Hotels are notoriously complex and challenging businesses to run. Even before the COVID-19 pandemic struck, these crucial tourist industry nodes were subject to a range of fluctuations and factors that determined their viability – from seasonal weather patterns and the buoyancy of economies to the quality of transport infrastructure and reliability of supply chains.
The latter is of particular concern to Milla Helle. As Head of Procurement for fast-growing hotel brand MEININGER, she knows all too well the ins and outs of hospitality supply chains and what makes an effective hotel procurement operation.
But she’s had to learn the hard way, inheriting a setup around four years ago that was far less structured and formalised than what she had at her previous employer, Bombardier Transportation.
“There was no procurement function in place, so all departments could buy whatever they needed, wherever they wanted and with conditions that were not ideal,” Helle recalls. “I was brought in to centralise the procurement, bring in efficiency, strategies and economies of scale and build a structure into the procurement function. “We had to figure out how to centralise in an efficient and best possible way, so we created the policies, processes and tools to support that. We’re still not at the end of this roadmap, as we are constantly trying to improve but we’ve gone a very long way in recent years.
“The MEININGER family is very open to change. From my previous change management experience, I was expecting more opposition and hesitation when making such big organisational changes. In the end, centralizing procurement was affecting all departments and disrupting their old ways of procuring and adding a step into decision making. However, the employees realised that I’m not there to make their lives harder. I’m actually here to take work away from them.”
Gearing up for growth
The first priority for Helle was to observe and support the existing setup, learning what, how and where purchases were being made.
It soon became clear that nurturing a common understanding between different departments of the business would be critical to building a centralised procurement function that could provide value to the organisation.
Indeed, much of Helle’s work to date has involved collaborating with various units of MEININGER, vital given the firm’s ambitions to grow its footprint of hotels.
Today, MEININGER operates 29 sites in 19 European cities, catering to all types of traveller in both business and leisure circles and priding itself on combining the best components of hostels and hotels.
Furnishing new sites is by far the most significant spend category that falls within Helle’s remit. It has revealed both the need to standardise and the challenges associated with standardisation as new markets are opened up.
“We have a different theme for every hotel, which is specific to the local area and that means a different interior design and different products, not only for the rooms but also for the public spaces,” Helle explains. “However, over the past few years we have been standardising a lot while keeping the unique designs – starting with the products we buy and the contracts we sign to enjoy better conditions and higher efficiency.
“For new openings, we always try to bring in the partners that we already have on board. For example, Transgourmet has been providing us with F&B products for many years and have followed us to multiple regions and countries, even to those not in their usual area of business. But setting up a supply base in markets where you have not been before is not only done with cooperating with the current partners.
My team doesn’t consist of for example Italian and French speakers, so we always require close collaboration with the regional teams to make things work, because in certain cases, the suppliers simply don’t speak English.”
To help ease some of the challenges associated with entering France as a new market, Helle turned to an unlikely source – to a competing hotel chain’s procurement organisation, French hospitality veterans with boundless valuable knowledge.
“We were discussing this internally for quite a while, assessing the pros and cons, especially considering any confidential information to be shared,” she says. “But in the end, we realised that there are no secrets behind our procuring and we’re not sharing any information that one couldn’t figure out by staying a night in one of our hotels. So, it was a win-win tap into, and use of, our competition’s supply base. By combining our forces, we increased the total purchasing volume and could reach better conditions for both parties.”
Procurement is about people
As MEININGER has grown its footprint, Helle has naturally had to grow the resources in her procurement team.
There are now four full time employees running the department, a far cry from the one person she found managing part of the contracts when she first joined. He happened to be a founding family member, and his desire to leave the role opened up the opportunity for Helle to build her team from scratch and find the best fitting people.
The key for Helle was to find people who, alongside herself, could assume total responsibility for certain procurement categories.
She adds: “Instead of asking for a Master’s degree and years of experience in procurement, I wanted to find new members to the MEININGER family with this little spark that one needs to bring a new procurement function forward. I needed my team members to really become business partners to the different departments – to talk with them, to collaborate with them, to understand what they need.
“This is really where the magic of procurement lies. There is understandably a lot of talk about tech in this space, but I think the magic is in working with people and working with the different departments, qualitative things that don’t necessarily come out in the data. You can negotiate with the help of data, but you’re a much stronger negotiator when you have an in-depth understanding of the needs of the department and the company.”
According to Helle, mastering this magic has been the greatest challenge but also the greatest achievement to date. It has enabled the team to constantly bring value to the business.
“Once you have found your spot within the organisation you need to question where and what the value is that one can bring,” she continues. “This is a battle that you may also struggle with yourself, because obviously, you realise that some of the things that you do may not actually add value in the end, so you need to rethink the way you and the team works.”
Indeed, to Helle, procurement is all about a constant cycle of reimagining, learning and improving the way purchasing processes are carried out.
It is a non-stop exercise, and one which will continue to evolve at MEININGER as the company grows and matures its offering to guests around Europe.
Looking ahead, standardisation remains a high-priority topic for Helle and her team, the Head of Procurement explaining how the concept of risk management has also come into her focus to help failsafe contracts and supplier relations.
“We now go through different scenarios of what could happen,” she says.
“The pandemic gave us a totally different view, because we were always a hotel chain that had very high room occupancy rates with about 80% to 85% throughout the year as an average.
“We never even thought about what happens if our hotel is empty, and how this would affect our supply base. How do our suppliers survive such pandemics or other crisis situations?
“This is something that we will certainly need to take a look at now that the pandemic is showing signs of slowing. We need to see what the financials look like with the different suppliers, how they are coping, to see how we can work this out together going forward.”
Honing various strands of technology is another key priority for the Head of Procurement.
While Helle is very much a people-centric procurement leader, she realises the immense value digital tools can bring to collaboration and organisational elements of the procurement function. For instance, MEININGER is in the process of integrating procurement into its ERP system in the aim of tying all departments of the business together. This drive is reflective of Helle and her team’s efforts to inspire collaboration throughout the business, something which has not gone unnoticed by her corporate colleagues.
“We were selected for Best Collaboration in 2019 by the company,” Helle says, “so the team has really found its place in the organisation, and the MEININGER family has realised the value that we bring.
“The biggest compliment is that it’s really hard to imagine for us as a department not being there anymore. We have come a long way from selling ourselves every day to actually having people seeking our support and expertise proactively.
“That said, I believe procurement will become even stronger, and that we will have even greater ties to the decision making within the company.”
And as the worst of the pandemic passes, with Helle back from a period of maternity leave, the Head of Procurement is ready to help write the next chapter in MEININGER’s story.