We’re building in unprecedented times. This was the pervading theme last week at HD Expo. It was also the exact same sentiment that made the event so much more valuable: Not only were hospitality professionals meeting up again with old colleagues, we were all learning from each other, as well.
At the “HD Conversations: Ask the Purchasers,” four leading procurement specialists discuss their experiences, lessons learned, and best practices for purchasing during a pandemic.
Instead of a budget, consider starting a project by looking at what’s available.
If you needed any indication of how bad the procurement situation has become, this piece of advice should paint an accurate picture. “I’m getting lead times that are like 20 weeks for fabric,” says Jasmine Brevik of Absolute Procurement. “And then 17 more weeks for the actual product to get made once they get the fabric.”
“I mean, I feel like I’m just doing selection after reselection after reselection, just on fabric right now, just to try and get our lead times to meet all the schedules we were going for,” she adds.
The solution? “I’m finding that a lot of designers are specifying running line,” says Bryce Sprecher of Summa International. “Custom fabrics take 12 weeks, and of course the seating piece is another 16 weeks on top of that. So can we find a running line? Is this off the shelf?”
Still, running line is not the end-all solution to textiles. According to Brevik, “I feel like running line, textiles specifically, are still taking forever to get these days.”
Ted Carroll of The Carroll Adams Group agrees. “With a suite or a lobby or a restaurant, you can find in-stock yardage. But to do a hotel with running line — it’s not sitting on a shelf,” he says. “Plus, everyone sat at home for the last 18 months, ordering everything from every catalog, redoing their home.”
Getting a product, he says, can take just as long as making it custom.
“If we’re in a pinch and I have to do something, we end up calling the manufacturer, the vendor, saying, give me a list of what you have in stock. What’s here that I can get my hands on right now, versus going online and sending an RFQ.”
Transparency, transparency, transparency.
If they had a message to tell suppliers, purchasers agree on one thing: “Just tell the truth. Be honest and communicate, communicate, communicate.”
“Don’t overpromise,” says Brevik.
If there’s one good thing that vendors and suppliers can take away from these difficulties, it’s the knowledge that everyone is in the same boat.
“For all the vendors, just remember,” says Sprecher, “you guys are all in the same situation. Don’t think that, Oh my God, we’re at a 20-week lead time and freak out — because all your competitors are, too. Nobody’s pulling a rabbit out of a hat.”
“It’s the exact same thing we do with out clients in the beginning,” Sprecher adds. “We tell them the hard truth, wether they want to hear it or not. So we expect the same from the vendors. Don’t be a yes man.”
Hilton’s Jason Bramhall adds, “The transparency is paramount. If the lead times are double, tell us upfront so that we can plan accordingly. The more we know upfront, the more we can do to set the tone moving forward and make this a success for everybody.”
Carroll agrees. “We can deal with anything as long as we know it. Just tell us the truth and we’ll work around it, we’ll work with our owners,” he says.
Build contingency into your budget.
According to Brevnik, “There’s a lot of people that want contingency to be removed from their budgets.” However, “They don’t really understand why we have to hold contingency, but it’s really important, especially at this time when all of these extra costs are coming up.”
What extra costs? Well, an important thing to understand in this situation is this: While production itself may be a bit slower than during regular, non-COVID times, it’s really the shipping that’s holding things up.
“Shipping is killing us,” says Brevnik. “I will literally have product complete but that will ship three months later, simply because we can’t get space on containers. So we’re padding heavily on our timelines as well as budgets, ‘cause those container costs just keep going up and up and up.”
“China’s holding people hostage and charging premiums,” says Sprecher. “With containers, you know, they’re saying, you can’t get this to the front of the line unless you pay us an extra $6,000. We’re building in a lot more money on freight than we would have before.”
Bramhall adds, “I think one of the biggest unknowns is the uncertainty in the logistics and being unable to commit to an actual delivery date. And that ripple effect is carrying over to the installation schedule, having laborers on site, being able to keep them at a property without fear of running out of inventory to fulfill a floor or whatever the scope of work is.”
Ship your products as soon as you can, and invest in a warehouse.
“I never thought I’d see a $22,000 container or inability to get a container,” says Sprecher. “That came as a big shock.”
“Then,” he says, “There was the lack of chassis to get the container unloaded.”
Adding to the unpredictability, Bramhall says, “You might have great news one day and then tomorrow, it’s gone, right? Oh, sorry. Your containers were scheduled to get loaded. Sorry, that’s going to be a three-week delay now.”Their recommendation? Stock up on products in advance.
“As much as they’re willing to warehouse,” Bramhall says. “Nobody wants to pay for a warehouse, right? It’s just not in their budget. (But) right now, the most impactful things that we can recommend very strongly is, if they have the finished goods available to ship, ship them. Do not delay, do not hold them. We do not know when they’re going to come in.
“If they do come in earlier than anticipated, put them in a warehouse. It’s the best money you could ever spend as an insurance policy right now.”
Also published on Medium.
Learn how to:
- Save days of work with faster specification
- Create firm-wide design standards
- Automate and centralize procurement
- Keep your whole team on the same Page
- Manage product data
- Track budget against cost in real time.
- Prepare for asset valuation
Published Aug 31, 2021
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