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Power of Purchase: Procurement challenges in Hyderabad

Procurement professionals of leading hotel brands in Hyderabad gathered at the 38th edition of EF&H Expo to speak on the challenges associated with procurement of materials in the metro city of Hyderabad
By EF&H Staff Hyderabad

The second day of the EF&H Expo Hyderabad 2019 saw a panel discussion on Procurement challenges in Hyderabad. The panelists were procurement experts of hotels including K L Narsimha Reddy, materials manager, Novotel Hyderabad Airport; Ankit Sureka, assistant financial controller, ITC Kohenur, Hyderabad; Satyanarayana O, purchase executive, ITC Kohenur; Venkanna Bandaru, stores & purchase manager, Lemon Tree Premier, Hitec City; Ramana Murthy P V, area materials manager – Telangana & Andhra Pradesh, Taj Krishna, and Karthikeya P, complex purchase manager at Marigold Hotels (Marigold & Green Park Hyderabad), who spoke at length about the many challenges that they face in the city of Hyderabad.

Ramana Murthy P V

Bandaru kickstarted the conversation on the challenges faced by them mentioning that with a lot of hotels coming up, the inventory supply is increasing but that of the materials is not increasing simultaneously. Procurement is hence becoming a challenge. “Procuring onions has become expensive, due to a lot of real estate
projects coming on the farmlands, which has been one of the reasons for decreasing productivity. The rates are also increasing due to low productivity. Even procuring milk is a challenge in the city as there is a lack of dairy farms, so we have to depend on the neighbouring states. The lack of suppliers is a pain point again.”

Logistical infrastructure in the doldrums

Venkanna Bandaru

Reddy agreed with Bandaru and went on to say that the major challenge that he has been facing in the Hyderabad market is the procurement of perishables. “The quality of the mutton is not up to the mark. As compared to procurement in a metro, the hygiene conditions of meat storage and transportation, the quality is lacking in Hyderabad. Getting the produce in temperature-controlled manner is also a problem with substandard logistics. Another big challenge in Hyderabad is price fluctuation. Considering onions or potatoes, there is a lack of governance in pricing and also the disposal of perishables,” he explained.

K L Narsimha Reddy

Satyanarayana agreed pointing out that there is a challenge to import mutton from Jaipur vendors. “In terms of dynamic pricing strategy applied by the vendors, we have a strong arm with the vendors wherein we enter with a year-long contract which has fixed prices irrespective of the market sentiments,” added Surekha.
Karthikeya too agreed with the other panelists and highlighted that maintaining hygiene is a bit of a challenge when it comes to the vendors in the Hyderabad market.

Satyanarayana O

Murthy opined that a major problem is the commitment from the vendor’s side. “The vendor commitment that I have witnessed is the best in Mumbai. Even at times, when market situations are changing, Mumbai vendors are skeptical to approach us. Taj as a brand has always supported the vendors and we believe that it should be a win-win situation for both. We believe in having a long term relation with our vendors and develop them in the meanwhile too.” He added that this year, the market has seen some turbulence in the pricing of various food articles right from vegetables to dairy. “We negotiate on certain items on MRP. Earlier, Gujarat used to supply dairy, but now with an increase in the dairy SKUs, the surplus of milk has gone down significantly. We close the negotiations in February looking forward to the upcoming budget. May onwards, the rates start surging,” he added.

Organic produce procurement

Karthikeya P

Karthikeya feels that the demand for organic produce is good, but cost is a problem which goes up to 60 to 70 per cent more than procuring the conventional non-organic produce. “There is no authenticity in this regard as well. So many are just making business in the name of organic, but it is not,” he believes.
Satyanarayana informed, “We have an organic restaurant now and also have started terrace gardening.” Bandaru feels that organic produce will take some time to penetrate the Hyderabad market. Reddy said that they have learnt about the trend of organic produce consumption and have started growing broccoli, cherry tomatoes and a few more exotic vegetables without using any pesticides and chemicals.

Ankit Sureka

Murthy said that the measure of the harvest of organic as compared to non-organic produce is dramatically less. “We do consider seasonal procurement. The market runs behind the fad, for which, many organic stores opened but didn’t last for long. “Organic produce is good but consistent consumption pattern of the same still needs to be looked at with diligence. If you have to get yield, chemicals must be added,” he concluded.

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