Essential Links in Procurement Supply Chain

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Onsite staff shoulder the responsibility for keeping a community humming, which more often than not involves the procurement of goods and services, especially maintenance supplies.

Many conversations on procurement—a big business-type word that means "purchasing"—start at an account level that, in the case of larger management companies, occurs above the onsite level. Once those talks occur, it is up to the property staff to make purchasing decisions within the scope of those discussions. 

But do the boots-on-the-ground employees know the answers to important questions? Some may be asking:

1. How is an onsite manager or maintenance technician who wasn't at those high-level meetings supposed to decide what to buy, and from where?

2. Aren't all suppliers the same? 

3. Can't I place an order at the end of every day for what I need tomorrow?

4. I'll just buy the least expensive version of what I need. That's the way to do it... right? 

5. Why does this salesman/woman come around every week and bother me or my staff? 

6. What about emergencies? 

7. Why can't I buy a year's worth of parts in January and then fill in the emergency needs from a local store?

Frequently, apartment owners/managers prefer to operate on what is referred to as an "approved vendor list." This is a list of businesses that have agreements with the property management for specific terms. These terms could be discount pricing, delivery instructions, catalogue or ordering considerations, billing practices or any other needs as agreed to. 

Onsite staff should start with any such agreements that are in place to take advantage of this list. The accumulation of these companies will, in many cases, cover the majority of needs that a property may have.

Purchasing Predictions

Buying parts and supplies that a community needs can sometimes feel like trying to channel psychic powers. Predicting what is needed and keeping on top of property goals can be a stressful exercise, especially with a limited budget. Fortunately, there are several standard and helpful business practices that many of the big-name suppliers provide.

Many suppliers will offer a history of what was purchased during a specific time frame. In some instances, these can underscore a trend, such as the plumbing parts that were ordered in the month of September during the past two years. This information can be used to show trends or predict needs. 

Another resource is a "shop setup." If a specific part is running low, the item number for that supplier is right there on the bin label to simplify reordering. A couple of suppliers even have color coding that can be used to separate different sections from one another, such as hardware from HVAC. In addition to minimizing reordering problems, this can make repairs faster and more accurate.

It's often helpful to take the history from primary and secondary suppliers and list the parts' numbers for items used frequently on the front of the bin. This minimizes time otherwise wasted getting lost in the catalogue, or spending time on their website trying to find the same thing that was previously ordered. Pick a time frame—one particular month for instance—and look at its history to determine the highest number of a needed part during that month.

This will be the maximum level and the property should never have more than this number of that item. Listing these on the bin will ease ordering, as a technician would only need to recreate an order to replenish the item back to the pre-specified amount. By setting these numbers in advance, not only will a technician know how many to order—they won't miss any because the shop is organized. 

Additionally, this reduces frequency of ordering, which saves accounting and budgeting time over the month consumed by those one or two item invoices. This practice takes advantage of any delivery discount over a certain amount that many suppliers offer, as well.

While it may seem easier to just order a little at a time, and the invoiced amount is smaller with this practice, it should be avoided. When looking at the bottom line invoice, quite frequently "soft costs" aren't considered. "Soft costs" are the unseen money spent handling the administration of each invoice. In short; fewer individual orders equal less money spent on getting a purchase order, paying for shipping, receiving a shipment, inventorying that shipment, coding the invoice, adjusting the budget, accounting for the spend, processing the invoice and finally paying the bill. While those costs are not often found in the maintenance budget, they can add up for the property. 

Each property has a personality of its own based on all of the variables that have occurred during its life. Construction materials, age and how actively preventive maintenance has been performed throughout the life of a community will speak to what and when items will need repairs or replacement. 

Because of these differences, each property will have its own set of "high-velocity" items. These items are those that are rapidly consumed at the property. Common examples are caulking, drip pans, doorstops, toilet flappers, air filters, switch and outlet plate covers and blind wands. A good supplier welcomes the challenge of fulfilling a property's needs. The cheapest item isn't always best, and the most expensive item doesn't always last the longest. 

By spending time weighing the options available and working with the variety of suppliers that a community has access to, onsite maintenance technicians can become more than just money spenders. They can become successful procurement officers. 

When to Call Your Supplier Sales Representative

Suppliers will sometimes offer to assign a sales representative to the community. He or she will regularly call on the property-either in person or over the phone—to assist in any way they are able. Their job is to ease any issues and help with ordering, but call on them responsibly. 

Many communities maintain a love/hate relationship with their vendor salespeople. The best way to work with them is to keep in mind that it is a partnership. This partnership has two sides, and truly is a co-dependent relationship. The community wants what the vendor has to offer and the vendor has to ensure that the community receives what they need. 

After receiving what was ordered, the community needs to provide timely payment to ensure that the vendor has the money to order more for next time. Communities need to trust their vendor to deliver; vendors need to trust their customers to pay. 

The property and the sales person should have an understanding concerning communication. Here's an example of this type of understanding: The sales person doesn't need to regularly stop by as they trust that the property will call the ordering department when parts are needed. With this understanding, if a sales person sees the property phone number on the phone, they know to answer as there is a problem. 

