Master Your Purchasing Process
Join Paul Rhodes and discover strategies to streamline your purchasing and boost operational efficiency in multifamily management. Learn five actionable steps to improve planning, vendor partnerships, and budgeting.
[Paul Rhodes] (0:00 - 41:49) Today's episode of the Maintenance Mindset can be summarized by the following statement, fewer partners standardizing a trusted review. To find out what that means and what exactly we're talking about, stick around for after the word from our sponsor. App Work is one of our founding sponsors.
Much more than maintenance, App Work is advanced business intelligence. Streamline maintenance workflows and keep an eye on the leaderboard as your service teams enjoy the gamification of maintenance. Visit appworkco.com and transform your productivity today. Welcome back. Now, today's episode, we're talking about something that I think doesn't receive enough attention, especially by onsite maintenance leaders. And that is the topic of purchasing.
Now, having supplies and keeping the things that we need in stock to do the things that we need to do is often thought of as a last minute activity. And to figure out if you're thinking about it as a last minute activity, go back and look at last month's purchasing. How was it done?
You can begin with that by looking at how often was an order placed? Are you placing two or three orders a week for one or two items and not really making any headway or the opposite? Are you only placing one order per month and overstocking for things that you don't really need or you're wondering if you need to have more, even worse?
What kind of relationship do you, the maintenance leader, have with your community leader, the operations leader? I've spoken with way too many maintenance professionals in my career that have put in an order to their office and their property manager or their regional team takes a look at that order and says, hmm, I see here that you've ordered 10 fill valves, but you know what? We don't have enough money for 10 fill valves in our budget.
You're only going to get two. All of this summarizes the fact that without any strategy of purchasing, you are going to be frustrated and even worse, your residents are going to be impacted in a negative way. So the statement that I gave you during the intro was that fewer partners standardizing a trusted review is actually the five things that I think are what makes up a good strategy for buying and purchasing at our properties.
It all begins with having a strategy. And the best way that you can tell whether or not you have a strategy, like we already talked about, is ensuring that you're only ordering when we need to. And when do we need to?
Before we need it. Yes, I know that suppliers can promise next day or in some cases, depending on what market you're in, same day service. And that's fantastic.
It's great, except often by the time we determine we need something, it's already too late. Our industry right now is reaction based. We've discussed it before.
We need to change and get initiative based. In other words, we need to be ready before the situation occurs. You know, my statement of entropy is job security is not meant as an excuse for failure.
As a matter of fact, it's a reason why we need to be taking more action upfront. So the first action is have a strategy. When I'm on site, my preference is to place a maximum of two orders per month.
And from a reality standpoint, it's completely doable. It happens because we begin at the end of the previous month, looking at what we're going to need coming up. That can begin by looking at how many move outs we have.
So right now, as I'm recording this, this is the beginning of August. And at the beginning of August, I'm already late. If I'm just starting now to plan for my purchasing for August, a better case would have been to plan at the end of July for my first order of August.
Now, this goes into place to where we need some shop organization. We need to be ready with what we know we can expect. Now we're ordering before the beginning of the month.
Generally speaking, our budgeting processes, we know August 1st, how much money we're going to have for the entire month. So I can begin to use that as a starting place for my order. But let me caution you, getting stuck in ordering from the budget can have problems.
Oftentimes, I speak with maintenance professionals who are saying that I'm stuck in use it or lose it. In other words, if I get to the end of the month and I have $100 left in plumbing, I'm going to go to order $100 worth of plumbing parts. Whether I need them or not, because if I don't, the budget's going to be viewed at the end of the year and they're going to see in August, I didn't use $100.
That means that next year, I don't need 100 bucks in August. So they'll take money away. No.
Matter of fact, let me encourage you, if that's the way that you are planning your budget, go back to your strategy and double check. What I'm advocating here is that at the beginning of every month, we begin by looking at needs. Those needs can begin as predicted.
We know, for instance, in the month of August, how many apartments are moving out. Take that with what we normally use in every vacant apartment, and there we begin our shopping list. Look at what parts we've used last month.
What do we need to replenish? As we're deciding what we need to replenish, do I need any extra for seasonal related issues? I mean, this is August.
We're beginning to decrease the amount of parts and supplies and work orders that we achieve or have going on due to the season change. Much of the country is beginning to enter fall. Not only that, Florida right now is, and the Gulf Coast, they're beginning to enter the hurricane season.
Does that affect the parts or supplies that I can begin to look towards? Have an intentional strategy. Come up with what your purchasing plan is going to be and sit down with the property manager and the maintenance leader, your maintenance supervisor, and talk through.
Do everything possible to figure out what, if you were to place one order, what would that order look like? Compare that with your budget, and of course you're going to have to work through, and sometimes it means strategizing out that, you know what, I don't think we'll need it in August, but we will need it in September. Don't forget that, you know, cold weather's coming.
Depending on where we're at in the country, that could start fairly quickly. All of this goes into play with the fact that we need a strategy, and that strategy begins by looking ahead and comparing what we expect to see with what we have. Now that second piece there, the what we have, that presupposes that I can actually look and identify what I have.
