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Source1 Purchasing’s Scott Hoffmire
Purchasing group helps operators get the best value for their money by appealing to customer preferences, satisfaction as well as price
“A purchasing partner can help hotels save money while maintaining quality in the products they use. The cost of food, supplies and equipment can account for 50 percent (or more) of a property’s annual budget,” according to Scott Hoffmire, president & CEO at Source1 Purchasing. “A purchasing services organization can help make sure hoteliers get the best value for money,” he said.
Hoffmire founded Source1 in 1997 with a basic principle: Centralized purchasing offers more opportunities for businesses than decentralized. “There were a lot of independent operators who were buying different levels of quality” from a wide range of suppliers, he recalled. His goal was to establish standards and work with brands already familiar to consumers rather than those geared exclusively for business use.
“That familiarity to consumers was crucial to the company’s success,” he said, “because hotels took guest feedback into account when purchasing food or other items. There were a lot of big brands coming from the retail segment-Kraft, Dannon, Hormel, Nestle-that wanted a foothold into foodservice and hospitality,” he recalled. The question, then, was how would those brands translate to a restaurant’s menu?
The answer, it turned out, was “very well,” with brands familiar from retail shelves becoming commonplace on menus and in hotel guestrooms. “Centralized purchasing and standards-based purchasing was about helping to bring quality and consistency into the purchasing arena by looking at ingredients, recipes and menus,” Hoffmire said. “We work with the operators and help them understand consumer needs and how to align products and service to present the most optimized selection.”
BUILDING A NETWORK
Back in the 1970s, Hoffmire spent a summer at Cornell University as a purchasing manager for the university’s dining program. ”A few years later, I became the director of operations for a large management company that ran hotel, retail and education operations. As I ran the culinary side of these operations-and it was large, 25,000 meals per day-we started to see that there were variables in quality. Some operators would chase price by lowering quality, but they lost customer satisfaction. You can’t lower quality,” he emphasized. “It’s a requirement for satisfaction.” Hoffmire decided to start focusing on customer preferences rather than looking for the lowest bid, and asked customers what brands made them feel safe.
From there, he began looking at each unit’s operational needs. Did this kitchen need organic produce? Did that one need to prepare meals quickly? How large was each kitchen and what was their capacity for workspace and storage? “The ingredients were identified, and we worked with manufacturers to build recipes and menus,” he said. The basic process of using price as determining factor became a dynamic process. ”And the outcome was beyond expectations. We had consistency and high satisfaction.”
Even with his experience and proven results, creating Source1 Purchasing was still a challenge, Hoffmire said, and the biggest challenge was convincing people to see centralized purchasing as a legitimate industry with tangible rewards for customers. “There’s that determination to do it yourself and negotiate with vendors and pit vendors against one another,” he said. “Our challenge is to demonstrate for operators that this knife fight usually doesn’t result in the best outcomes. Because we work with large leveraged companies and pre-negotiated pricing and levels of efficiency, we know that fighting isn’t beneficial. You can get a more efficient supply chain by being a participant in a large buying group. Do-it-yourself is just a barrier.”
The business, Hoffmire continued, was built on the idea of operators serving the operators who run operations. “We know the pressure to manage guest the experience,” he said. To that end, Source1 Purchasing has built several platforms to offer support and education for its customers and partners. “My goal is to have operators see that we’re the best way to advance, whether it’s through advisory boards or helping operators work together. We’re empowering operators.”
To view the Hotel Management article, please click here.
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