How A-ROSA unlocked savings potential by optimising its food and beverage procurement
A-ROSA Flussschiff based in Rostock is one of the leading European suppliers for premium cruises along the Danube, Rhône/Saône and Rhine/Main/Mosel. Its fleet currently includes 11 ships that all comply with the latest safety and environmental standards. As a brand supplier, A-ROSA offers relaxed, deluxe holiday experiences based around enjoyment, wellbeing, sport and discovery, all from a single source. The company employs approximately 630 people from 20 nations and achieved a total turnover of more than 65 million euros in 2013. In spring 2009, as part of a management buyout, A-ROSA Flussschiff was acquired by the financial investor Waterland, among others.
For many years, A-ROSA’s food and beverage requirements had been fulfilled by a partner/service provider. As part of efforts to professionalise procurement, its management and financial investors decided to closely review the costs spent on food and beverage. Due to the previous contractual framework (contract duration of five years with fixed prices for the entire season), a common solution had to be found with the stock provider, since although the conditions were negotiated each year, a comparison based on market prices was never taken into consideration.
INVERTO was tasked with overseeing the tendering process and procurement of food and beverages (worth EUR 3.6 million) for the 2016 season. The aim was to achieve significant savings in food procurement using the positive price effect by renegotiating the existing framework agreement. Streamlining the product range was ruled out due to the contractual conditions.
Course of action
As a first step, the product groups and structures in food (294 products) and drink (288 products) were analysed. INVERTO was able to provide an estimate of the savings potential per category by benchmarking on an individual product basis. This benchmarking consisted of both market inquiries into alternative full-range suppliers as well as comparing the prices of service providers operating in various industries (whose prices vary per industry).
As a second step, renegotiations were carried out with existing service providers based on established market and supplier transparency. By adjusting selected product prices to meet market levels, significant savings were made and advertising subsidies were agreed with the suppliers. The key to this success was in-depth negotiation preparations and strict benchmarks for food wholesalers.
Double-digit percentage savings were achieved in food & beverage procurement…
- …despite complicated contractual conditions, and
- …without compromising the product range, such as a loss of quality or reduction in quantities (traditional like-for-like tender)