So, maintenance supervisor, what's your shop look like? When was the last time you got in the shop and actually went through your parts? Get rid of all the extra stuff, like in the last episode, I had that conversation with Chris Karamonica, and we talked about not keeping things that will never get used.
We talked about throwing away the carcasses of appliances that we've gotten rid of. Begin there. I'm not saying at this point that we need to go crazy and do everything all at once.
It does take a little bit of time in order to get things in order, but with that being said, August, this time of year, we're beginning to slow down a little bit. That doesn't mean we're not still busy, but what it does mean is that there's less catastrophic events occurring caused by high temperatures, heavy usage because kids were out of school, families making a lot of use of our amenity space. So, we're still busy, but it's a little bit less pressure.
In this time of a little bit less pressure, make a plan. Figure out when you're going to clean your shop. Make use of my strategy of every Friday afternoon from 4.30 to 5 o'clock. Every Friday afternoon, everybody's in the shop except for whoever's on call. If a call comes in or an emergency request comes in, they're the ones that go out and do it. Everybody else, spend time in the shop figuring out what you use this week and what you're going to need next week.
Those can add up to something at the end of the month so that we can make the purchase for the following month. So, strategy number one, meaning that word that we looked at, fewer, place fewer orders. The reason why that's critical is the fewer orders that you have, actually the less money you spend per invoice.
Every time an order is placed from your property, there's accounting fees, there is the check writing fees. You get more and more people involved, meaning if I order on Monday flappers, on Tuesday I order air conditioning parts, on Wednesday I order different air conditioning parts, on Thursday I order more flappers, and on Friday I order a box of caulk. That's five different orders and each and every one of those orders, depending on what your organizational process is, had to go through a workflow.
PO, approval, approval of oversight, double check against the budget, let alone the fact of what goes on for our suppliers. Our suppliers have to ship it and box it and crate it and get it ready and the truck has to go over the road. So if for no other reason, just the environmental impact of having that occurrence happen, if we can decrease or cut that down, it can be a huge impact to the environment and other factors.
So first, think about it in terms of fewer, more strategic, and better plans. Step two, and word number two is that word partner. This I wholeheartedly endorse.
I work with vendors and I want those vendors to work with me. I want to like working with my vendors and I want my vendors to like working with me. And essentially what I mean by partnership is that both persons, I like the idea of dealing with a person, not a company.
Both persons, I'm the decision maker. I need to work with the decision maker and both of us have equal amounts of priorities based on our needs. This truly is an opportunity for partnership.
I need something. I need parts. I need paint.
I need a service. I need whatever I am placing an order for, I need it. If I didn't need it, I'm not placing an order for it.
But that's just me. There are two pieces of this partnership. My mom and dad used to tell me and my brother all the time, it takes two to tango.
Often we were fighting with each other when we had that, we received that counsel. But in this case, it takes two to tango. It takes two to dance.
It takes two people in a partnership. I need something. What does our partner need?
I can give you a quick answer to that. They need to be paid. They're a business just like we're a business.
And on their side of things, they have a process to go through. They can't purchase more stuff until they get our money. And they need to purchase more stuff because we're going to need that stuff in the future while they make money doing it.
It's capitalism in its oversimplified form. So what that means from a boots on the ground level. First, be very clear about what you need.
I believe in getting my order ready. Meaning, if who I'm ordering from a supplier or a service provider, if they want part numbers, stock numbers, service request numbers, invoice numbers, floor plans, whatever documentation they need in order to process the order faster, I'm going to provide it. I do not believe in having suppliers especially come into my shop and they tell me what I need to order.
In other words, I'm not a proponent of having any field representative put together an order for me. That's my job. It's my responsibility.
The other half of this equation. After I get my things, when I double check that everything was in the box or after the wall's been painted or the floor's been installed or cleaned, whatever service or product I received, my responsibility in this partnership is to do everything possible to ensure that my partner gets paid because that's kind of the agreement that we got into. I want stuff.
You bring me the stuff. You want money. I give you money.
If our supplier is doing everything possible, whether it's service or product, to give us what we need faster or at least on time, then the very least I can do as a good partner is ensure that I'm giving them what they need faster or on time. By the way, a little side note. When I went several years ago, when I went looking for a job, one of the criteria I had for the companies that I interviewed with for me to go to work for them was I actually called their vendors and I found out I didn't get dollar amounts, nothing top secret, but I called vendors and I found out how was whatever company it was on paying bills.
As a company, I recognize things happen and one property or another may get a little behind or paperwork gets lost or something happens in the same way that our suppliers and our service providers. Something happens. That's fine.
Entropy is job security. But on the whole, I would actually interview the vendors, the contractors that those management companies were using and if the management company was not doing a good job of paying their bills, I took that into account for the decision on whether or not I went to work for them. So, yeah.
It is a partnership and it requires the two of us to end up working together. Now, the third piece in this strategy is standardizing. What I mean by that is chances are every single supplier you talk to, especially where parts are concerned, they run specials from time to time.
