With the wheels of the hotel sector beginning to turn, Areen Design’s Head of Contracts and Procurements Niklaus Lünow explains why procurement is vital cog in the design process.
Who is Areen and what do you do?
As part of a design group with skills in architecture, interior design and procurement, we offer a full design and installation service. From selected design services to procurement-only services to a full turn-key approach, we can tailor our involvement to the client’s requirements, ensuring that they receive the highest quality of support and delivery. We also manage the design, development, production, supply and installation of all fittings necessary to bring our clients’ interiors to life. Our experience in hospitality, residential, aviation, healthcare and commercial sectors underpins our ability to create striking luxury spaces.
What can you bring to an establishment’s procurement that they cannot achieve themselves?
As a professional procurement agent, we bring industry knowledge to all our projects. The procurement of FF&E and OS&E can be straightforward if a methodical approach taken, coupled with an understanding of the industry, which is necessary to get the best out of your supply chain. We work with an expansive network of international suppliers and craftsmen, negotiating terms and pricing that we can then pass on to our clients.
We have recently been engaged on a project to recover the delivery program where a client – highly experienced in general contracting, but inexperienced in hospitality procurement – insisted on adopting a contractor approach to the packaging of the FF&E procurement. We have been working closely with client, manufacturers and suppliers to identify and close gaps – including introducing trusted suppliers we know will deliver as promised – expedite the delivery of component items and regain control over the programme.
Tell us about a usual challenge in procurement services…
Part of the FF&E procurement agent’s role is to ensure that the many component parts of the interior fit-out come together in the right place and at the right times. For example, it is not unusual for an item of bespoke upholstered furniture to have between five and ten individual components – the frame, two or three different primary fabrics, trimmings, secondary fabrics for cushions etc – all of which come from different manufacturers or suppliers and may also need flame-proofing and fire treatment. We take control of the process and, drawing on our years of experience and using a tried and tested network of logistics providers, ensure that components are brought together to deliver the item of furniture that a designer has created.
How have you coped with the current supply chain crisis?
After 35 years of working in the EMEA region, we have witnessed many market shifts in response to socio-economic world events. Each of these has led to the strengthening of a particular area of our network and reinforced the importance of extending and improving our overall network, in order to boost its resilience.
During 2020-21, and in 2020 in particular, manufacturing was inconsistent as governments variously allowed and prevented business from working. However, longstanding relationships with key manufacturers allowed the production of goods for projects that needed to be completed during the pandemic to be prioritised. We also benefitted from using new suppliers in regions where government restrictions were lower and the good relationships we established there have allowed us to build diversity and resilience into our supply chain.
Like others, we saw a dramatic increase in demand for sea- and airfreight space which, when coupled with a tightening of the global availability of containers, has resulted in shipping costs increasing significantly. We maintained strong relationships with our international shipping agents and by leveraging the volume we handle annually; we were able to reduce the impact to clients and deliver two large projects in remote regions.
What role does the procurement agent function play in enabling a client to face project challenges?
Using a professional procurement agent makes a significant difference in reducing risk for the project owner. FF&E procurement can be fairly complex at times, and it requires an understanding of how components go together; market knowledge and a methodical approach. While we cannot predict all obstacles, our knowledge make it easier for us to adapt to challenges, which may not be possible for clients to achieve directly.
Assembling a professional team that can collaborate and play to each other’s strengths is the basis of a successful project: the interior designer develops the creative vision, while the owner and operator creates the culture – responding to brand constraints and local influences – for its guests; we then use our resources to marry the two in order to achieve the broader vision, within the client’s budget and program expectations.
How do you see procurement function changing in the current climate?
Previously stalled projects are restarting and new projects are coming online, signaling a period the return of confidence in the industry and ultimately growth. Demand for professional procurement services is increasing. Despite current international supply chain and logistical challenges, our clients still seek value for money and are demanding high standards to be maintained. Over the years we have seen traditional or preferred global manufacturing locations adapting to international circumstances and we expect this to continue.
Areen Design brings broad insight into project delivery can offer clients solutions. For example, the increased time and cost of shipping out of China has resulted in furniture manufacturers from southern and eastern European becoming more competitive. The ability to produce in Europe, coupled with the speed and relatively low cost of trucking goods across Europe, is now seen as a risk-reduction tool that can be offered to clients.
Alternatively, where appropriate, we might advise clients to consider starting the procurement of FF&E early to cater for potential production delays or prolonged shipping durations. Whilst they might incur storage costs, they could reap the benefit of having the furniture they need in stock, which would allow them to finalise the project on time and thereby avoiding the more extensive cost of program overrun.
If a business partners with you, do they need to move all their purchasing to Areen-nominated suppliers?
We are a fully independent agent and although we might recommend suppliers for their quality, value and reliability in delivery, we can work with any suppliers that have been recommended or specified. If a client has a supplier they would like to use, based on brand standards or preference, we can accommodate that.
We are starting to see clients looking to partner with agents for multiple projects, particularly in the so-called giga-projects. Diriyah Gate Development Authority (DGDA) in Saudi Arabia is an example where there is an extensive program of development – with 38 hotels in the pipeline – and procurement agents are being prequalified to tender for packages of three-, four- and five-star hotels , rather than each individually.
The benefit for the client is that they can expect to see a lower average fee for a series of concurrent or overlapping projects and build a familiarity with the process that provides for more efficient project delivery. Established teams can be mobilized quickly, without building in time to understand the systems or processes of a newly-formed team. Clients that have worked with us in the past know that we provide a design-led approach to procurement, ensuring quality and brand standard compliance are paramount to our solutions.
What advice do you have for clients who are looking for procurement services?
Find a team you can partner with, rather than simply employ. They should consider an agent that provides value-for-money, which requires taking a holistic view to a project. Looking at the fee in isolation of the cost-benefit brought to project by an FF&E professional can lead to the wrong decision being taken based on the fee alone. As with all consultants, the fee must be reviewed in line with the quality of the service offered.
With our ‘Where Anything is Possible’ mantra, the Areen procurement team brings with it a strong background knowledge, understanding – and where necessary, a resource – of interior and furniture design and it goes without saying that knowledge of the industry, experience, expertise and global reach is key.
The post Q&A: Niklaus Lünow, Areen Design appeared first on Sleeper.