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How hospitality businesses can reap the benefits of finding the hidden value

Over the past few years, the hospitality industry has undergone several unprecedented challenges. From the COVID-19 pandemic and Brexit to labour shortages and rising energy concerns – these challenges have highlighted an urgency for the industry to find innovative strategies to achieve resilience and financial stability.

According to the UK Government’s Autumn Statement for 2023, the hospitality industry is currently facing significant financial pressure. In the last twelve months, there has been a 66% increase in pub and bar insolvencies. On top of this, recent energy cost hikes, interest rate increases, and rising inflation on food and drink are making things even more challenging. To overcome these difficulties and remain competitive, the industry needs to adopt new tactics and focus its efforts on improving its finances, through discovering the hidden value within its supply chain.

In this interview, we speak to Nigel Draper, Founder of Sorsco, a leading service provider in supply chain and procurement, to find out more about the company and delve into the art of mining hidden monies and unlocking untapped potential within supply chains.

Can you tell us more about the supply chain and the role of procurement?

Supply chain and procurement are often overlooked yet critical aspects of any business, especially in the food and beverage industry. Contrary to popular beliefs, supply chain management is not just about acquiring ingredients; it’s about strategically managing resources to ensure long-term success.

An effective supply chain is one that values and drives insight from factors such as supplier relationship management [SRM], cost control, market trends, and evolving consumer habits – with the aim to support both the immediate and long-term needs of the business. Using these measuring points, businesses can make an informed decision within their supply chain to negotiate and unlock the best deals by streamlining and procuring the best services throughout the supply chain.

Under effective supply chain management, businesses can uncover hidden opportunities for growth, cost savings and ultimately strengthen their supply chain in areas which may not have been obvious to businesses.

For example, at Sorsco we recently worked with the Truffle Burger Chain to streamline their supply chain operations. By carefully analysing their network of wholesalers and direct deals, we implemented a strategic sourcing model that optimised product delivery routes and consolidated spending to maximise efficiency and cost-effectiveness. The revised supply chain generated £146,000 in savings, equivalent to a 13% reduction in costs overall.

Through your business background, having worked with different-sized businesses and seeing how things change as businesses grow; can you talk us through how you these different stages and how it impacts a supply chain?

Certainly! As for the stages of business growth, it’s a tumultuous journey, to say the least. It very much a stepped process, especially in the supply chain. It’s a discontinuous process where volume grows, and new opportunities arise.

The initial phase is all about proving your concept and demand. Once there is demand for their products and they can hit their margins, then it’s all about building a broader, bigger business and brand. At this stage, the focus is on establishing the business processes to support greater growth and enable them to scale. This is also the stage where brands will attract investors, having evidenced their growth. So, most businesses will look to raise funds.

Then there’s the breakout stage – which most aim to get to.  This is when businesses look at expansion after proving the business’s worth. But as you grow, challenges evolve. Scaling up brings complexities like supply chain logistics and maintaining quality standards. It’s like navigating a maze; you have to anticipate the twists and turns to come out on top.

The final stage I call the Victory Parade – this is when you have an established brand with a strong national presence.

Which would you say is the most difficult stage?

Each stage has its distinct challenges. I think you will always find that some people are good at starting businesses and growing them initially but may struggle with running a large organisation or vice versa.

Each stage requires specific skills and presents unique difficulties, so it’s hard to pinpoint one as particularly harder than another.

Can established companies still benefit from supply chain and procurement services or is it better to work with companies in the early stages?

As discussed, there are challenges at all levels so all sized businesses at every stage can benefit from an effective procurement strategy and supply chain management.

Whether it’s a budding startup that needs nurturing or fine-tuning the operations of an established brand; there will always be areas for improvement and opportunities to find tailored solutions that drive results.

It’s not about the size of the company; it’s about the passion and dedication to succeed.

What advice would you give the hospitality industry for the year ahead?

I believe that being proactive and staying relevant is crucial. Sustainability, changing consumer trends, and the impact of social media platforms all influence consumer eating habits.
From the viral videos of a melting chocolate bomb pudding to the favourable market positioning and advocacy of the smashed avocado on toast; these emerging trends can catch businesses off guard. Keeping up to date on the latest food craze can prove to be a strategic tool for the hospitality industry.

Similarly, staying versed in the latest regulations, sustainability practices and supply chain concerns is essential for navigating the year ahead. Consumers are increasingly prioritising sustainability and searching out products with minimal, recyclable packaging and favouring businesses which prioritise sustainability commitments. Considering the environmental impact of your supply chain will prove to be a key driver for success in 2024.

In conclusion, I truly believe that success in the food and beverage industry isn’t just about what’s on the menu; it’s about how you manage your resources and adapt to change. With the right strategies and partners, the possibilities are endless.

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