Hoteliers must adapt or die in the wake of the National Living Wage

Nigel Crunden, Business Specialist at Office Depot discusses why hoteliers must drive efficiencies within the supply chain to free up funds for an inflated wage bill.

The implementation of a national living wage, set to come into force in April 2016, has been met with a wave of outcries from UK businesses. Companies will be expected to pay staff £7.20 per hour rising to £9 by 2020.

In the latest of concerns raised, the UK’s largest hospitality company Whitbread, which owns Costa Coffee, also announced it would need to raise prices in order to pay staff a living wage.

The national living wage will soon become a reality for UK firms and in order to manage its potential impact, owners in the hospitality industry need to holistically assess other areas of the business such as procurement, supplier management and staff productivity to drive cost savings and plan ahead.

Many businesses fail to recognise the importance of working with suppliers closely, but by selecting a few key partners, better service levels can be achieved. Look for suppliers that can offer multiple services and goods under one roof as a way to streamline costs to offset against a rise in the minimum wage. Vendors are now expected to have the ability to become more than just a supplier, but act as an extension of their client’s business by providing consultation and bespoke solutions.

Consolidating suppliers has several benefits for business performance. With fewer suppliers on board, the ordering process becomes more straightforward allowing businesses to challenge suppliers to provide further support where needed. By having a smaller roster of suppliers, this reduces complexities within the supply chain and greater control is retained by the business.

As margins are set to become squeezed for businesses with a large contingency of workers being paid the minimum wage, it is those that assess the wider picture and take a health check of current procedures and practices that will come out stronger.

One particular area that companies often overlook is how they can maximise the use of available space and create an adaptable working environment. By removing any unwanted furniture, stock or materials packed away in storage rooms, hospitality businesses can operate more cost-effectively and create a more productive use for the space. Many firms still have stock rooms filled with files, old furniture and outdated technology. In order to free up these areas for a more productive purpose, documents should be scanned and stored electronically via cloud computing, as well as protected by a back-up system to guard against data loss.

Further to this, companies should scrutinise the working environment itself and how it can be used to keep staff motivated. A motivated workforce is a productive one and by offering a working environment in which staff can thrive, productivity levels and output can be increased.

Through focusing on changes that can potentially increase productivity and make cost savings, business owners can address the financial impact of a national living wage. Standing still is no longer an option and it is those companies that look to other areas of the business to plan ahead for a rise in staff costs that will ultimately win the day and move ahead of the competition.

Nigel Crunden, Business specialist at Office Depot

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