The repercussions surrounding the international tariffs recently imposed by the U.S. government continue to reverberate throughout the global economy. The hospitality industry in particular is grappling with the consequences: increased operational costs, supply chain disruptions, and sharply reduced international tourism to the U.S.
As an furniture, fixtures and equipment procurement professional, my colleagues and I are on the front lines, trying to deliver for our clients while navigating a landscape where the news changes daily. Yet I know we will weather these challenging times just as we have endured others.
COVID-19, for example, was a global health crisis and tragedy for people around the world, resulting in loss of life, economic collapse and much more. No one was unaffected. Those of us working in hospitality — at every level and in every role — had to learn to pivot, regroup and recalibrate our businesses under nearly impossible circumstances.
Some of the lessons we learned during COVID hold true today. Here are some of my tips for navigating the current situation:
1. Plan ahead to deal with uncertainty
Hospitality professionals are skilled at planning ahead. Luckily, many of us realized the potential for significant financial, supply-chain and sourcing challenges towards the end of last year and came up with detailed contingency plans. The more you can anticipate what your biggest obstacles will be, the more you can try to mitigate those risks beforehand.
At my company, getting schedules early — along with detailed communication about budget — is giving us time to find cost-saving solutions. For example, we know that for one of our projects, the lighting is almost exclusively produced in China. Having a long-standing relationship with one of the few domestic vendors that manufacture this lighting, we were able to send in our purchase order early. Luckily, the client also allowed us to store the lighting on-site for much longer than is usual, which helped us to keep the overall cost in line with our budget.
While not everyone will have the luxury of ordering products a year early or storing products on-site, if you are able to do so, you may be able to lock in savings.
2. Build strong vendor relationships
In procurement, your business is only as healthy as your relationship with your vendors. Trust and clear communication lie at the heart of these crucial relationships. When your vendor gives you a due date, know that they will do everything possible to meet it (or to alert you in advance if the deadline might be missed).
Always have a diverse vendor list in case you have to pivot. For example, I had a strong list of domestic vendors that I was able to turn to during the pandemic and I am doing so again in the current situation (as seen in the example above).
Another example of the power of a strong relationship is a current project requiring area rugs that need to be shipped from China. I was able to negotiate with our U.S.-based manufacturer, who convinced the factory owners to store our order until the tariffs come down. This will ultimately save my client around $20,000.
Right now, vendors are all over the map in terms of pricing. Some are telling me they will absorb the extra costs caused by the tariffs while others say that they will meet me halfway or that it will be impossible not to pass on increases. Empathy goes a long way in times like these. Know that vendors are trying to do their best, as we all are. Again, longstanding relationships will help see you through the chaos.
3. Do your due diligence on supply chain issues
Despite strong relationships with my vendors, general best practices include always conducting rigorous due diligence. Especially if I am working with a new vendor, I ensure that they are truly domestic if they say they are. Oftentimes, they only have an office located in the U.S.. Do your research, especially if you are purchasing big quantities, as many companies engage in outsourcing to meet increased demand.
Similarly, if you’re purchasing furniture with multiple components, a vendor may say that all components are manufactured domestically, but maybe only one part is made here. Again, check and double-check.
With the rush to find domestic vendors, lead times are going to inevitably increase. I experienced this first-hand during COVID in 2020. Listen to the lead times domestic vendors are quoting, question their accuracy and production location, and always build into your planning schedule the possibility that lead times could increase significantly.
4. Lean on community
One of the most important things in a time of crisis is to keep lines of communication open. I talk to vendors and other FFE procurement colleagues every day. We share tips and encouragement. Continue to think about what you can do to lessen the burden on your clients or ways you can help a colleague. Remember that you are not alone, and that we are all rooting for each other and the health of our industry.
Despite challenging times, business is moving forward. I attended two industry events in the last month, and as a result, signed two new clients. I am confident that with creativity, advance planning and community, we will weather this situation, just as we have endured other crises, and come out more flexible, nimble and resilient.
Kendra Raines is the founder and CEO of KBK Procurement (www.kbkprocurement.com) and a member of the International Society of Hospitality Consultants (ISHC).
This column is part of ISHC Global Insights, a partnership between CoStar News and the International Society of Hospitality Consultants.
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