Ms. Locke

Furniture, Fixtures & Equipment

The Power of Proper Purchasing: Decisions That Make Sure You Won’t Miss Deals, Trends, or Deadlines

By Amy Locke, Director, Interior Design, Hatchett Hospitality

Banks are on the verge of lending again. And franchisers are poised to issue property improvement plans (PIP’s) for properties that have been neglected over the past two years, especially those owned and being operated under foreclosure by banks.

These trends mean we’re about to see a wave of investing in both new and existing hotel properties – and owners will be making significant decisions about furniture, fixtures, and equipment (FF&E). Let’s review some purchasing suggestions which can help you properly capture deals, design directions, and deadlines.

In-house Staff or Outside Professional?

The typical limited service hotel will need to purchase more than 2,500 line items, 250 of which may be specified. These items may come from 70 or more companies. Obviously this generates hundreds of purchase orders over many months – a process that must be carefully managed:

• so all product options and specifications are thoroughly evaluated for desired function, quality, durability, and brand standards
  
• so the right items are purchased at the right price and in the right quantity
  
• so every order is delivered to the proper location on the scheduled date
  
• so all installation is done in a way that enhances product performance and maintains the integrity of manufacturer warranties
  
• so all appropriate follow-up service is received from vendors in a timely manner

If you consider having an in-house staff person handle your FF&E purchasing, you should also consider (1) whether that person has the appropriate experience and expertise, and (2) to what degree the person’s other responsibilities will be impacted or neglected.

More and more owners/operators are coming to the conclusion that they want their staff people to concentrate on marketing and on enhancing the guest experience – while having a professional purchasing company devote its time and skills to managing the multiple details, special nuances, and tedious paperwork of the FF&E process.

When selecting a purchasing company, remember that this firm is going to be your partner for hundreds of decisions and thousands of dollars in expenditures – so select someone you feel comfortable working with.

For example, every hotel brand focuses on slightly different details and requirements in its FF&E package. You want a purchasing firm that is familiar with your flag, but that will still represent your interests as the owner.

However, purchasing is only one of the four distinct phases of FF&E – the others are design, transportation, and installation. These functions are separate yet closely linked and dependent on each other.

So keep in mind that some FF&E companies are more full-service than others -- most just do purchasing; only about one-third can enhance the purchasing function with in-house design services; and fewer still can also coordinate the logistics of your FF&E purchases with installation and transportation.

Clearly, a full-service FF&E company will get you the most “bang for the buck” because design, purchasing, installation, and transportation are all centralized in a single source. One-stop shopping means one point of contact for you as well as for all your vendors – and that means one less worry for you.

Clear, complete, and continuous communication is an essential “safety net” or “layer of value” that protects your project and your budget.

Exactly how does an outside purchasing agent add value?

First, by helping to choose the right product for every application – and then finding the best source for that product. Experienced professionals look not only at initial price of a product, but also how well the product will hold up under active hotel usage.

There are literally dozens of manufacturers for every type of hotel product – not just in the United States, but throughout the world. A professional purchasing agent knows the advantages and disadvantages of these various manufacturers, as well of doing business in America compared to overseas.

There is no hard rule of thumb, but a good purchasing professional can extend your original budget by 10% to 20% – plus considerably reduce your headaches and sleepless nights.

Transparency

Although “transparency” is a popular word these days, it’s not always clear what it means. Here are some ways that your purchasing company can be transparent for your benefit:

• has no conflicts of interest with or “kick backs” from vendors – any price incentives should be shown on invoices
  
• treats vendors fairly – all negotiations and dealings should take into account that it’s a small industry and you may need a given supplier again. Even if you don’t, rumors and gossip about mistreatment of vendors can hurt you with other vendors, franchisers, lenders, employees, and even guests.
  
• solves problems independently – an owner sets strategy, but then doesn’t need to be involved in every tactical issue that comes up
  
• maintains thorough documentation – including but not limited to invoices, inspection certificates, delivery receipts, and customer forms plus an organized record of maintenance manuals
  
• is firm yet flexible – you want a purchasing company that’s firm on issues such as accountability, responsiveness, attention to detail, and meeting bottom-line results, yet flexible on such issues as the ability to collaborate, to handle changing deadlines and priorities, and to go “the extra mile”

Choose your purchasing partner carefully based on reputation and integrity, because by association those qualities will become your qualities.

Cost Center Can Become Profit Center

The goal of a purchasing company should include:

• implementing the designer’s vision or “look” for the hotel
  
• locating products that are durable, high quality, and when possible unique, all while meeting standards of the brand and the owner
  
• managing relationships – and negotiations – with vendors and with the franchiser
  
• managing the schedule
  
• managing the budget

My purpose here isn’t to write a purchasing job description, but I do want to suggest a few activities which should not be forgotten:

• products such as carpeting, wall vinyl, and window treatments require on-site measurements at multiple times during the ordering process because changes can occur in walls, floors, and windows during construction
  
• products such as lighting and lamp shades, throw pillows, and bedspreads should be ordered with “attic stock” – or extra quantities that can be used for repair, replacement, or touch-up
  
• request “take-offs” – namely, exact samples – before ordering wall covering, lighting, carpeting, and case goods so you can see colors, quality, and patterns up close and in the actual property environment
  
• coordinate closely between the designer and the manufacturer for all custom work
  
• verify and match all products received against specifications of products ordered

To paraphrase, the buck starts here – because the purchasing company is not only protecting the owner’s current interests but also building the property’s future value. Yes, money is what you spend but when FF&E is done properly, value is what you get.

This means that while purchasing is an expenditure, it can also be a source of savings, growth, and profitability.

One important source of savings is volume buying – namely, the purchasing power that the purchasing company has with vendors. This leverage can often lead not only to better prices, but also to better payment terms, faster delivery, enhanced quality such as upgraded fabrics, and better after-sale service, especially in resolving manufacturing defects or delivery damage.

However, a word of caution: do not make low price your only purchasing criterion. Sometimes a low price won’t include certain “value added” intangibles that are important such as quality, delivery, service, or payment terms. These factors have a price, even if it’s an invisible cost, so you and your purchasing partner have to decide when it’s worth paying more for these features – and how much more.

If you’re not careful when furnishing your property, the expression “pennywise and pound foolish” can come back to haunt you.

Don’t Forget Transportation and Installation

Unfortunately, poor scheduling and shipping logistics can undo all the benefits of a cost effective purchase. If orders do not arrive on time and in the proper sequence, your rooms may be held out of inventory longer than necessary. And that’s why you’re in business – to rent rooms.

Installation is too often overlooked or is an afterthought. The reality is that a product is of no value to you and your guests until it is properly installed and ready to use. And improper installation can invalidate a manufacturer warranty.

Most purchasing companies don’t deal with installation. A few will sub-contract the work to outside vendors, but only a very few have their own team of installers on staff and it’s these firms that offer you the most advantages.

In summary, proper FF&E is what gives a hotel its character and its personality – its first impression and its lasting memory. And experienced purchasing professionals are the folks who will get the most out of your FF&E budget so your guests get the most out of their stay.

Amy Locke is director of interior design at Hatchett Hospitality. She works with franchisers and franchisees on a wide variety of hotel brands, styles, and themes – from economy to luxury, from resort to business conference, and from traditional to modern. Previous to joining Hatchett, she held a position in interior design with Ethan Allen Interiors. Ms. Locke earned a bachelor of fine arts degree from the Art Institute of Atlanta. She is completing a degree in feng shuiand is an allied member of the American Society of Interior Designers (ASID). Ms. Locke can be contacted at 770-227-5232 or Amy@HatchettHospitality.com Extended Bio...

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