Event Review: Hotelier Procurement Summit
Key issues, challenges and opportunities discussed at The Ritz-Carlton DIFC
The Ritz-Carlton DIFC was the gathering place for more than 100 purchasing professionals on November 4, who came from across the region to debate and discuss the key issues, challenges and opportunities in the purchasing landscape at the second Hotelier Middle East Procurement Summit
Creating more efficient purchasing processes in the Middle East will be crucial going forward as more and more supply comes online each month.
The latest STR Global Construction Pipeline Report revealed that there are currently 646 hotels under contract in the Middle East/Africa region totalling 151,579 rooms, and so the role of leadership in procurement decisions, and leveraging strong resources and investment power will be vital to meeting the requirements of this pipeline, as well as the many more hotels set to be signed in the next five years.
The challenges and opportunities facing the region’s purchasing managers were debated in depth during the one-day Hotelier Middle East Procurement Summit on November 4, with a range of panel discussions, case studies and presentations from experts in the industry, which resulted in heated debates and plenty of audience contribution.
In the first panel discussion, delegates contested how best the work of procurement managers should be highlighted in order to empower them further as purchasing decision-makers on behalf of the company, thereby increasing efficiency. Moderated by Wissam El Cheikh Hassan, managing partner, Provident Solutions Ltd., the panel featured three purchasing managers from hotels across the GCC.
These were Madhu Gopal, director of procurement, Anantara Hotels & Resorts, Abu Dhabi, Mohamed Baloch, central purchasing manager, Shangri-La Hotels UAE, Sarfaraz Bashir, officer — supply-chain & logistics, Jumeirah Group and Katie Kuuskler, an independent procurement specialist.
While some of the panellists and audience members said that recognition of the work of a procurement manager is the responsibility of the GM, others disputed that it was up to the procurement manager to make him or herself noticed.
“It’s up to how management wants to define purchasing,” said Gopal. “Changes should come from top management to identify the work that a purchasing manager does and what the process is. It shouldn’t come from the bottom up.”
On the other hand, Bashir argued that recognising the work of the purchasing department is a two-way responsibility.
“The GM and purchasing manager need to work together to educate other departments. There are many things involved but I think managers are starting to put the spotlight on us now. In the last 10 years the purchasing department has become more important,” he said.
According to Baloch, it is up to the finance department to put purchasing managers forward to present in front of GMs.
He commented: “Communication is one of our key skills; this is what we use to negotiate and that’s how we present to clients. So we should be allowed to present to management.”
Audience member Zehra Masood, purchasing manager at The H Dubai, argued that it is purely up to staff in the department to make themselves noticed. “I think it’s very important for us to empower ourselves. Even if we are not given due credit it’s very important to self-invite,” she commented, a sentiment echoed by Kuuskler from the panel.
Kuuskler commented: “It’s up to purchasing managers to make themselves heard. You’re already doing the job so go for it!”
One of the liveliest sessions of the day revolved around the relationship between finance and procurement departments. The panel revealed that purchasing managers not only feel undervalued by general managers, but they also have strong views about the ways that purchasing and finance departments should work together.
In the session, moderated by Orsini SPI and Direct Hotel Supplies director Manesh Balani, the question was put forward about whether procurement and finance should be integrated, and if procurement needs to report to finance.
“Your knowledge about your area, even your CEO cannot compete with that,” said InterContinental Dubai Marina director of procurement, Pushpa Nair.
“When it comes to your area, you are the CEO of your position. You know the products better than anyone else. So why do you have a channel for reporting, when you can report directly? Your area is as important as any other.”
One of the main gripes raised was the idea that finance often overshadows procurement, both in terms of taking credit for successes, and also when it comes to paying vendors on time.
“With the standard uniform accounting system, which everyone does, it [would be] nice for procurement to have our own slot and to show exactly what we contribute to the bottom line,” suggested Baloch.
However, a voice of dissent came from the audience, in the form of Jumeirah at Etihad Towers Abu Dhabi director of finance Stephanie Timsit, who argued that special credit shouldn’t be given to any BOH staff.
“It’s not a question of ego. In the P&L is there anything that says Stephanie has done a good job? No,” she said.
“Do I really think procurement should have a line saying they’ve made savings in a certain category? No. All of us in back office are doing a good job. Do I have to prove that reservations is doing a good job? Not really. Because people are coming there. Do I have to prove that sales can do their job? Yes.
“I’m just here to guide them, not do their job or take their thunder. If you are working as a team, finance and purchasing becomes one team.”
Another sore point was the lack of understanding by finance of what procurement is looking for, and especially the fact that cheaper is not always better.
“[Finance] are masters in their area but when it comes to procurement sometimes they just look at the price tag,” said Nair.
“For us as procurement guys, [it’s not about] price alone, it’s about the value added, the support you get. Finance refuse to look at that. They insist on [the cheapest].”
Baloch added: “If I’m talking to a vendor, I have the experience to read things finance don’t understand.
“But when I am trying to explain that in the same way to finance, they don’t want to listen to it. Sometimes you just give up.”
Nair moderated a panel discussion on another contentious issue, which looked at business ethics and best practice in purchasing.
The panellists commented that suggestions about bribery being rife among procurement managers in hotels is unfair, with professionals calling for more attention to be paid to the actions of suppliers and other hotel staff.
Fairmont Dubai purchasing manager Jean Manuel said: “In each [hotel] there should be a strong policy on bribery. And it should not only be for procurement.
“It should be for the whole organisation because it is always implied on procurement, which is really very unfair.”
Nair had begun the panel on business ethics by citing the Hotelier Middle East Supplier Survey, conducted earlier this year, in which 55% of respondents said that they had been asked to offer a monetary bribe, while 72.6% of participants said they knew of other supply firms that were using bribes.
El Cheikh Hassan, speaking from the audience, insisted that everyone in the industry — from both hotels and suppliers — had “horror stories” about bribery, and that these were gathered either through first-hand experiences, or from their peers. “I have never seen an example — apart from one — where someone is fired [for bribery],” he said.
“The best way to get rid of this problem is to make an example of someone.”
In the same session, some of the expert panellists also shared best practices to ensure fairness in the procurement process.
“We don’t allow any supplier anywhere near the hotel,” said Damac Hotels Management director of procurement — hospitality Ajaz Wani.
“I have no one in procurement sitting in the hotel. So all the interaction has to be with someone sitting in the corporate office.”
HotelEquip Consultants International Head of Delivery Sarry Jouzy detailed how suppliers should have to meet pre-qualification criteria in order to do business with a hotel.
“Our job is to make sure we have competitive procurement, and that there is transparency. We invest a lot of time in giving suppliers feedback.
“That’s really important to try and engender fairness and make suppliers feel like this is a company with which, if they stay and work hard enough, they will have a chance.”
Next year’s Hotelier Middle East Procurement Summit is scheduled for November 3 in Dubai.