Do-it-yourself is a great strategy for homeowners, but it often doesn’t work for hospitality operators. DIY can end up costing you more than you save. Here are four ways that a good purchasing company can partner with you in achieving the best for your project at the best price.
1. Take Advantage of Conceptual Budgeting
Commonly, hotel-casino owners try to budget using dollars per room as a metric. That metric is useful for the lenders, but not for the interior design and project management team. At PMI, we believe that some of the most successful projects start with an opinion of value, what we call a conceptual budget. We take the interior design team’s schematic furniture placements and assign a budget number to each piece based on the level of design expected by ownership or brand.
For example, a typical room has 35 yards of carpet, and we might budget $13 per yard based on those ownership or brand expectations. The design team can then select pattern and color within that budget. We would do the same for wall covering, lighting, case goods and the like.
We would then budget for warehousing, installation, overages, sales tax and contingency. After multiplying by the number of that room type, we end up with a budget number that includes everything needed to complete the project.
Asking a purchasing company for a conceptual budget is a smart first step in the process because it creates parameters for the design team. The design team now has the freedom to create within those budget parameters, and there are no surprises when the specifications are issued to the development team.
2. Do Not Buy Cheap
The difference in cost between quality furnishings and cheap product is less significant going in than it is on the back end of a project. Cheap furniture means a shorter life cycle in a contract application. Many furniture offerings today are online companies. These companies’ low prices represent residential-quality furniture that will not hold up in a hospitality setting. Cheap furniture will cost you tremendously in lost room nights, reputation, and higher maintenance costs.
A good purchasing agent will know all of the best vendors for the type of product you are installing in your facility. They will know how to bid out your FF&E and analyze the bids for your benefit. A good purchasing agent will also have the best product knowledge. Your purchasing agent should be able to speak knowledgably about product construction, durability and alternate products. This will ensure that you are getting contract-quality product that will last in your casino and hotel.
3. Buy Domestically As Well As Overseas
Due to advantageous pricing, much of our furniture has been coming from China. Recently, as the dollar has changed and labor costs have increased in China, we are finding increasing opportunities to procure product from other regions of the world. The regions include Vietnam, Philippines, Spain, Italy and South America. We are also seeing increasing opportunities to buy domestically. Sourcing domestically is an increasingly great opportunity, particularly when shipping costs and shorter lead times are factored into the overall project costs.
4. Execute the Project Well
Project purchasing is more than just issuing an order and hoping the product will deliver on time. It is the choreographed execution of thousands of transactions from sources around the world within a limited time and budget. Navigating those constraints requires specific skills, expertise in project purchasing, great attention to detail, creative problem solving, and deep product knowledge. Getting the best value for your projects requires your purchasing agent to keep the project timing in step and the entire project team informed about the movement and logistics of each item needed to open the project on time and under budget.
The key deliverable at this stage of the procurement is communication. We have seen owners that have diligently executed the first three steps and then lose focus on the project purchasing execution. They make decisions that impact the schedule and timing of deliveries to the project without informing the entire team.
They attempt to ship furniture direct to the hotel and let the contractor install the goods. Many times, the general contractor does not have the proper equipment to install furniture. Without trained crews and proper equipment, you will most likely end up with damaged, dirty or missing furniture, which, again, will cost you.
These four steps, facilitated by an experienced purchasing agent, will assure that your resources are employed to obtain the best value you can achieve for your project.
