Property management has to procure services and products frequently for its properties, and if this system is non-standardized and inefficient, it can take a huge chunk out of the profits. Cost of services and products has a major impact on the overall profit margin, and therefore it is critical to have a procure system that not only reduces costs but also deliver quality goods. Here are certain points that can help a property manager devise afantastic procurement strategy.
Have a Separate Purchasing Department
Instead of procuring at the property level, it is better to have a purchasing department that controls bids across all the properties. The type of services required and specification of products will be accomplished at the property level, and the requirements will be sent over to the purchasing department.
This way there is a single window for receiving bids, and the purchasing department is left with the responsibility of identifying and determining the best value and quality. The purchasing department will develop a list of qualified vendors, thus avoiding unnecessary quotes and possible fallacious information, and saving the time of the property manager.
Procuring Discounts Based on Volume
Rather than compromising on quality, it is best to procure discounts based on higher volume. Vendors will be more willing to negotiate the price when there is a bigger volume at stake. Here again, having a purchase department will be beneficial because all requirements across properties will be routed through a single department. This will increase the needed volume of services and products, which in turn will give better bargaining power to the department.
Consistency of Products and Services
Since the purchasing department controls the actual purchase, even though it is based on the requirements of individual properties, the services and products acquired will be of consistent value and quality. If there is no single basis for bids, there will be inconsistency in costs as well as quality.
For instance, manager of property A might select more discounts by compromising on quality of paint, while property B manager might procure costlier paint being more interested in the quality. Hence, there will inconsistencies in the product used, as well as the amount spent across two properties. On the other hand, the purchase department would already have a set standard on the quality of paint to be procured and will entertain bids from qualified vendors based on volume.
A Working System for Tracking Warranty
It is important to know whether the product is still under warranty before replacing it since this can help the company save money. Many products and services are procured to maintain the property. But unless there is a computerized system for tracking the warranty, it would be almost impossible to know whether you should buy another unit or call for repairs or replacement.
It is best to have an internal system, where the property manager simply has to enter the identifying code and serial number of the product or service to know the warranty status. If the purchase department is maintaining records of all the warranties, then these records should be accessible at the property level.