Five themes for hospitality procurement post-Covid

28 April 2021

The hospitality industry must collaborate in its recovery after sustaining “huge structural damage” due to Covid. 

In a white paper, Prestige Purchasing said the challenges currently faced by the food and drink sector were “arguably greater than at any time in living memory”. 

“Before the outbreak of coronavirus, hospitality and its supply chains was the third largest UK employer, and contributed over £150bn to the UK economy. But the Covid-19 pandemic has cost hospitality dearly with an average of over £200m of lost sales every week during 2020,” it said. 

“The sector and its supply partners have sustained huge structural damage, which has weakened balance sheets, and raised the level of risk for all.”

Shaun Allen, Prestige Purchasing CEO, said: “Food and drink supply is entering a period where enhanced collaboration, use of sophisticated data, and leveraging technology will all be critical factors of success. We must be positive and grasp these opportunities fully as we exit the pandemic.” 

David Read, chairman of Prestige Purchasing, commented: “It can be difficult to spot when operator supply chains are sub-optimal, and business leaders are frequently unaware of a significant performance gap. 2021 must surely be the ideal time to tackle avoidable waste, inefficiency and unsustainable ingredients, creating better margin, and strong, enduring and long term supply relationships.”

Prestige Purchasing’s five themes for the hospitality supply chain in the post-Covid era:

1. One value chain

There are now fewer hospitality operators, wholesalers, manufacturers, processors and producers, and those that have survived the pandemic have weaker balance sheets, Prestige said.

“The current value chain operates in silos, with highly limited end-to-end data integration in either direction. More investment in data integration will grow trust, and enable collaboration which in turn will improve responsiveness and resilience, lower cost, lower risk and reduce waste,” it said. 

2. Long-term collaborative relationships

Prestige added many supply contracts often have an “over-focus on competitive leverage, with lowest price as the key criteria for selection”, and added performance measures can often create misaligned incentives. 

“Greater focus on selection of the right partner, with the right mutual incentives for joint improvement, with the aim of a long-term relationship, will yield higher returns.”

3. Smart supply chains

Hospitality supply chains often create low-value-add complexity to menu and ingredient ranging, and operate with sub-optimal sourcing and distribution strategies, Prestige said. 

“These two factors, linked to an under-utilisation of available data and insights, creates inefficiency that can be eliminated, lowering costs and improving service and quality,” it said. 

4. Low waste and sustainability

Prestige said despite progress being made in this area already, food and drink supply chains continue to negatively impact biodiversity, animal welfare, soil degradation, and carbon generation. 

“Post-Covid we must raise the bar on sourcing standards that address these issues, and operationally excite, educate and inform our customers on standards and diet as they impact the environment. We must also renew our efforts to reduce operational and supply chain waste.”

5. Innovation and new product development

Embracing science and technology in the sector could enable better outcomes on each of the key strategies, Prestige said. 

“Tech systems have driven new channels to market for operators, and supply innovation in blockchain and AI. Food tech has created new options for low-carbon eating, and higher quality pre-prepared products,” it said. 

“Supply needs to drive these changes by providing opportunities for innovation to operators in a proactive manner.”

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