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Operations Management

Notes 8. Make every reasonable effort to negotiate an equitable and mutually agreeable settlement
of any controversy with a supplier; and/or be willing to submit any major controversies
to arbitration or other third-party review, in-so-far as the established policies of my
institution permit.
9. Accord a prompt and courteous reception insofar as conditions permit to all who call on
legitimate business missions.
10. Cooperate with trade, industrial and professional associations, and with governmental
and private agencies for the purposes of promoting and developing sound business
methods.
11. Foster fair, ethical and legal trade practices.

12. Counsel and cooperate with department members and promote a spirit of unity and a
keen interest in professional growth among them.

Case Study Centralized Purchasing Pays off for Radisson

here are a lot of benefits that accrue from centralizing purchasing, as several hotel
chains have recently discovered. But none has been attempting it on the scale of
TCarlson Cos. Carlson is combining the purchasing for its Radisson Hotel chain,
Colony Resort Hotels, TGI Friday's restaurant chain and the Country Kitchen restaurant
chain into one central group and it's been paying off.
Marvin Salsbury, vice president of purchasing and distribution for the Carlson Hospitality
Group, has been ramrodding the conversion from its original concept. It started with TGI
Friday's and worked so well that last year plans were implemented to apply the plan
across all of the Carlson properties in one area, the Southeast.

Now, a little over a year later, the concept has proven itself and is being moved nationwide,
one region at a time, according to Salsbury. At the present time there are 71 Radisson
Hotels and eight Colony Resorts using the system, and within the next six weeks, 12 to 15
more units will be added. Salsbury says that includes three Radissons of the Paraiso
Hotels group in Mexico City, with two others in that country to be added later.
What are the advantages of centralizing purchases? Volume leverage is the obvious one,
Salsbury says. But there are others. "It reduces deliveries and increases drop size, which
means less billing and less staffing needed to receive goods."
Centralizing has reduced foods costs, in part because it lets the company take advantage of
promotional and other allowances. All of the savings are passed right through to operations,
including franchisees, Salsbury emphasizes.

The use of one national, multi facility distributor simplifies the chain of supply, he points
out. Furthermore, it enables Carlson to standardize products. And it frees hotel purchasing
personnel to concentrate on expediting and quality control instead of spending all their
time on "shopping," Salsbury explains.
"They already had the experience of negotiating for major contracts. Now they have the
additional voluve leverage to be even more effective."

Contd...

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