Shoot for PAR
Jon Sholter - June 9
Today in less than 5 minutes we are going to cover:
Managing Hotel Supplies Inventory - wait don't go yet, it's not as bad as it sounds!
Seems like too many hotel operators think it's best to shoot for below PAR when it comes to hotel inventory levels, but they forget, not everything is about golf.
For those who don't know what I am talking about, I'm writing an exciting article regarding hotel supply inventory and the popular acronym of PAR (Per Available Room). Now not every hotel supply item can be gauged using PAR, but the logic remains the same.
We've all worked in the hotel that does not have enough sheets to turn over their rooms, runs out of some breakfast item or worse yet, toilet paper. Who else has received a call from a fellow hotel operator asking if they can borrow a box of something on a regular basis? When are they going to learn?
Now hotels in extreme cash flow situations or in the midst of a asset transaction are exempt from the following, however, for most others please keep reading.
As operators we can sometimes confuse having extra inventory as an 'additional' expense rather than just an 'expense'. We think if we minimize our order sizes of non perishable inventory we are some how saving our hotel money. However, in many cases (no pun intended) we need to view extra inventory not as an additional expense, rather a fixed expense requiring an upfront payment. Let's look at linen inventory as an example.
"But we can't afford to get our linen to the proper PAR level, it's not in the budget".
Says the typical hotel operator with not enough linen. Who also has housekeepers running everywhere trying to find sheets. Stealing sheets from their fellow housekeeper's cart when they aren't looking. Putting stained sheets on beds because they know there aren't any other clean ones. Managers literally in the laundry room washing linen as fast as they can because they have to turn around their hotel in a busy time. We just can't keep housekeepers, no one wants to work anymore this operator says....
Get the point?
Throughout the years, you are naturally going to discard linen. Inventory will continue to go down and PAR levels will need to be replenished. So when you continually invest to maintain the proper PAR level, you are not spending extra money that the hotel beside you isn't, you're spending money you will eventually spend anyway. Meaning, the more linen you buy, the longer your linen will last. Better yet, the more you maintain the proper PAR the more money will flow to your bottom line through the opposite benefits associated with the negative's mentioned in the example above.
This same logic can be passed to other inventory items too, such as, room supplies that do not expire, chemicals that do not expire, so on and so forth.
Create a 'PAR' level for most of your non perishable supplies and order up to that level every month. Ensuring you have enough supply to get through the unexpected.
Make sure you cycle through inventory properly, first in, first out.
Make sure you have proper storage to adequately maintain and processes in place to prevent theft.
Less frequent ordering and inventory which saves on labour.
Less frequent stress of running out of materials which causes additional labour, energy and potentially impacts guest experience.
More Team Member satisfaction and efficiency, because the consequences are not passed down to them.
Perishable items cannot be treated in the exact same way and have more to do with ongoing occupancy.
If your property has issues of theft, controls need to be tightened and other obvious measures need to be put in place.
Changing brand standards or a planned product switch would of course alter your purchasing decisions.
There is such thing as too much inventory. You should not have three months of toilet paper sitting in storage (well, unless there's a zombie apocalypse or even worse, a Covid apocalypse... who knew).
If you've made it this far, congratulations! Now go out and spend some money you were going to spend anyways.