A Deep Dive into Procure-to-Pay Technology: What it is and how to unlock ROI

In the challenging world of hospitality, where customer experience and operational efficiency are top of the agenda, taking advantage of technology to streamline processes and control spend is no longer a luxury, it’s a necessity. One such technology is Procure-to-Pay (P2P) platforms like Caternet, which have the potential to transform business operations and boost bottom line profits. In this blog, we will explore what P2P technology is, its significance in the hospitality sector, and it can deliver substantial return on investment (ROI).

What is Procure-to-Pay (P2P)?

Procure-to-Pay is essentially an automated process which encompasses all activities related to the purchasing of goods and services. From ordering stock and purchasing to receiving goods and payment. A P2P system quite simply automates and streamlines the procurement cycle, making it more efficient and transparent for businesses. The five key stages of procurement include:

1. Ordering goods: The procurement process begins when a department identifies a need for goods or services. The order request is created and sent for approval.

2. Purchasing: Once approved, the purchase order (PO) is generated and sent to suppliers. Systems like Caternet widen the network of suppliers for businesses in a live-priced setting, meaning catering teams can purchase goods based on specific criteria such as pricing, quality, locality and past performance.

3. Receipt of goods: Upon delivery, the goods or services are received and verified against the PO, ensuring that the correct items and quantities have been delivered.

4. Invoicing: Suppliers submit invoices, which are matched against the PO and receiving documents to confirm accuracy.

5. Payment: After verification, payments are processed, completing the cycle.

The importance of P2P technology in hospitality

Characteristically, the hospitality industry is known for its complex supply chain, and its constant need for various goods and services. From ordering food and beverages to creating recipes, menu planning, managing equipment and cleaning supplies, implementing P2P technology can offer several benefits tailored specifically to the needs of hospitality businesses:

1. Enhanced efficiency and reduced costs

By automating the procurement process, P2P technology minimises the need for manual data entry and reduces the time spent on admin-heavy tasks. Eliminating the admin burden and freeing up people’s time can result in numerous cost savings, as staff can focus on the core aspects of their role rather than mountains of paperwork. For instance, hotels and catering teams can streamline their ordering processes, ensuring that inventory levels are maintained avoiding wastage from overstocking or running out of ingredients.

2. Improved visibility and cost control

Everything that goes in and out of a business must be accounted for, it is what we like to call a single source of truth. A robust P2P system provides real-time visibility into procurement activities, allowing catering managers to track spending patterns, supplier performance, and inventory levels. This transparency empowers teams to negotiate better contracts, optimise supplier relationships, while also reducing costs.

3. Compliance, allergens and risk management

With built-in compliance checks, P2P technology helps hospitality businesses adhere to procurement policies and regulatory requirements. By standardising procurement processes and maintaining a clear audit trail, catering managers can mitigate the risks associated with fraud and human error. Many P2P systems today can also eliminate the burden of changing allergens legislation and management by automating the process through recipe generation.

4. Supplier relationships

P2P technology fosters improved relationships with suppliers. By providing a centralised platform for communication, hospitality businesses can easily share requirements, receive quotes, and manage contracts all in one place. This can lead to improved service levels, stronger powers of negotiation for catering teams, more competitive pricing, and can even encourage enhanced innovation from suppliers themselves.

Measuring ROI from P2P technology

The ROI of implementing P2P technology like Caternet goes beyond the immediate cost savings. To fully understand the financial benefits, it is helpful for hospitality businesses to consider several key performance indicators (KPIs) such as:

1. Cost reductions and increased bottom line

Measure the reduction in your procurement costs over a period of time. This includes savings made from negotiated supplier contracts, reduced overheads from admin tasks, saving of recruitment costs as a result of happier more productive teams who are less likely to leave, cost savings derived from a wider more competitive supplier network, greater visibility of cost control, reduced spending and wastage.

2. Time savings

Quantify the time you have saved in procurement activities. This might include looking at the hours of time/resource that you’ve been able to redirect into revenue-generating activities and enhanced customer service - ultimately contributing to increased profitability.

3. Process improvement

Evaluate the reduction in your procurement cycle times. A shorter procurement cycle means faster response times and improved inventory management, leading to improved customer experience.

4. Enhanced compliance

Track your compliance rates with your procurement policies. Improved compliance can prevent costly penalties and foster a culture of accountability within your team.

5. Supplier performance

Look at the improvements in your supplier performance metrics, considering aspects such as delivery times, quality of goods, and responsiveness of your suppliers. Stronger supplier relationships can lead to better terms and conditions, once again, increasing overall profitability.

The hospitality industry has always been competitive and adopting a Procure-to-Pay platform like Caternet is a strategic move that can drive significant ROI if managed in the right way. By streamlining procurement processes, enhancing visibility, and developing supplier relationships, catering teams can not only reduce costs but also improve operational efficiency and customer satisfaction. As the industry continues to evolve, those who embrace P2P technology will likely find themselves at a distinct advantage, paving the way for more sustainable growth and long-term success. With that in mind, investing in P2P is not just an operational decision; it’s a strategic initiative that can redefine the future of hospitality and catering management.

‍