Sticky Inflation: Insights From the 2023 NEST IFM Summit

Facilities management (FM) professionals from some of the country’s best-known retail brands recently converged on the Las Vegas Strip to share their insights on inflation, supply chain delays, and their impact on FM expense management.

The panel discussion was part of the 2023 NEST IFM Summit, a two-day thought-leadership conference for FM professionals to share knowledge, learn about new trends and advancements, and network with friends and colleagues. NEST is the industry leader in Integrated Facilities Management (IFM) and provides multi-site facilities and construction management for some of the world's best-known companies.

NEST CFO, Jason Cesare, moderated the session with panelists Randy Rokosz, Senior Director of Purchasing & Facilities for western apparel brand Boot Barn; Laura Gross, Senior Manager, Facilities for furniture company American Signature, Inc.; and Craig Nichols, VP Design, Construction and Maintenance for retail brand Signet Jewelers.

Here are a few highlights from the session.

Managing Inflation in the Supply Chain & Vendor Costs

Sometimes, complex challenges can have simple resolutions. If costs are out of whack, work with your vendors and partners to identify the precise issue and its location in the supply chain. Ask the questions required to narrow down the scope of the problem. While this approach may seem obvious, the root cause can occasionally get lost in the “cost increase” headline.

Digging a little deeper can make the issue more containable and resolution more achievable.

When it comes to managing vendor costs, Randy Rokosz underscored the importance of understanding what drives vendor costs from the contract outset:

“Go back to your [service delivery] RFP and ask yourself, ‘Am I asking the right questions? Am I asking the important questions?’ If you’re not, rewrite the RFP [and [rebid it].”

“And just because you’re in the middle of a contract doesn’t mean you can’t renegotiate,” he added.

Craig Nichols suggested focusing on cost outcomes. For example, by removing Not-To-Exceed limits (NTEs) on trade services, Signet Jewelers enabled vendors to increase the number of first-time fixes achieved, translating to significant cost savings.

“We used to shop for vendors. Now vendors are shopping for clients,” he explained. “We had to flip the model and try to be the client of choice. Without the NTEs, we’re helping drive that first-time fix. We closed out 11,000 more work orders in 2022 than 2021一and spent $1,000,000 less一even without NTEs.”

Laura Gross said they work similarly at American Signature. While she is required to have NTEs in place, she encourages vendors to call or text her team directly to discuss dollar limits when it means the vendor can stay on site to complete a first-time fix.

Managing Backorder Supplies, Unit Delays & the Repair vs. Replace Question

Showing a history of repairs throughout the useful life of a unit (and beyond) can do a lot to get a purchase decision over the line.

“It’s showing all those repair costs over the years,” explained Gross. “By the time it’s time to replace the unit, [repair costs] show I’ve already bought a unit with that repair money.”

And lead times for equipment are still quite protracted. HVAC units are currently taking 30 weeks or more, requiring ordering now for 2024.

Having the executive team experience the limits of equipment can sometimes be more effective than pages of analytics.

For example, if senior leadership found themselves in a store with a malfunctioning HVAC unit in the summer heat, they may be more inclined to approve an HVAC buy than they would otherwise.

How Do You Balance Budget Cuts With Supporting the Customer Experience?

As the session wrapped up, the panelists addressed reconciling budget cuts with maintaining a top-quality customer experience.

Rokosz acknowledged that while he’s employed by Boot Barn, he really sees his job as working for the Boot Barn customer.

“You have to be able to explain to [senior management] the sensitivity to FM issues at the store level,” he said.

Gross agreed. Tying FM performance to sales or lost sales during unscheduled downtime can help make the case to save at least a portion of the proposed budget cut.

“It’s always telling that [sales] story,” she explained.

“Knowing your program data can help strengthen your position, and understanding payback periods and how each dollar of spend translates to performance will be expected from most CFOs,” added Cesare.

“Saying, ‘I need this, the stores need this, our customers need this’ can make a difference,” he concluded.

Now, who could argue with that?

Be sure to check out the audio link for the entire discussion.