Keeping It Close to Home
Use of domestic sources can greatly reduce FF & E purchasing costs
By Carl Long
Increasingly , we are being asked by our clients how to source FF & E ( furniture , fixtures and equipment ) for their casino developments closer to home rather than from Asia . Growing unpredictability of the global supply chain combined with the tightening labor markets in the construction trades has eliminated any wiggle room in project timelines .
After having worked for years on some projects , development executives want to have a clear understanding of their supply chain and be as close to the sources as possible . They do not want the success of their projects in the hands of a factory on the other side of the world or waiting for a steamship to make its way across the Pacific Ocean .
Effectively sourcing product from North America for casino developments requires proper planning and coordination of design . This means the tribe ’ s owner ’ s representative needs to engage an interior design firm and FF & E purchasing company , like PMI-Tribal Services , in a thorough conceptual budgeting process .
This involves reviewing renderings , reading furniture layouts , and understanding product assumptions to develop a preliminary FF & E project budget . Armed with that information and a clear geographic preference from ownership , qualified interior design firms should be able to design product within those budget constraints and work closely with the tribe ’ s FF & E purchasing company , to identify qualified manufacturers . There are manufacturing resources available throughout North America that can deliver beautiful product within budget if you know where to look .
If ownership wants to pursue a more local sourcing strategy and the project has already moved past the budgeting stage , a more in-depth analysis of the current specifications is required . Some key questions need to be asked of the design and ownership team as it relates to the design specifications . Some of those questions are :
What critical items need to be made domestically ? Are there project-critical items the owner wants to have produced close to the project for coordination purposes ?
Are there materials or finishes that prevent the product from being made domestically ?
Are there design details that make domestic production prohibitive because of high labor costs ? Can those design details be modified to reduce manufacturing labor costs ?
If the team works together to understand what is included in the specification , then items can be pulled from imported buyout and sourced locally . Finally , understanding the total cost of imported product may help bridge the gap between imported product and domestic goods . Storage and delivery costs for imported product are higher and often overlooked in the true cost of imported goods when the focus is solely on unit price .
Given that tribal projects must receive product on tribal land as part of a typical tax mitigation strategy , the storage and delivery costs are higher because imported product typically ships in bulk at one time . Domestically produced product can deliver in less time and in more controlled loads . This reduces storage costs as well as serving to limit a tribe ’ s potential tax exposure related to extended storage times .
Tribes that are planning a new casino project , or are currently involved in one , need a sourcing strategy that utilizes domestic sourcing to mitigate the risks of an increasingly volatile FF & E marketplace and tight labor market . An FF & E purchasing company , like PMI-Tribal Services , can help develop that sourcing strategy to keep projects moving forward . The stakes are too high to not have a plan .
Carl Long is senior vice president of Purchasing Management International , the gaming industry ’ s leading FF & E and OS & E procurement company . He also is president of the International Society of Hospitality Purchasers , and regularly speaks on topics related to global sourcing and procurement .
30 TRIBAL GOVERNMENT GAMING 2020