Yasemin Akaydin Miller, managing director, Pass International breaks down how to successfully procure OS&E items.
I like the way Albert Einstein defined insanity; doing the same thing over and over again and expecting different results. In the world of business repetition is unavoidable and, hand in hand with that, many tasks can make you feel you’re losing your mind; not least the up-hill struggle that is the hotel pre-opening.
It is well expected by all parties involved that there will be hurdles, complications, problems and difficulties during pre-opening, in fact it is considered as a norm. But how is that possible if we know what we are doing?
Let’s consider this as a play; A Tale of OS&E Procurement.
Your project is almost finished and you are at the last step; OS&E procurement. The scenario is, you have the following parties, who know their responsibilities and will act accordingly as a team to make this project a success.
The cast, roles and responsibilities are…
Client: The owner or developer of the property, the client is the one who provides the finances, and has hired all the right consultants to manage the various processes, without micromanagement. They are trusted for their experience and guidance.
Operator: The operator is the brand; providing the standards, specifications and knowhow . The operator has the full list of OS&E, ready with the right quantities and specifications for the property. The operator also manages the pre-opening team, detailing each area of the new operation.
Procurement Agent: The specialist in the field, the procurement agent knows the sources, knows where to get what, when to start, and when to finish, thanks to the tried and tested systems in place. The agent has people with experience to manage the client’s budget and reach the operator’s brand standards. That is the scenario, but what actually happens?
He is at a stage where they don’t want to spend any more money. Although OS&E generally gets the smallest budget in a hotel development, the client still thinks as if there is no money left and so approaches the task with a mentality of saving…. A lot!
The client is often heard saying things like: ”Let’s cut the budget down 20% more,” ”Let’s hire the procurement agent at the last minute, so we can save from fees,” ”Let’s not approve the budget or the POs right away, let’s negotiate more with the suppliers, sleep on it, think a bit more, get more discount.”
Unfortunately, all good intentions of saving money result in either spending more money on airfreighting the goods the goods at short notice, or losing ADR through a late opening.
The operator knows that it is time to get the OS&E going, so provides a list of items that are half of what is needed for the property and generally outdated. It is a mixture of pre-opening, FF&E and OS&E. He provides brand standards on certain items that are not more than 10% of the overall budget. Are there any guidelines for the rest? Not really. Are there any team members on board who can guide and select? Not really.
Therefore, specifying takes longer. Unless you are in good hands with procurement, it is inevitable that things will be forgotten or ordered incorrectly.
Every procurement agent is happy to be selected for a new project, however tough competition has reduced fees so much, resources are severely stretched. When the schedule is considered, there is not much time to do anything, let alone sourcing, finding the right fit for the project, doing something special is out of question.
There is a better way to do business and there is a better way to open hotels. In doing things differently we avoid the same traps. Order from people you know, invite them to present and consider their recommendations – they are professionals too, after all. And the next time you’re tasked to a pre-opening…. Remember Einstein.