PROCUREMENT: NOT A DIRTY WORD
BY JACKIE WIRGHT | INTERNATIONAL LUXURY HOTEL ASSOCIATION | JANUARY 7, 2021 | Read on ILHA
Those who can, design. Those who can’t, procure. At least, that’s how I feel sometimes being surrounded by so many talented designers delivering award-winning projects while I build fancy spreadsheets and schedules. But we all have our talents and while I admire thoughtful design and like decorating my own house, my strengths align best with procurement. As the founder of a hospitality procurement company, I have worked on a wide array of projects and experienced all the behind-the-scenes craziness that goes along with sourcing FF&E.
Hospitality purchasing agents often get a bad rap. I’ve heard the stories and I’m sure you have a few of your own. However, I’d like to share some of my experience and highlight the positive contributions that companies like Pineapple Procurement bring to the table and how you can get the most out of your FF&E procurement partnerships in the future.
WHEN TO HIRE A PURCHASING AGENT
The most successful projects are executed by people who like each other. It takes time to build rapport and comradery essential to team spirit. Once a team is united in achieving the same goal, collaboration and problem solving reach a new level of efficiency and productivity. One key to success is to hire your procurement team at the same time you hire your design team. Don’t wait until the interior specifications are ready to be issued to hire your FF&E procurement team. The conversations that happen early on after engaging your designer may not seem relevant to procurement, but the discussions reveal challenges and complexities that result in a bank of historical knowledge. More importantly, an understanding of each other’s responsibilities and challenges creates empathy which leads to a more dynamic team synergy – everyone doing their part, and more, to help ‘make it happen’. Additionally, you’ll have procurement at the table to weigh-in on aggressive timelines and budget issues from the get-go which means decisive action can be taken without wasting time or surprise budget increases down the line. Set your project and your team up for success by kicking things off at the same time and allowing everyone access to the same information and the same conversations.
Quick tip: Hiring your procurement firm at the same time as your design team should not cost more if the procurement fee is based on the scope of work.
ADD-SERVICE FEES: HOW TO AVOID THEM
To avoid additional procurement fees, my suggestion is to request flat rate fees for the duration of the project based on the scope of work. That way, if your project schedule gets delayed for reasons out of your control, but the scope of work stays the same, you may be protected from additional mobilization fees. Percentage based fees get murky and I recommend avoiding them because of the lack of transparency. I personally like to know exactly where my money is going and what I’m paying for and there is a lot of room for hidden and unexpected costs with a percentage-based fee model. Some procurement firms charge additional for change orders or other things you might forget to ask about at the time of the proposal, so just make sure to request details about the services and deliverables up front. Inquire about any additional fees for on-site time and what the maximum reimbursables will be. Another great question to ask is related to the company’s turnaround time for deliverables. Find out exactly when you can expect a procurement schedule, FF&E budget, and how long it will take to issue purchase orders, change orders, etc. If you have an aggressive timeline, it will be important to partner with an FF&E procurement company that has the resources and ability to turn important deliverables around quickly. At Pineapple, we issue procurement schedules for each project and keep them updated over the course of a project so that all parties know exactly what to expect and when. It keeps us accountable and on target for a successful project.
Quick tip: Keep your design firm and your procurement firm separate. You are more likely to keep costs down and service levels up when each party is dedicated to doing the roles they do best.
PUSH THE ENVELOPE, NOT THE BUDGET
First, let me be clear that I am not talking about “VE”. Of course, value engineering is one approach, but the truth is that there are drawbacks to value engineering that are not always clear at the onset. That said, VE is not the only or best solution for every project.
To help support design teams and clients push the envelope, we must dig deeper by investing the time and legwork into the project early on to determine the best strategy to execute complex design ideas within budgetary goals. Doing so will allow for confident, swift decision-making that will keep the project on course. Additionally, outside-the-box solutions may be more robust and valuable long-term; for example, a partnership between a vendor and client that resulted in a discount on goods, a unique shared marketing initiative, a more authentic guest experience, and higher ADR. Look for more value over a one-time discount.
When hiring an FF&E procurement company, it’s important to understand their process for sourcing and vendor selection. It should be an inclusive and collaborative group effort between design, ownership, vendors, and procurement. Finding the right vendor partners can make or break the project. The same vendors are not right for every project and not every item should be sourced from the same vendor. Sources that are off-the-beaten path often have more flexibility in their approach and can be a great fit for custom projects.
Quick tip: When placing model room orders, review the same big-ticket items from at least two different vendors. This will give you an opportunity to get a true comparison and be confident in your decision. Evaluating the reliability, quality, customer service, assembly, and overall execution of each vendor in the model room will save invaluable time and money up front. Prototypes can be credited back to the production order, so the big picture costs are nominal.
PROCUREMENT: THANK GOODNESS!
Procurement is such an integral part of executing a project well. Don’t be fooled into thinking that all procurement companies are the same or that the work can be completed by just about anyone. It is very complex work requiring meticulous attention to detail. You need a highly organized team dedicated to double and triple checking plans, specifications, schedules, quantities, budgets, and then threading all the details through every layer of your project. Thinking outside the box is everyone’s responsibility, not just designers. A good procurement team will save you a great deal of headaches, organize the chaos, and make your life easier. You need a collaborative team of strategic problem solvers, not a reason to curse. When you work with us, you’ll no longer think of procurement as a dirty word – you’ll be saying ‘thank goodness for Pineapple’.