Whitbread avoids price hikes with e-auction

The UK's largest hotel and restaurant company, Whitbread today confirmed its latest e-auction enabled it to avoid paying a 16 per cent price hike for a key commodity potatoes.

The firm used the auction to manage bidding from four international companies to provide it with potato wedges, mashed potato and chips for its 500 UK Premier Inn Hotels and Whitbread restaurants in the coming year, which cater for over 100,000 people a week.

By avoiding a 16 per cent price increase, the brand owner of Beefeater, Table Table, Brewers Fayre, Taybarn, Costa Coffee and Premier Inn, said it had saved the equivalent of nearly 400,000 per year.

Traditionally, the procurement process could take almost a week to complete as companies bid and negotiate on price.

But, using Oracle Sourcing software and the hosted platform of spend management provider and member of the Oracle Partner Network eThree, Whitbread was able to receive 60 bids from the four vendors and complete the entire process within an hour.

Whitbread was able to remove itself from the negotiations by setting the parameters for the bidders and allowing the prospective vendors to evaluate the criteria, then submit bids, which were ranked. The participating suppliers could quickly see if their bid had slipped in the ranking and therefore whether they needed to re-enter their bid.

"We are delighted with the outcome of this e-auction, because it vindicates our belief that such technology can delivery significant value to the bottom line for our business," said Paul Farrow, Whitbread's head of procurement.

"With commodity prices rising significantly the pressure on margins for the hospitality industry is immense, so we're particularly pleased to be able to mitigate such substantial cost increases through the use of technology."

He added that that e-auction technology would help Whitbread to stay ahead of the competition by managing costs more efficiently and enabling it to continue to pass value onto its customers.