This way, the maintenance team is not interrupted with unnecessary in-person sales calls or demonstrations, and, if something out of the ordinary occurs, the property knows that the sales representative will be ready and waiting to help.

Keep in mind, too, that these important, impromptu purchasing requests can work well when the sales representative is local and knows the area. And know, too, that when contacting a national representative, the property may wait an extra day, but will likely get a better price because they generally turn a larger volume. 

Competition is a good thing. It helps to keep us honest and keep prices down. With this in mind, remember that individual item prices may vary from supplier to supplier. 

When price shopping, be sure the comparison is "apples to apples." Don't forget the services and "freebies" that the community uses from the established vendor. Also, receiving a low price on a few parts doesn't give a picture of the overall value a supplier may bring to the table. 

This relationship often is governed by a contract. A frequent practice is for the management company to receive additional benefits if the company spends more than a certain amount. 

This could mean that at the end of a year, even though the invoice price might have been lower on a per item basis, the management company would have saved more overall.

Questions for Supplier Partners

• Is a supplier available for orders and problem solving 24/7?

• When do they expect payment? (30 days, 45 days, 90 days)

• What is the most efficient way to place orders? (In person, phone, fax, Internet, email)

• How well is the supplier equipped to handle special orders?

• Is there a daily cut off for same day/next day delivery?

• Do they offer extras? (Training, custom catalogue, specialty parts/services)

• What is the turnaround time on a proposal or estimate to procure a purchase order?

Preparing for When the Worst Happens

When it comes to multifamily housing maintenance, whatever can go wrong will, and at the worst possible time—which is a constant concern. When the pipe breaks or the roof leaks, a maintenance technician can't afford to order from a catalogue and wait for delivery. They need parts and materials now.

Both national and local home improvement stores can be a valuable alternative to traditional ordering. By offering their customers their own credit card or credit line employees—often with a purchase order—are able to get what they need quickly and efficiently during a crisis. 

Additionally, a separate desk is often available for contractors or construction professionals to conduct business while in the retail store. Research what discounts or specials are available to the property, or to a member of NAA or the local association. 

Open Door—NAA's brand-new affinity program—is a benefit of NAA membership. Sellers of construction materials and maintenance supplies are members, and offer exclusive discounts through NAA. Be sure to check NAA Open Door to increase the purchasing power of your community.  

Although emergency response can be an expensive occurrence, the cost can be reduced with a little bit of planning. Start with a list of emergencies that could occur at the property, such as the water heater breaking, no heat, no A/C, pipe break, fire, flooding, sewer backup, etc. 

Take each one and consider the options. For example, in the event of a pipe break or flood, already know the answer to the following:

1. What will the property contract out and what will it handle in-house? 

2. If we are hiring a contractor to perform the water extraction, can the maintenance team feasibly handle any part of that process? 

3. Is there any safety equipment or PPE that the community should have on hand?

4. Are there any parts or preparations that, if used immediately, could minimize damage, even for a temporary repair? 

5. After the standing water is removed, does the property have money in its budget to keep its own drying equipment (fans and/or dehumidifiers) or should these be rented?

6. Are there any parts that the property can keep on hand that will ease the damage to residents' belongings after the emergency has passed? For example, sheet plastic or blocks of wood to elevate furniture off of the floor.

7. Is there any staff training that a vendor could provide to simplify the process or decrease the damage to the building? For example, learning how to cut the carpet to remove damaged padding.

8. What records are required to prove proper repairs and remediation? What is the documentation plan?

Gathering maintenance parts is more than just placing an order whenever something is needed.

Saving Time and Money When Ordering Parts

When ordering from a vendor, be as specific as possible. Don't say, "the brass valve I ordered last year," but rather, give the number listed in the catalogue for that part. Once delivered, verify that the correct part was sent. Any discrepancy between the delivery and the invoice should be dealt with as soon as possible to ensure that the credit is issued properly. A discount price is only a bonus if the part is needed. Standardizing parts and sticking to them is a huge time- and money-saver throughout the life of a property. 

Take a vanity faucet, for example: 

The faucet has many parts, each of which are proprietary to that faucet, and are not interchangeable with other faucet manufacturers or models. If the community is installing a different faucet every month just because one is a little cheaper this month than the others, the shop will need to keep more and more specific parts on hand to quickly solve problems. 

The more money tied up in parts, the less operational money is valuable. This is also why a property needs to consider how many of each part to stock and why selecting a time frame between orders is important. The ordering process takes time out of an already busy schedule. A supplier that delivers can become a great asset in this regard. 

Paul Rhodes, CAMT, is NAA Education Institute's National Maintenance & Safety Instructor.

Many onsite managers complain that when a technician leaves the property to go to the local home improvement store, the trip takes too long. By being organized, a property can reduce this time, as the majority of needed items are ordered continually. 

At the same time, care must be taken with items to ensure that they are needed. For instance, a quick look at a supplier's catalogue or taking a trip up and down the aisle of the store can reveal a huge quantity of different toilet seats. The prices range from low to extremely high, with huge differences in options and looks. Be sure that what is ordered will work with the brand that is used at the community, meet the requirements for use and last as long as expected.