Rationalizing The Field

The trend in food and beverage purchasing, according to cruise-line executives: to rationalize the total number of suppliers to the most efficient level. In other words, to decrease the supplier base down to those who have proven themselves capable of 100 percent fulfillment rates at the most favorable margins.

Greg Wysocki vice president of strategic sourcing Carnival Corporation

Such rationalization comes not just at the cruise-line level, but also at the corporate level. As the cruise industry continues to consolidate, the various brands of entire umbrella companies are increasingly serviced by a single purchasing arm - evidenced most recently by last year’s creation of Carnival Global Source, which handles purchasing for all Carnival Corporation brands.

Explained Greg Wysocki, vice president of strategic sourcing for Carnival Corp., the supply lists are so long and complex that simply making the effort to compare them from brand to brand offers opportunities to find similar items, and aggregate demand without impacting quality.

All of which means fewer suppliers may ultimately cater to the cruise industry - and that begs the question: If cruise lines pare down the total number of suppliers, does the trend necessarily favor those who already hold long-standing relationships with the industry? Does it leave out newcomers?

“You could argue it both ways,” explained Michael Allsup, vice president of supply chain management of Royal Caribbean Cruises (RCC). “It could be a barrier,” he admitted.

Eugene Marino, director of purchasing at P&O Princess Cruises, argued the opposite position. “I think it actually opens up opportunities. A supplier working with one brand now has an opportunity with other brands (in the same corporation).”

Eugene Marino director of purchasing POAt the same time, all cruise-line executives questioned on the subject agreed that suppliers of innovative new F&B items should not be discouraged - and that the best way to break into the market is to understand how cruise lines actually make their choices.

According to RCC’s Allsup, “We’ve moved from the more traditional purchasing mentality to what is known as Supply Chain Management.”

Wysocki concurred, adding that Supply Chain Management - now the standard buzz-phrase of the purchasing business - means “looking at the net price - the total cost of ownership of an item from the factory to the waste flow.”

Which by no means implies that net price is everything. “Purchasing is guest- centric,” explained Allsup. “It’s all about the customer. Everything we do is subservient to the fact that the guest comes aboard our ships to enjoy their vacation. So we must overcome the lowest-cost mentality.”

Michael Allsup vice president of supply chain management Royal Caribbean Cruises

According to Marino, “The relationship (between cruise line and supplier) must of course be mutually beneficial - providing value to clients and all companies’ stakeholders.”

First and foremost, he asserted, “Fiduciary duty on the part of the supplier and the buyer must be understood, practiced and preached - the supplier shall deliver and perform as agreed and so shall the buyer pay and perform as agreed.”

The ingredients to the successful relationship, said Marino: knowledge, flexibility, experience, and the ability to understand new concepts. “Knowledge is key, knowledge of the client’s needs, the limitations presented by ships, products and how they’re used. Knowledge also of what value the buyer is trying to achieve.The buyer needs knowledge of what the supplier’s capabilities and resources are.”

Continued Marino: “This is the original 24/7 business. The supplier’s commitment to finding solutions in the most difficult circumstances and the ability to implement solutions effectively and promptly must be present throughout the organization.”

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