The process of procuring products for a multifamily property can be daunting and can drastically affect the owner’s bottom line.
Since product and services costs have such a substantial impact on a property’s overall profitability, everything from appliances to paint to water must be acquired in the most efficient way possible. With that in mind, it’s imperative for property managers and owners to develop an effective and efficient product procurement system that allows them to identify quality products and services while still reducing costs.
With more than 50 years in the property management business, Western National Property Management has developed a number of such strategies, described below. Together, these methods enable our property managers to secure the products they need without sacrificing quality—while, most importantly, protecting the owner’s bottom line.
One way owners and property managers can reduce costs related to product procurement is by negotiating prices based on the total volume at the portfolio level, rather than by individual property. At Western National Property Management, we negotiate our contracts on behalf of all the properties we own and manage. That way, we obtain far better rates than we would if we arranged the deals per property.
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Another strategy we employ in our product procurement process is ensuring that all quotes are completed through the purchasing department instead of at the property level. When the purchasing department controls the bid, we can control the product specifications and the scope of services, as well as ensure product consistency throughout a portfolio.
Using this method, the purchasing department alone identifies and determines the best products for the best value and then makes them available to individual property managers.
This process helps create a streamlined, more-efficient system, minimizing time spent securing unnecessary quotes from outside, non-prequalified vendors.
Product standardization helps ensure that a property management company is saving costs while still providing the best quality. In order to standardize products companywide, at the beginning of each year the purchasing department reviews all products, brands, product specifications, and any other relevant product information. Once the product review process is complete, the purchasing department selects the exact products and product types Western National will use at its properties that year.
This provides individual property managers with a pre-selected base of products to choose from that have already been pre-approved. And because the product types, brands, specs, and prices have already been negotiated, property managers can enjoy a seamless process when securing new products for their properties and units.
Developing an efficient warranty-tracking system is an integral component in reducing property management costs. At Western National, we’re in the process of creating an internal system that will track the warranty on every product we purchase. Our property managers will be required to type the product number of the broken or damaged item into the system to determine whether it’s still under warranty. If it is, the property manager will be provided with all the details regarding the warranty of that particular product.
For example, if the refrigerator in one of the property’s units suddenly stops working, prior to buying a new one the on-site property manager will verify whether the refrigerator is still under warranty. In that way, he or she can capitalize on still-valid warranties, therein reducing additional costs.
Without proper tracking parameters in place, a company can drastically hurt its bottom line by failing to take advantage of current warranties whenever a product needs repair or maintenance. By implementing an effective tracking system, property managers and owners can reduce or eliminate unnecessary replacement costs.
Product procurement plays a major role in the day-to-day costs of operations. Developing a series of strategies to monitor the procurement process will help property managers benefit an owner’s bottom line over time. If implemented properly, these strategies can help cut costs throughout a multifamily portfolio, allowing owners and property managers alike to not only contain costs, but create long-term value for their properties and residents, as well.