On Logistics and Supply Chain Solutions in Hospitality

Aethos Consulting Group™ Managing Director & CEO Keith Kefgen and Axis Global Logistics Managing Partner Wesley Cheringal sat down earlier this week at the 39th Annual NYU Hospitality Industry Investment Conference to discuss the importance of their strategic partnership. Kefgen and Cheringal share insights on why Axis, a logistics and supply chain solutions company, is important in the hospitality sector. Kefgen: Wes, so you’re the Managing Partner of a supply chain solutions company, Axis Global. From your nearly 20 years of work with Axis Global, can you clarify for us how a business benefits from a logistics firm? Cheringal: The DNA of Axis Global comes from the Advertising and Marketing world, just after the days of “Mad Men.” We quickly learned that to be relevant you had to be able to perform at a high level and provide services that your clients need to make them successful. We realized our clients weren’t looking for a “logistics” company, but rather they were looking for a “solutions” company that can create customized supply chain strategies from end to end. We can manage for them to optimize efficiency, reduce performance risk and the associated costs. So, we grew the company’s resources around these needs. Today, we have a broad suite of capabilities including air, sea and ground transportation, warehousing and fulfilment, white glove delivery, installation services as well as printing and graphics creation, management and fulfilment. In each of these disciplines, we create merchandising, PIP, and even special events solutions using a combination of our own assets around the globe. Our resources are augmented by a network of well vetted partners who deliver very specific services as part of an overall supply chain strategy. Kefgen: Can you share a recent success stories so that we can wrap our arms around what it is that you do? Cheringal: We have been able to demonstrate our value as a solutions provider in a variety of industries with a broad range of needs. Having achieved significant traction in the retail and luxury retail vertical, here are examples are situations that required complex supply chain solutions:
  • The first example is with a Top 5 global retailer who was looking to build out and open multiple flagship store locations in the New York metro area over a 3-year period. Like most retailers of this size, this company already had the resources to execute a supply chain for the goods on the shelves but those same capabilities don’t transfer to managing the supply chain to support new store development - in terms of the design and marketing elements of the store…. For example, FF&E, visual elements, millwork, lighting, and flooring. In this case, we worked with the construction manager, and the marketing and design teams to understand the needs and timing of each location. Ultimately, we created a dedicated warehouse for these projects where we could receive, quality control, and catalogue every element to be staged for delivery and installation in the new store locations. We were responsible for coordinating directly with vendors, managing domestic and international transportation, executing timed deliveries to the site, and assisting with the installation of many of the elements. During this multi-year process the client had complete visibility of our status updates through our project management portal, and Axis was entirely accountable for the success of the program.
  • Another example which highlights the depth of our solutions capabilities is the following: Hudson Yards in NYC is the largest privately funded mixed-use development ever undertaken. We are currently working with one of the primary developers in the project as well as an international hotel group which will be one of the anchor tenants in the project. For the developer, we have designed, manufactured and installed all the construction barriers on the sight which contain beautifully rich graphics that will be used for the duration of the project. This was a complicated installation as the project is “wrapped around” several historical buildings to which we could not anchor our barriers. We custom designed the installation systems for these barriers (which look more like works of art than construction barriers) that would properly support an exterior installation and work within the codes protecting the historical sites. The developer appreciates our creativity, ability to manage all elements of the project and coordinate with the trades on site to deliver high-quality solutions which represents their brand. On the same site, we are working with an international hotel group on the logistics elements of opening their new property at Hudson Yards. We are in the initial stages of the project and are working with their procurement manager and designers to develop a customized logistics strategy for the project. We won the project based on a glowing recommendation from the developer for whom we handled the construction barrier -- because we created a customized solution and take full accountability for all the elements of the project.
Kefgen: Where can Axis provide the most value for a hotel project? Is it at the brand level, the owner and developer level, the management company, or with individual properties? Cheringal: Great question because it’s not an easy one. Every hotel project is like a snowflake; they are all unique because the responsibility for the logistics for new hotel construction, renovations or rebranding can lie with a different constituency. At the brand level, we add value by being vetted on their approved vendor list so we can provide brand consistency and accuracy when working with the owners, developers, and management companies of franchisees. The owner/developer is usually responsible for the construction elements of the project and either has their own team or outsources to an owners rep., construction manager, project manager etc. In some cases, we can add value if hired by the owner to create an end to end supply chain solution for the FF&E, high end art objects and other design elements of the project. If the project/construction manager to a logistics company subcontracts these services out, it creates an opportunity for these services to be “marked up” or wrapped in a management fee. If hired by the construction/project manager, we add value with our buying power in the marketplace and by providing a single point of accountability in a complex vendor network. We also can find opportunities for consolidation, which reduces costs, and employ other strategies only available when managing the entire supply chain. If we are hired by the property manager (primarily for refreshes and renovations) or the individual property, we can add value by taking control of a complex project with a high degree of accountability allowing the manager of property to avoid full time staffing to manage these projects. Kefgen: What need, or benefit, is met when a hotel company consults with a logistics specialist such as Axis Global? Cheringal: The notion of having a single point of accountability for the entire logistics network provides multiple benefits. First, managing the entire supply chain allows a single point of accountability where if any link in the chain is at risk we can work across the supply chain to pick up any slack created by the failing link. Additionally, by cutting out middlemen in hiring the logistic vendors for the entire project you avoid mark ups by project managers, procurement vendors and construction managers. The ability to view the status updates and details of the entire project allows the owner/developers and managers the comfort that they can access the entire details of the project 24/7 from any Internet connected device. This would not be possible if multiple parties who have no accountability among one another manage the various links in the supply chain. Additionally, the most frequent source of cost over runs and delayed openings is non-performance of a link in the supply chain. By managing multiple elements of the supply chain, we can “flex the chain” to make up for a failure or delay of any individual link to keep the project on time and on budget. Lastly being a stand-alone logistics provider who is vendor agnostic, Axis Global offers a single source solution. Although we have vetted all the partners we use for transportation, warehousing and installation, we are essentially partner agnostic allowing us to offer the right product for the best solution for the client as opposed to ‘shoe horning' a clients’ project into a finite set of proprietary assets. Kefgen: Aethos™ also works with restaurants, restaurant chains, and restaurateurs. How so? Cheringal: We work with restaurants on sourcing and installing all the elements of the front of the house FF&E etc. Back of the house (the food prep area) requires very specific skills in kitchen equipment, design, workflow etc. and that is not one of our core competencies. We partner with kitchen equipment and design firms providing the logistics to get the equipment to the location for installation. We can ensure it will be delivered when needed to be installed rather than have it is subjected to sitting on an active construction site. In the fast food or fast casual restaurant space, closings or conversions have become a frequent trend in the industry. We can help by un-installing fixture and equipment and either transporting it to a new site or storing it until it can be re-deployed. Our print management services can provide printing and graphics support and ensure colour consistency and quality to enhance and protect the brand across locations around the world using our print partners in the US, Asia, and Europe. Kefgen: Is there anything else that you want to share with us about how a logistics firm, specifically Axis Global, can assist us in the hospitality space? Cheringal: While we are fairly new to hospitality, we believe there are many similarities to the services we provide to retailers. We believe that the industry is ripe for single source logistic solutions providers to create efficiencies and accountability in their supply chains. Not to disregard the specific needs of the hospitality industry but we look at every client’s situation as unique and develop a supply chain solution that meets their needs in almost any industry.