arrive at the total value of the cost. That makes our profit and loss statement easy to understand. These are the guidelines that the government wants us to follow, and we find it makes things easier.