3 Purchasing Program Problems to Avoid

Purchasing programs consist of negotiating national accounts with vendors, getting accounts established upon onboarding of a new asset, as well as monitoring pricing and standardizing products across your portfolio to increase your NOI and overall value of a property.

As a procurement and purchasing management professional in the apartment industry, I often wonder why these programs are implemented and then die out rather quickly—or, when reviewed, the adoption rate is less than ideal. There are a few key reasons:

1. Communication does not come from the top down. This is critical, as it shows your property teams that leadership is behind these decisions. Providing positive reasons behind the decisions allows for the site staffs to “buy in” to the new programs.This helps them to understand the benefit is for the entire company, not just their property. This also helps give them a bigger vision and understanding of property management.

2. There is no one to inspect what you expect.  A wise leader once told me that if we didn’t “inspect what we expect,” we will never get what we want out of our teams. Thank you Alan King of Berkshire Property Advisors! It is one thing to implement programs, but if no one ever evaluates the progress, or ensures purchasing standards are being followed, programs can fall apart. In our industry, the turnover is such that with one swift maintenance technician change, many standards can be pushed to the wayside. If there is no follow up and no checks and balances, these changes will not be noticed until it is too late; meaning more money will have been spent, products could be changed and the overall “look and feel” of your brand could be altered.

3. Price shopping. You might not see this initially; however, price shopping can be to your properties’ detriment. With a good purchasing program, ideally you will have negotiated good pricing for your entire portfolio at the corporate level. While you want the property teams to be good stewards of the owners’ money, they never tend to consider what their time is worth. The time it takes to “Google” items, or to make multiple phone calls to various vendors, only to save a few dollars or cents, does not add up to the hours of time they used price shopping.

Additionally, the national accounts established at the corporate level allow for purchasing on an account. Many times when you locate an item with a new provider, you are required to pay with a credit card, petty cash or even waste more time by setting up a new account.
National and company-wide purchasing programs are extremely beneficial when managed the right way.  If you have a procurement department, make sure they communicate with the Operations team often to ensure success in this area. If you don’t have a specific department, consider partnering with an outsourced company that can assist you in reaching your goals.

Melissa Palmer has a 20+ year history in Property Management and has held various positions at both the site and corporate levels. In her experience she has assisted over 60 property management companies totaling over 350,000 units. Melissa is a Certified Apartment Manager (CAM) through the National Apartment Association and attended The University of North Texas in Denton, Texas. She is currently Partner, and Vice President of Operations, for The MaRK Advantage, a boutique consulting firm in the D/FW area.