How Hospitality Teams Curb OS&E and FF&E Costs Using Technology
How Hospitality Teams Curb OS&E and FF&E Costs Using Technology
Procurement is a major activity in the hospitality industry. Designing and equipping comfortable, functional spaces requires a balance of art and science—and also finance. Unlike other types of procurement, operating supplies and equipment (OS&E) procurement and furniture, fixtures, and equipment (FF&E) procurement blend project management with traditional procurement activities to ensure client-facing spaces provide the right guest experience while maintaining cost efficiency.
Teams seeking to achieve interior design, sustainability, and experience goals for hospitality spaces are most successful using a mix of technology and strategy. These methods make outfitting a location like a boutique hotel, conference area, or group of guest rooms easier and more cost-effective.
Download the free tool: Hotel Budgeting Template
What are OS&E and FF&E?
OS&E and FF&E are the two main procurement categories for hospitality and property management businesses. While OS&E and FF&E go hand in hand, they pertain to different needs. OS&E refers to items required for daily operations, while FF&E covers procuring long-term assets.
- OS&E procurement spans the essentials required for the day-to-day operations of a hospitality business, such as a hotel, a vacation rental, or a co-working space. This includes consumable items and those that need frequent replacement, such as:
- Bed linens
- Cutlery and glassware
- One-time use items like disposable cups and napkins
- Soaps and lotions
- Cleaning supplies
- FF&E are larger, more durable items that are not affixed to the structure of a building but are essential for operations, including:
- Furniture like sofas, beds, and desks
- Wall coverings
- Fixtures that can be moved but are often installed into spaces, such as decorative lighting fixtures
- Equipment such as computers and kitchen appliances
Both OS&E and FF&E are critical in setting up any operational establishment, ensuring smooth experiences for guests and employees alike.
OS&E and FF&E procurement challenges
Procurement for the OS&E and FF&E categories presents several challenges that are different from more standard procurement activities, such as ordering common office supplies or managing inventories across locations. The sheer variety of items needed, along with larger design and space considerations, require more planning and forecasting than routine supplies management. Since the portion of a hotel's construction budget for FF&E alone is generally around 9 percent, managing costs is fundamental to the financial outcomes of your project.
Unlike standard office or location supplies, OS&E and FF&E purchases require an understanding of operational needs, design compatibility, durability standards, and intricate delivery logistics. The procurement process often involves more complex vendor sourcing and contract negotiation to accommodate the budget while guaranteeing timely fulfillment of high-quality goods.
Teams procuring fixtures and operational supplies generally run into challenges in these seven areas:
Order lead times
Estimating and maintaining lead times for OS&E and FF&E can be particularly challenging due to the custom nature of these types of items. These orders may require production that extends shipping times, and procurement teams must also manage unexpected delays in manufacturing or shipping that have become more common with global supply chain disruptions.
The Institute for Supply Management (ISM) delivery times index shows that the average lead time for materials and inputs rose by about 35 days in the United States between 2020 and 2022. This unpredictability can make project planning difficult and create implications for timelines and budgets when orders get off track.
Product quality
Quality matters when you’re outfitting an office, vacation rental, hospitality venue, or other client-facing space. The diversity and specificity of necessary items mean quality can vary widely among suppliers, making consistent product assurance difficult.
Procurement teams must conduct thorough research and vetting of suppliers and maintain rigorous inspection processes upon delivery to ensure products meet the project's standards. This meticulous attention to detail is crucial to avoid costly replacements or delays due to substandard items.
Vendor sourcing and management
Vendor sourcing is always challenging, but contracting with high-quality vendors for larger orders in these categories adds more complexity to the process. Procurement teams must evaluate potential suppliers, review their references and compliance practices, and negotiate for cost-effectiveness.
Establishing long-term relationships with trusted suppliers is the best way to maintain consistency in procurement, but this approach may be more time-consuming. Having access to a centralized pool of quality vendors makes the process faster and more reliable.
Once vendors are under contract, it’s important to maintain these relationships for continued success. This hinges on clear communication, regular performance evaluations, and a partnership mindset. Technology plays a key role in helping teams maintain strong communication channels. It streamlines many vendor management processes through efficient data management, feedback mechanisms, and centralized contract and invoice systems.
Budgeting and forecasting
Budgeting and forecasting for OS&E and FF&E vary from standard procurement since the needs and projects associated with these buying categories change over time. Accurately predicting costs relies on strong data regarding market trends, product life cycles, and the impact of external factors such as pricing and supply chain concerns.
At the same time, teams must balance quality with cost while securing purchases that align with the project's design and operational needs. A technology solution provides much-needed visibility to develop accurate budgeting and forecasting for OS&E and FF&E expenses.
Hotel Budgeting Template
Growing a hotel business calls for strong process, cost savings, and commitment to guest satisfaction. Download this hotel budgeting template to achieve all three.
Order and invoice tracking
Manually tracking invoices and completing order processing for OS&E and FF&E can be a challenge. Manual management isn’t scalable, as it requires increasing time and resources to monitor the status of each order, reconcile invoices with deliveries, and ensure payments arrive on time. Delays or discrepancies can lead to project setbacks, impacting budgets and schedules. Creating an efficient tracking system helps procurement teams maintain control over the process.
