The rental housing industry has been pushed to find creative solutions and leverage technology to ensure they have the things they need—when they need them.
Supply chain issues have remained a problem throughout the U.S. in nearly every industry. Multifamily housing is particularly vulnerable because supplies are needed for new developments as well as to renovate and maintain existing apartments.
According to Bloomberg, while issues have slightly eased during the past few months in some sectors, many areas are still affected and there are growing fears of a resurgence by the end of 2022. The challenges have spurred several multifamily owner-operators to explore creative solutions and leverage technology to ensure they have the items they need—when they need them.
Supplier communication addresses fluctuations
One of the biggest obstacles in dealing with supply chain problems is overcoming the continual shifts in inventory among different products. For many, one month will present a deficit in paint, while the next could be an absence of needed flooring. Greystar, a multifamily investment, development and management firm with more than 775,000 units, approaches these obstacles by focusing on consistent communication with suppliers, who are oftentimes indispensable partners in navigating solutions that can keep projects on schedule and within budget.
“Until the issues settle, we’re working with installers and manufacturers to find crossover products of equal or better value, and at the right price point,” said Jessica Reznik, Director of Procurement for Greystar. “Many of our suppliers are great about communication when there’s going to be an issue ahead.”
Forecasting upcoming needs, in conjunction with supplier communication, makes it possible for Greystar to have supplies ready when needed. Reznik said that many suppliers have been very helpful, offering to briefly hold products if the inventory arrived before scheduled delivery.
“Greystar possesses the ability to be big and small at the same time, which works to our benefit,” said Reznik. “We’ll work with our national accounts and then send a message out to our local properties and teams. They work with their local staff to get everything forecasted so that it doesn’t disrupt that supply for us.”
Pre-ordering is another helpful tactic that suppliers can help facilitate. If a Greystar property knew it would have five units vacating in a couple of months, they could pre-order items such as paint and flooring to ensure those units are quickly returned to a rentable condition.
Adjusting buying habits to meet needs
Since shortage occurrences are not always foreseeable, reassessment of stock-keeping units (SKUs) can help to ensure availability. BH Management, a property management and construction company that oversees more than 100,000 units, which has also struggled with supply shortages, found many items out of stock by the time they evaluated needs and placed the necessary orders via their e-procurement system. To combat this, the company began to increase its overall communications and focus on the best avenues for acquiring the supplies the company required.
“We developed a real-time buyer’s guide resource, listing our top three or four preferred vendors and product numbers, and shared it company-wide,” said Krystin Reuter, Director of Strategic Sourcing for BH. “We were communicating often with onsite and regional operations, facilities and construction teams. We also resorted to bulk orders early on and are still seeing some of this continue with certain categories — such as appliances – due to incredibly long lead times and backorders.”
As the situation has stabilized slightly, BH has returned to its e-procurement platform, which informs on real-time pricing and availability and allows for quicker onsite decisions. They also deployed technology that allowed them to assess repair and replacement needs as soon as a resident provided a 60-day notice.
“We began utilizing an electronic pre-walk checklist via mobile maintenance platform to get an idea of what’s needed in the unit well in advance,” said Reuter. “This allowed us to get ahead of purchasing decisions.”
Pricing and costs necessitate a careful evaluation of needs
On top of availability challenges, supply chain issues have led to pricing swings that can hamper budgeting. Companies have seen price increases upward of 25%, which necessitates close monitoring of what actually needs to be replaced in each apartment, opting to extend the life of items in units when possible until prices stabilize and availability increases.
“For BH, having the right vendor partners in place has been important as we navigate the tough supply chain issues,” Reuter says. “Flooring was one of the heaviest-hit categories – facing discontinued products, price increases, stock and supply chain issues, along with labor shortages. We were able to lean on our preferred flooring installer partners … to help us revise our standard products to similar options where supply was not a concern. They helped us identify the correct products that would be most easily adopted by our teams. It’s a pretty big lift to change all flooring standards, but we did it.”
The supply chain issues have also had a noticeable effect on associated costs that added to the problems. BH has seen increased costs for containers, shipping and fuel that the company needed to address.
Supply chain issues have shown signs of easing, but there’s no guarantee that things will stay that way. Cautious optimism is the approach currently being deployed. The silver lining is that this has given many companies foresight into how to approach the issue, as well as using technology and local relationships to help ease pain points within the supply chain.
Kevin Juhasz is Content Manager at LinnellTaylor Marketing.