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Jay Schwartz, Vice President of Procurement, LXR Luxury Resorts

Industry veteran reflects on building relationships, navigating the new economy and avoiding nervous breakdowns over bathroom amenities.

Friday, January 29, 2010
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Jay Schwartz's first calling was food.

Throughout high school, Schwartz worked in hotels and restaurants, leading him to enroll in the prestigious Johnson & Wales University. The background helped when he made the transition into procurement at a country club in New Jersey.

"I can stand toe-to-toe with any food director and chef and discuss food specs as well as operations and equipment," he said.

His first taste of the procurement business was a revelation.

"I said, 'I never want to go back to the kitchen again. This is heaven.'"

His work with the company led to overseeing sourcing at multiple renovations and openings of properties across the country. Schwartz later moved onto procurement positions at the Resort at Squaw Creek in Lake Tahoe, the Waldorf=Astoria, and Starwood. He joined LXR Luxury Resorts in 2005.

Schwartz recently share his insights on the business with Buyer Interactive.

The LXR collection includes hotels and resorts from various chains. How do you leverage your purchasing power as a company when you have different brand standards?
The purchasing power can be leveraged with the same manufacturer and distributor, but the standard can be different. You can have a bed sheet in a property that is a limited-service hotel, and you can have a bed sheet in a property that's a full-service hotel, and one for a luxury hotel, and all three can come from the same manufacturer or mill or distributor. You don't need the same exact product in the hotels, but you can leverage the volume with that producer or distributor. That's the best way to negotiate product.

What do you look for when you are deciding on new products to purchase?

Availability, quality, speed to market, cost, how the guest is going to perceive it, and how our employees work with the product.

What’s the best way for a supplier to get your attention?
People mail things to me, people e-mail things to me, people call me. I love speaking to new suppliers. The best way is to e-mail me with what you want and schedule a phone call. Cold calling or walking in off the street is generally not the best result. You would be shocked at the number of solicitations you get and you don't know who is calling you. It's an unlisted number or from a home line and you don't know who they are. If you're busy, you tend not to pick up the phone. Or someone e-mails you from an unidentified email account. I have no idea who this person is.

What industry trends do you see emerging?
Everybody in this economy is trying to re-examine what they need vs. what they want. The overall trend we've seen with our suppliers is that most of them are stressed in their ability to perform based on world events. In the past, people had warehouses and trailers of inventory, but now people don't have that kind of product readily available. In 2007 and 2008, you could pick up the phone and say, 'Send me XYZ,' and they would say OK and just send it. Two years later if you decide to change out your hotel to another product, it's not sitting in a warehouse to get. That excess inventory, people got accustomed to having that product floating around and not planning as they should. Now people have to pay much more attention to inventory levels and product supply lines.

In this economy, you have to be sure that your supplier is on sound financial footing. How do you vet potential suppliers for financial soundness?
It's a very important question. In some cases it's very difficult to figure out the creditworthiness of the supplier. It's not uncommon for us to do orders in a six-figure range or in excess of $1 million for several hotels. What are the payment terms? In today's market you have to make sure the people you're dealing with are credit-worthy. In many cases, it's not your supplier but the people they're dealing with. The number of suppliers today who have the wherewithal to partner with a company of our size is very limited.

How has the economy affected your purchasing?

Many vendors have limited their inventories and their cash flows have changed. As a result, it's affected how the vendor can provide services to us. We're reasonable people and we're willing to help vendors where need be. But the system seems to be under a strain, and rightfully so: The economy is not good. You really have to pay attention to supply chain and inventory, and better communicate with suppliers on forecasts so they can inventory properly. Most of the suppliers have cut inventory back as much as 30-50 percent.

What's the toughest item you can recall sourcing?

Products that a guest utilizes are very difficult to source because they are subjective. When you ask three, four, five people in a group what they think, everyone has a different answer. It's difficult to source guestroom linen products because something that feels good to you feels different to me. Someone may like a firm mattress and someone else may like a softer mattress. So many people are using them, no one ever wants the same thing. You could have a nervous breakdown trying to pick a bathroom amenity. Those things are difficult to get a group of people to agree this is what you want. So when you agree on a product and get it, that's good.

In what area do you see the most innovation?
There seems to be a lot of innovation in the green area. IT is forever innovating itself.

With technology, it's constantly changing and it's difficult to figure out when to buy. How do you decide when the right moment is to jump in?
I am not a technologist. The tech people are in a much better position to answer that question. The cost to implement whatever IT solution you have needs to be heavily weighed in what you're doing. You never want to be the first person to experiment with the supplier software, you never want to be the last and have to change over right away. I'll ask [software sales people], 'Are you using it in a commercial hospitality setting anywhere?' In today's modern age, when you implement, it takes a great amount of time and effort and planning. You don't want to be the guinea pig. If you're going to be the first, you need some assurances from the software supplier.

What should suppliers do to build a good relationship with you?
Communication, that's the key. If you're a supplier that I work with and we're partners in the business, there's nothing that drives me crazier than not communicating. Many cases, it's a phone call back, an e-mail back, a fax back, a visit. I don't want to find out we're having a challenge when it's past the boiling point. I'd rather find out beforehand. Most of the communication removes the challenge or potential challenge because you know about it beforehand. Whether it's how a product is going to perform or not perform, or be early, on time or late, or if something is going to be defective: The time to find out about it is not after, it's beforehand so we can adjust accordingly. It's a true partnership: You're servicing our hotels and I'm relying on you. Don't avoid any of the challenges, because they only blow up later down the line. An e-mail with a note is, 99 percent of the time, all I ask for.

What is your opinion of start-up suppliers? Would you consider them if a product fit your needs?
Sure. No one wants to be the person who threw Bill Gates out of his office. There are start-up suppliers and people who are doing things great every day. If you can find one of those products or people, you have the chance to be at the forefront of the industry or cut a great deal. Whether it's the new green guestroom amenities or a better towel or a better performing garment, something more cost-efficient or makes an employee's job easier, all that stuff is great.

What’s the best piece of advice you can give to anyone who aspires to a similar job as yours?
To continue to ask questions and try to learn as much about the industry as you can, and work with as many people, as well as vendors, that you can.

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