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The right price for maintenance: e-Procurement system enables management firms to streamline supply orders.

Many multifamily companies have poor community-level purchasing habits that have. become an accepted way to do business, The result is busted budgets, rogue spending, decentralized purchasing programs and a .general lack of control at the corporate level, among other issues that plague companies. Technology-based procurement plans can help.

Typically, maintenance, repair and. operations (MRO), paint, floor covering and office supply purchasing decisions are handled at the community level by onsite staff. However, the corporate office often negotiates pricing and discounts with suppliers. The result can be problems created when purchasing decisions made at the community level are not in line with corporate guidelines. This can erode the value of the negotiated supply contracts. This leaves the management company with little or no control over the supplier, product and pricing choices being made at the community level, not to mention that maintenance team members who are actually making purchases are doing so against a budget they may have not seen or understood. Bill Nye, CEO of Caviness and Cates, explains, "Before we had a technology solution for purchasing, some of our maintenance team members were keeping budgets with a legal pad and a calculator."

A Better Way

e-Procurement solutions are designed to increase NOI for management companies by giving greater insight while monitoring spend. They suggest savings opportunities on MRO, paint and floor covering--the largest controllable expenses at the community level.

When management companies decide to implement a managed procurement solution, community-level purchasing decisions are made within corporate guidelines, ensuring maximum discounts. Taming budgets are also accomplished with the technology that an e-procurement solution brings to the table.

"We went from asking our maintenance staff to do everything manually, to asking them to simply log in to the system to see their budgets in real time at the point of purchase," Nye says. "The first quarter we were on the system, every single property came in under budget for the very first time."

A true business solution should be beneficial in more ways than one. e-procurement is no exception. A technology platform is only the first piece of the puzzle. It's essential that management companies have a team of experts working in partnership with them to help navigate and update ever-changing catalogs for each portfolio and identify areas for spend reduction and product standardizations.

Technology is the tool to communicate and designate established standards to the property level. Team members are able to place orders with multiple suppliers from one electronic catalog with a few clicks.

That means they are saving time by not having to frequently order from several different suppliers. The time saved from calling, faxing and logging on to different websites for .each supplier or making offsite trips to big box retailers can instead be used to concentrate on work orders and make-readies.

"We don't need our maintenance staff worrying about budgets and wasting time," Nye says. "We need them to make informed purchasing decisions; then move on to their main function which is keeping our residents happy. Flaying. that balance is critical.

"Our maintenance folks were seeing a lot of windshield time going off site to purchase from big box retail: their mileage is calculated into the overhead and we used to budget $800 .a month for maintenance mileage. Now, we budget $450."

Efficiencies that managed procurement solutions create translate into real dollars. In terms of per-unit savings, Nye says, "We've seen an almost $7 per month drop per unit in our maintenance costs, and I attribute that 100 percent to the technology."--Anne Kumth Director of Marketing. eSupply Systems.
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Title Annotation:Procurement
Date:Mar 1, 2014
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