Challenges Faced by Procurement Aggregators in India’s Hospitality Sector
How India’s Hospitality Sector Can Solve Its ₹10.7 Trillion Payment Bottleneck.
At a Glance
- How a ₹10.7 trillion payment problem is disrupting hotel and restaurant operations nationwide.
- Why 60% of small vendors fail to deliver what they promised—and how to fix it.
- The three-part strategy that transformed fulfillment rates from 85% to 98%.
- What procurement leaders can learn from Tata Motors, Unilever, and the Taj Group.
- The hidden opportunity in solving India's 'late payment culture' for competitive advantage.
In India's hospitality sector, procurement aggregators face a critical challenge: small vendors frequently fail to deliver promised quantities when payments are delayed. This white paper highlights the scope of this issue and introduces proven solutions that are transforming supply chain reliability.
Here’s how some forward-thinking companies are tackling these challenges to streamline operations and enhance efficiency:
Direct Dealer Engagement in the Battery Sector
Companies like Exide and Amara Raja Batteries have shifted from traditional distributor-led models to direct interactions with dealers, allowing them to offer higher margins. This strategic shift has paid off, with both companies now commanding over 70% of the market share in India’s battery industry. This closer relationship with dealers not only improves margins but also enhances supply chain responsiveness and reliability.
Advanced Contracting and Supplier Engagement
McDonald's and Zomato Hyperpure are deepening their relationships with farmers and suppliers through advanced contracts and engagement strategies.
Predictive analytics is changing supply chains, allowing companies to act before disruptions occur.
- McDonald's provides training, quality seeds, and assured purchase agreements at fair prices, ensuring a steady and reliable supply.
- Both companies employ sophisticated inventory and supply chain management software that offers real-time visibility and predictive analytics on vendor operations.
For example, this technology can forecast potential delivery failures when external factors—like a 10% rise in chicken prices—occur.
Delayed payments are the most notorious challenge suppliers face, leading to strained relationships and inconsistent supply fulfillment. — Hotelier India survey
Tata Motors’ Innovative Supply Chain Financing
Tata Motors has launched a Supply Chain Financing (SCF) program named "PayEarly" through the CashInvoice platform. This program offers on-demand early payments to MSME vendors, alleviating the common issue of payment delays.
By ensuring vendors receive their payments promptly, Tata Motors enhances their ability to meet supply obligations, thus strengthening the entire supply chain.
The Way Forward
The whitepaper explores how leading companies are combining different strategies to create resilient supply chains even when working with the smallest vendors.
Learn the specific implementation tactics that are proving successful in India's unique market conditions, and discover how your organization can transform procurement challenges into competitive advantages.
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