There are five basic principles that can help ensure security of supply for any hospitality project. Some are simply procurement best practice, but others require a change in attitude to procurement strategies and, to some extent, wider financial thinking at Board level.
1. Be attractive
In a seller’s market, particularly in the construction industry, ‘beauty parades’ are now conducted by supplier looking for the best purchaser rather than the other way round. So, while choosing the right supplier is critical, it is you, the purchaser, that has to make yourself attractive. This can be by bundling work together to create scale; agreeing more attractive commercial terms, or simply presenting a procurement culture that is fair, reliable, but pleasant to deal with.
2. Be diligent
Whether sourcing specialist skills or general services, it is critical to review regional, national and even international supplier networks. This should include looking at outside indicators such as potential suppliers’ progress with their pipelines of other projects and, if listed, movements in their share price.
Establish whether suppliers can meet delivery deadlines to keep a project on track, have the capability to fulfil the contract and will stay in business long enough to do so. If they can’t, consider whether they are the wrong supplier, or whether the project or timescale is unrealistic.
3. Be clear
The tender process needs total clarity, from brief to appointment and beyond. As well as clearly-written initial documents, establish framework contracts to speed-up the process of awarding new pieces of work – this also another way to remain attractive to suppliers.
4. Close the gate
Procurement best practice now recommends ‘stage-gate’ processes for any project. This means the project is segmented and suppliers are only allowed through the ‘gate’ to the next stage if the previous stage has been delivered according to the contract.
Conversely, using stage gates also means the purchaser has a responsibility to avoid unplanned design/supply changes that can move the goalposts, whether it is time, human resources or budget.
5. Build relationships.
The most secure supply chains come from building close, long-term relationships with professional teams and contractors. This requires strong communication and collaboration skills from in-house financial and procurement teams, as well as developing smart strategies, such as considering companies that can provide a bundle of professional services for one project or an individual, such as a structural engineer that can work across a range of projects.
Securing supply is always important, but is now becoming critical, for any major hospitality project. While this may add pressure to procurement teams and senior management, ensuring the supply chain is secured early can make the difference between staying ahead of the competition, or being another statistic on the ‘still waiting’ list.