MONEY MATTERS: THE POWER OF PROACTIVE SPEND MANAGEMENT
Operators of senior living communities constantly balance delivering exceptional services with maintaining financial stability. Whether it’s in healthcare services or foodservice operations, keeping a close eye on spending can have a big impact on the bottom line.
Understanding Proactive Spend Management
One way to improve financial practices is through proactive business spend management. This involves actively managing expenses across an organization to optimize efficiency, control costs, and enhance the quality of products and services. It encompasses establishing strategic purchasing practices, fostering partnerships with suppliers and vendors, and creating purchasing formularies. By embracing proactive spend management tactics, senior living organizations can improve resident satisfaction, streamline operations, and achieve long-term financial sustainability.
Putting Proactive Spend Management into Practice in Foodservice
Building relationships with suppliers, vendors and Group Purchasing Organizations (GPOs) provides the foundation of spend management. Collaborating with GPOs and suppliers offers several advantages, including access to a broader range of products, competitive pricing and industry expertise. These partnerships enable senior living communities to benefit from economies of scale, reduce administrative burdens, and ensure the availability of quality products and services.
Formularies also play a pivotal role in proactive spend management. A formulary is a pre-approved list of products and services that meet specific quality, cost-effectiveness, and resident preference criteria. By establishing a formulary, senior living communities can ensure consistent purchasing practices, standardize offerings, and streamline decision-making processes throughout the operation. Two types of formularies that help with business spend management apply to foodservice operations.
Formulary 1: Cross Utilization of Key Products
A product formulary that promotes cross-utilization of key products maximizes their usage and reduces waste. To create this formulary, operators of foodservice at senior living communities first identify versatile ingredients that are used in multiple menu items, such as fresh vegetables, grains, and proteins. Using this formulary optimizes inventory and spend management, ensuring consistent availability of products while reducing the need for excess inventory, which leads to cost savings through improved product management and reduced waste.
Partnering with preferred vendors who offer these key products brings an added benefit of negotiating favorable pricing agreements and ensuring a reliable supply chain. Ingredient and product formularies allow chefs and kitchen staff to create diverse and appealing menu options while maximizing the utilization of ingredients, resulting in an improved dining experience for residents and cost savings for the operation.
This approach is not only cost effective, it’s also environmentally friendly. By reducing food waste and promoting responsible consumption, senior living communities can deliver a wide variety of high-quality meals while minimizing costs and promoting a more environmentally friendly, sustainable approach to food management.
Formulary 2: Kitchen Equipment Standardization
Operators of senior living foodservice facilities can also practice business spend management by establishing a formulary for kitchen equipment. First evaluate different suppliers and their offerings to identify standardized, durable, and energy-efficient equipment that aligns with operational needs and budget considerations. Use this list to create a formulary for kitchen equipment, which ensures consistency across facilities, simplifies maintenance and repair processes, and potentially secures volume discounts from preferred suppliers.
The equipment formulary may include commercial-grade ovens, refrigeration units, and dishwashers that meet specific efficiency and safety standards. Investing in high-quality, standardized equipment, leads to cost savings through improved productivity and efficiencies as well as reduced energy consumption. This translates into smoother meal preparation and service, ultimately enhancing the overall resident experience.
When done consistently and effectively, proactive spend management is a powerful tool that allows senior living operators to deliver exceptional resident experiences while helping to manage ever-tightening margins. Building partnerships with suppliers, utilizing formularies and making these practices a focus of daily execution allows organizations to optimize operations, control costs, and enhance the daily lives of residents. Prioritizing proactive spend management helps communities achieve their financial goals while providing the best possible care and services to those they serve.
Need a hand?
Contact Boelter for help in creating your business spend management strategy. Our experts have wide-ranging experience in sourcing foodservice equipment and can help ensure you get top-quality products at the best prices to fill out your equipment formulary.
Connect with Trestle Hospitality for additional operational tips.
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Contributed by:
Aaron Fish
Founder & CEO
Trestle Hospitality