Centralized purchasing: Driving efficiency, sustainability, and local empowerment

By Amjad Alotaibi – Supply Chain Projects Manager at Red Sea Global

In the world of regenerative tourism and luxury development, it’s easy for headline-grabbing innovations and architectural marvels to steal the spotlight. However, the less glamorous systems operating behind the scenes often have the most significant impact. At Red Sea Global (RSG), our centralized purchasing system exemplifies this principle – transforming supply chain operations into a powerhouse of efficiency, sustainability, and local empowerment.

Building a system tailored to excellence

RSG's centralized purchasing system was established as a shared service to streamline the supply chain for our operators, encompassing hotels, community facilities, and construction entities. By consolidating the procurement of consumables such as food, beverages, and operational supplies, the team at RSG has turned purchasing into a strategic advantage.

With a team of 30 specialists, each bringing expertise in categories such as fresh produce, FMCG, and fisheries, we’ve built a system that ensures only the highest quality goods reach our destinations. The process is supported by state-of-the-art distribution centers such as the Jeddah Consolidation Center (JCC) and on-site facilities such as the Hanak Distribution Centre, RSG’s newly opened on-site distribution center, where rigorous quality checks are performed.

As Sebastien Defois, Senior Director of Centralized Purchasing, puts it: “By combining the needs of hotels, community services, and facilities management, we leverage economies of scale to source and secure the availability of daily consumables and specialty products—both food and non-food items—that are essential to our operations. By managing volume synergy, ensuring the right quality, and streamlining cost efficiency, we contribute to an enhanced guest experience at our destinations.”

Overcoming challenges through centralization

As most customers are located in remote areas along Saudi Arabia’s Red Sea coast, multiple logistical challenges need to be overcome. Without centralized purchasing, the sheer volume of trucks traveling to and from these properties would result in inefficiencies, quality concerns, and a heavy environmental impact. By consolidating shipments and optimizing routes, the company has reduced its logistical footprint while improving the reliability and responsiveness of its supply chain.

This system allows us to maintain operational flexibility, sourcing products locally whenever possible and globally when necessary. By prioritizing local suppliers, we’ve also fostered economic growth in the Tabuk region and supported initiatives such as The Red Sea Farm Cooperative (TAMALA), which connects over 3,000 local farmers to our supply chain.

Sustainability at the core

Centralized purchasing plays a vital role in RSG’s commitment to sustainability. Through precise inventory management and real-time data analysis, the system minimizes waste and ensures that orders align with demand. This focus on efficiency has led to a 36% reduction in costs and a dramatic improvement in service levels, with fulfillment rates increasing in the past year to over 90%.

Moreover, centralized purchasing ensures that sustainability isn’t just an operational goal but a tangible result. By working closely with local suppliers and adhering to stringent quality standards, The company has created a supply chain that respects the environment while supporting the communities that call it home.

Setting new standards for hospitality in the Kingdom

RSG’s centralized purchasing system isn’t just a logistical achievement, but a strategic initiative that underscores our broader mission to create destinations that are as sustainable as they are luxurious. By massifying volumes, ensuring stringent quality control, and leveraging advanced technologies, the company is setting new benchmarks for procurement in the hospitality industry.

This approach also highlights the human element behind our success. From local farmers empowered by TAMALA to the dedicated team members who manage every aspect of our supply chain, centralized purchasing is about more than efficiency; it’s about making a meaningful impact.

Looking ahead

Marking the opening of Shebara, our first of several self-operated properties, we now have five operational resorts and more to come this year. In fact, we plan to open 11 resorts on Shura Island alone next year. As our portfolio grows, our centralized purchasing system becomes even more critical. It allows us to scale operations seamlessly while maintaining our commitment to sustainability, quality, and supporting local communities.

Plans to extend the model to other regions, including Riyadh, promise to amplify its benefits and further align with Saudi Vision 2030. By continuing to innovate and collaborate, RSG is paving the way for a new era of sustainable supply chain management – one that supports both business objectives and the greater good.