Q: How does Avendra show new customers where they will find savings?
A: Avendra conducts price comparisons to provide new and prospective customers with an analysis of the prices they currently pay vs. the prices they would pay for matching items if they leveraged Avendra’s contracts. In addition to food and beverage, we are able to compare prices on a wide range of categories such as smallwares, rooms supplies, engineering supplies and more.
We begin by collecting a customer’s purchasing data, including specifications, quantities and freight. We then enter the data into our proprietary item matching engine, which uses tight specifications to match up items amongst varying manufacturers and distributors. We analyze the items the customer spends most on—we find the equivalent Avendra-contracted product and compare their prices. Savings shown on these items will have the biggest impact on the customer’s budget. In order to ensure our price comparisons are accurate, we pay close attention to product specifications to ensure we are not matching items of varying quality. In 2013 we conducted 97 cost comparison projects and showed an average of 11% savings across a variety of segments (e.g. luxury, full service, limited service, golf, gaming, etc.) and categories (food and non-food).
Q: What are some examples of bad pricing comparisons and how do you identify them?
A: It is important to know what to look for when you receive a price comparison. In many cases, we’ve seen comparisons that pair the customer’s purchases with items of lower quality. For example, a bad price comparison would be to “show savings” by recommending that high-quality bacon flavored with natural wood smoke be replaced by low-quality bacon flavored with a liquid. Avendra does not engage in this kind of analysis manipulation, but instead matches each product as closely as possible.
For a price comparison to paint an accurate savings picture, savings must be properly weighted according to a customer’s spend habits and history. Some pricing analyses may exploit the opportunity to pick and choose items that would make savings appear much greater than reality. Avendra insists on studying top purchases together to avoid this pitfall—the savings we demonstrate are an accurate and holistic picture of the impact our contracts would have on an entire budget.
In some cases, another indicator of mismatched items is an abnormally large price variance. When that occurs, we look at the products in question to see if anything went missing during the comparison. Often we consult with one of our 60 internal product/category experts who help identify errors and correct the analysis.
Q: How do you help Avendra stay competitive?
A: I research cost comparison results and compile the findings to help make recommendations that will improve Avendra’s contracts. I analyze results by category, focusing on high volume categories that are most meaningful to our customers in order to ensure savings trends are on target. For example, if I notice that in the first period we showed an average of 10% savings on fluid dairy, but in the second period we only showed 7%, I investigate the change and seek to solve the problem with the help of Avendra’s dairy experts. I work closely with Avendra’s Strategic Contracting team to help enhance existing contracts or create new ones based on what I find in the analyses.
Q: What are some examples of changes Avendra has implemented thanks to your research?
A: I have helped implement changes to the pricing structure of the products our customers buy most often. For example, some contracts use bracketed freight which gives the largest discounts to distributors for buying a full truckload of product from a manufacturer. For products with limited shelf life such as yogurt, it’s hard for smaller distributors to purchase a full truckload as they may not be able to use the product before it expires. Our customers tend to buy smaller quantities of these items for the same reason. To accommodate these situations, we renegotiated a different freight structure for yogurt so both smaller and larger distributors can take advantage of favorable freight rates. In turn, we can offer the best price to all of our customers.
In addition, I have helped add new products to existing contracts. When reviewing customers’ spend data, we look for frequently purchased items that are not under contract. When we find items that exist outside our contracts’ savings structures, I work with our Strategic Contracting team to add these products so that our customers have access to more advantageous contracting terms.
Q: Are there additional ways you help customers reduce their costs?
A: Along with our Customer Care team, I help customers meet their unique goals and appreciate more savings. We provide advice and reports on alternative products that will help customers take full advantage of our contracts. By considering things like usage, cost of food, yield, freight, and brand standards, we are able to help our customers reduce costs and improve efficiencies in the kitchen. We also provide reports and advice in other areas such as room operations, engineering, cleaning chemicals and many other purchasing programs. We do similar analyses in these areas as well, and many of our recommendations directly impact our customer’s bottom line.
These are just a few examples of how Avendra helps hotel operators reduce costs and optimize purchases. For more information, Avendra customers can login to myAvendra.comand search for cost savings solutions, review custom reporting tools for cost saving suggestions, or contact CustomerService@avendra.com. Those interested in becoming Avendra customers can fill out our Prospective Customer Request form, and an Avendra representative will be in touch to discuss your unique needs.