Accounting and payments
Managing accounting and payment processes for OS&E and FF&E requires accounting teams to keep track of transactions from an increasing pool of vendors. Consolidating these activities into a platform helps maintain transparency and ensure timely payments. Without a system, the risk of errors increases, leading to budget overruns and strained vendor relationships. A procurement platform can mitigate these risks, providing real-time visibility into every transaction and better AP management throughout the purchasing process.
Spend analytics
Finding and contracting with high-quality vendors for OS&E and FF&E is a primary activity for procurement teams managing hospitality procurement projects. Vetting vendors for big-ticket purchases like furniture, equipment, and operational needs can be intensive. What's more, securing punctual delivery and maintaining contract compliance for these items is vital to ensuring the project is completed on time and within budget.
Optimizing OS&E and FF&E procurement processes
Using best practices in the procurement process for OS&E and FF&E, such as leveraging technology for supplier management, adopting strategic sourcing, and implementing standardized procedures, can significantly streamline operations. These methods enhance efficiency, reduce costs, and improve the quality of outcomes, making the procurement process more effective.
Outlining purchasing policies
Outlining purchasing policies for OS&E and FF&E procurement streamlines operations, guarantees compliance with industry standards, and fosters transparency. It enables better budget management, minimizes risks associated with supplier negotiations, and enhances the overall efficiency of the procurement process. This strategic approach leads to significant cost savings and operational excellence.
Create a repeatable approval workflow
Creating an approval workflow for OS&E and FF&E procurement introduces a structured decision-making path, enhancing efficiency and accountability. This process verifies that all purchases are justified, align with budgetary constraints, and meet quality standards. It significantly reduces errors and unauthorized expenditures, streamlining procurement and fostering financial discipline within the organization.
Centralize order placement and management
Centralizing order placement and management through technology for OS&E and FF&E procurement brings unparalleled efficiency. It simplifies tracking, creates cohesive purchasing strategies, and reduces duplication of efforts. This consolidation leads to better discounts, quicker decision-making, and a more transparent procurement process, ultimately saving time and money.
Manage procurement using technology
Using a procurement platform for OS&E and FF&E streamlines the sourcing process, allowing for real-time inventory tracking, automated purchase orders, and consolidated vendor communication. This not only enhances operational efficiency but also ensures cost-effectiveness through competitive bidding and bulk purchasing advantages, significantly impacting the bottom line.
Automate accounting and reporting workflows
Automating accounting and reporting workflows in a procurement platform optimizes OS&E and FF&E management by providing accurate, real-time financial data. Using software for these processes reduces manual errors, streamlines budget monitoring, and informs financial decision-making. This enhances transparency and compliance, leading to more strategic purchasing and improved financial health.
Hotel Budgeting Template
Growing a hotel business calls for strong process, cost savings, and commitment to guest satisfaction. Download this hotel budgeting template to achieve all three.
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Most common OS&E and FF&E tools
In OS&E and FF&E procurement management, software platforms with integrated inventory controls, purchase order automations, and financial reporting capabilities help procurement teams organize the order and supplies management process. These tools typically include features for tracking orders in real time, overseeing supplier relationships, and automating repetitive tasks.
SaaS platforms are the most efficient way to manage these categories, offering the flexibility to access data and maintain processes from anywhere. Other tools, like inventory tracking and reporting apps, can also ensure smooth operations and optimized spending for OS&E and FF&E purchasing.
Inventory management software: For projects that need granular counts, an inventory system that tracks and monitors stock levels of OS&E items will ensure optimal inventory at all times.
Digital procurement platforms: Procurement tools help teams centralize the purchasing and tracking of FF&E items from multiple vendors on a single platform.
Budgeting and forecasting tools: A budgeting software tool that goes beyond simpler methods (such as a hotel budgeting template) can provide detailed insights into spending patterns to help forecast future procurement needs for both OS&E and FF&E.
Maintenance management software: A maintenance manager organizes and tracks maintenance activities for FF&E items to extend their usability and maintain quality standards.
Vendor management systems: Vendor management tools centralize and streamline vendor relationships by managing contacts, contracts, performance, and communications in one central place.
Space planning tools: A space planner helps achieve effective layout planning of FF&E items, enhancing functionality and aesthetics.
An all-in-one-alternative to the OS&E and FF&E tech stack
Many hospitality and property management companies invest resources in assembling a tech stack to handle the demands of OS&E and FF&E procurement. This often involves integrating multiple specialized tools. However, the right stand-alone procurement platform can give brands the control and visibility of a full tech stack without the challenges of implementing one.
With Order.co, businesses can easily manage all aspects of OS&E and FF&E procurement from a single, easy-to-use platform that lets stakeholders initiate and track orders for these categories without slowdowns or concerns.
Order.co offers end-to-end procurement features for OS&E, FF&E, and every other category of spending, including:
- A curated catalog that allows buyers access their preferred OS&E and FF&E products, making it easier to find exactly what they need from quality supply partners
- Vendor-agnostic ordering that lets stakeholders order from any supplier or brand, even offline vendors
- Customizable approval workflows to automate the purchasing process, ensuring all purchases are reviewed and approved by the necessary stakeholders
- Invoice and payment features that consolidate invoice management and payment processing within the platform, which reduces administrative overhead, expedites payment cycles, and improves cash flow management
- Advanced reporting tools and spend analysis features that provide valuable insights into procurement activities, spending patterns, cost-saving opportunities, and potential procurement strategies
If your organization wants to learn more about the benefits of end-to-end procurement management in a single, powerful platform, schedule a demo of Order.co.
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