Today, we are pleased to announce Folio Substitutions, a tool that’s fully embedded into Folio and helps properties save more and comply more easily in real time as shopping happens.

Under the hood of a Folio interface that our customers love for its “clean” and “intuitive” usability, there is a tech stack of powerful agentic tools.

Folio Substitutions is the latest addition to this agentic scaffolding. It seamlessly guides buyers to purchase the right items from the right suppliers, right as they shop.

So how exactly does it work?

1. First, Folio supplier agents programmatically access and interpret information on a supplier site to understand the details of each product, including deciphering if an item is contracted or a brand-standard. Sometimes, we can enhance this information from your GPO partners

2. Next, Folio standardizes the data across suppliers and seamlessly incorporates it into your Folio.

3. Then, with Folio Substitutions, Folio detects potential alternatives and promotes the preferred items while buyers shop. The buyer is guided to purchase the most “on-plan” items and boom: you have confidence that your team will buy the most optimized purchase possible, unlocking significant savings.

Why this matters

On the main stage at Destination AI last week, the CFO of HHM Hotels, Jeremiah Galvin, stated that his hotels are leaving hundreds of thousands of dollars in savings on the table every year by purchasing the wrong specific items for their hotels. (These savings would be incremental to the other savings and benefits Folio drives for them!) The average substitution identified by Folio Substitutions offers 29% in savings on each item.

This is even, by nearly all metrics, their procurement program is highly effective.

So, how can this be? Most mid-to-large hotel operations have negotiated discounts from an above-property level that do not always translate into purchases on-property. These operations, or their partner GPOs (“group purchasing organizations”), make commitments with suppliers about specific products they are going to repeat-buy over time or buy in bulk to support their operations. These negotiations are symbiotic. They help suppliers better project revenue and better forecast their inventory to meet that expected demand. But hotel operators on the ground don’t have the visibility, time or tools to take advantage of all these discounts.

Even when buying from the right on-program suppliers, you are not always buying the right item from the right supplier.

But aren’t there existing platforms that can help??

There are procurement systems (often called “ePro” platforms) that help hotels purchase on plan. They introduce controls and workflows to control suppliers, and review shopped items, purchase orders, or requisitions to try to drive compliant purchasing relative to the program.

Typical ePro platforms are beholden to legacy infrastructure: “punchout” technology. When “punching out” to a supplier website, an operation cannot encourage buyers to purchase the right item outside of what the supplier recommends. (Meanwhile, each supplier also likely has its own priority items to promote!)

To make things more complicated, each supplier has its own, unique way of identifying contracted items. They each have specific product tags, shorthand codes, or processes where they create order guides to surface the correct items. It varies by supplier, and it’s not always intuitive. Buyers often get training to understand these methods, supplier by supplier, which is expensive for corporate staff, as well as the buyers participating in the training.

Given this complexity, time pressure, and other guest needs to prioritize, it’s not a surprise buyers do not always prioritize buying the “compliant” item.

Organizations often review non-compliance and identify opportunities for savings long after purchases are made - sometimes months in arrears. They reach out to buyers and try to change behaviors, but it’s too late. Or maybe the purchase is no longer relevant. Folio’s substitution AI capabilities eliminate all of this complexity and keep hotels compliant in real time.

Folio carts are getting smarter

Folio has, and will continue to be, quite excited about smart carts. Smart carts rock. We love them.

Folio’s first generation smart cart was a multi-supplier cart, to save buyers time and reduce admin overhead with every order. With one cart, buyers could more easily buy sheet-to-shelf, across suppliers. For context, most procurement platforms require buyers to create unique POs supplier by supplier (ugh! what a drag!). And THEN buyers return to the purchasing platform process and categorize the products in each.

Then, we supercharged smartcarts with robust visibility and more supplier connectivity so buyers could make more informed decisions across those suppliers. We provide minimums, available checkbook, syncing with BI tools and supplier sites, notes and messages that could be provided to reps.

Now our Folio Substitutions helps surface smart substitutions in cart. When Folio identifies opportunities for alternatives that align with program design, help drive greater brand compliance or could help save buyers money, Folio recommends a substitution in a familiar ecommerce format that all buyers can understand.

We’ve done a lot to support smarter buying at the last mile, at cart, and we are excited about the future, as well, to drive even better outcomes.

Who knows? Maybe the future is cartless all together. After all, we believe that if we can seamlessly guide buyers towards the right items while they are still shopping, buyers and owners get better outcomes.

Buyer buy-in, with real-time suggestions

While we love Smart Carts, we are even more excited about guiding buyers while they shop, earlier in the shopping process. This type of influence, intra-item and intra-supplier is not possible with punchouts today.

An aside: ever get a message from your door dasher or Instacart shopper that a product you wanted to purchase is actually out of stock at the store? Yep. Disappointment. Maybe you wouldn’t have placed the order in the first place, or gone somewhere else. Amplify that disappointment by multiple factors when buying for a complex operation.

That is why we are prioritizing influencing buyers earlier than the cart, as they shop. We think it will drive better outcomes, and help drive buyer buy-in.

We are loading our Chat and Search capabilities to be smarter about recommending products, keeping item-level compliance top-of-mind in our recommendations.

We are excited for recommendations to get even smarter, and more nuanced, to drive optimal outcomes for our customers and their property owners.

Let’s get substituting!

If you’re a Folio customer, reach out today to get early access to Folio Substitutions and discuss how it works given your supplier mix and GPO partner.

If you’re interested in seeing how our substitution AI capabilities can save you time and money, and help with item-level compliance, send us a note and we’ll set up a demo!