You'll get flyers. You'll receive emails. You will get this month on sale.
Do yourself a favor. Take a look at them. See if what you normally get is on sale.
But if it's not, don't change. What I mean by this is standardize what you use and stick to it. Let's look at a faucet, for instance.
A kitchen faucet. If you have a single kitchen faucet, that faucet is going to require multiple parts and pieces that if we're doing a good job, we're gonna keep in stock in order to be ready for something that breaks because something's gonna break entropy is job security. But here's the thing.
With a single faucet, we end up having aerators, cartridges, handles, a shell, supply line, and all the possible different kinds and types of O-rings and seals and gaskets that that faucet was designed to work with. So as a maintenance professional, if I'm gonna provide good service to my resident, that implies that I have some of each and every one of those parts ready and available for when, not if, when that faucet begins to fail or break down. Newer faucets are lasting longer, but they are still a thing with a finite lifespan.
They will eventually fail. And when they fail, hopefully I can repair it as opposed to replacing it. That's just one faucet that has all those parts.
If next month, a different faucet is on sale for two, three, four, even $10 cheaper than the one I'm used to purchasing, don't change. And the reason why is even if it's 10 bucks cheaper and you order it in bulk, how many parts are you gonna have to stock now for the new type of faucet when it fails? Standardize your parts, your components, your pieces as much and as often as you can.
The nice thing about this, and even when I was director of maintenance and when I was in charge of buying, we could talk to our suppliers and get what they referred to as a history. I can find out exactly what was purchased at my properties and they deliver it to me. Some suppliers will even give you a custom catalog.
That's what I liked doing. I'd go down through that list and I would standardize. If I found out that we were ordering three different types of faucets over the past three years, make a decision and withhold the ability through whatever means possible to order only one kind of that faucet.
Standardize it across the board. This has a secondary benefit because it speeds up training, meaning that your maintenance technicians will only need to know how one type of faucet comes apart and how to put the only parts that service that one kind of faucet together. So the first three steps of our strategy are all having a plan and being a part of that plan.
Step one, go into it prepared and plan on placing as few orders as possible to cover the entire month. The second piece of that is to go for a partnership over just somebody who can deliver it today. We need to think of it in terms of a long-term relationship.
The third piece of this is to ensure that you are standardizing, not just shopping for sales or shopping by cost or price. After this short break from our sponsor, we're gonna talk about the last two pieces of this strategy and that is trusting and reviewing. We'll be right back.
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Visit appworkco.com today. All right, welcome back. We're talking today about five steps on creating a strategy for purchasing.
And step number four seems like a very simple one, but I do need to illustrate it with a short story. Step number four is trust. Now, we just spoke a few minutes ago about having a partnership with a vendor or a supplier.
This actually is ensuring that we have trust internally. And by that specifically, I mean the maintenance supervisor and the property manager. There's got to be the same level of trust between those two persons.
And the story to tell is actually based on the weather. Several years ago, down here in the South, we had a surprise snowstorm that popped up in the middle of the day, like during the school day. Now, how this ended up worked or how I became embroiled in it was at the time I was working for the National Apartment Association.
And every once in a while, I'd go ride with a friend of mine who worked for a supplier. He was in their property improvement department that did a lot of renovations. And every once in a while, he'd let me ride along with him to where while he was doing what he needed to do on the property, I, with permission, would talk to the maintenance supervisors about what their needs were and even the property managers sometimes, what they needed their maintenance teams to learn.
It was a great way to get insight for the classes that I was teaching at the time. Now, on the day that this happened, before I left early in the morning, the weather people said that there was a possibility for some snow. And they left it at that.
Temperatures were dropping. Situation looked like it might get a little bit of frozen precipitation. But at that time, there was no stress involved.
Now, over the course of the day, as we were driving around Atlanta all over the city, the weather reports began to get more and more alarming. Now, the problem here is I already had a distrust of weather people. It was the end of the world.
Every single time, something bigger than a cloud came about. And it, while could get to be really, really bad, more often than not, there was a lot of hyperbolic language involved with how bad it was going to get. I mean, I remember watching the weather station that they got this new technology that allowed them to stand in front of a green screen and whichever weather prognosticator they could, was on, they could stand there and graphics would pop up around them that would show depth of flood waters in actual scale, meaning that the person would stand there in the studio and there would be a cutout around them and you could see the water level as it got up above their head and even higher up. Now, Hurricane Katrina or major events, I can understand that's possible.
I really, really can. But is it realistic? Well, after several years of hearing that the sky is falling, the day that it actually begins to fall, I discounted it completely.
So much so that I wasn't worried at all. We rode around the Atlanta area and we ended up, because all of a sudden, temperature dropped, it wasn't freezing rain, it was slick, icy sleet. I mean, this was 2017, 2018 if I remember right and schools got out.
They let out early and buses got trapped in the ice, in the snow. I mean, we ended up not being able to get back home that night and we actually had to walk for about a mile, mile and a half in order to get over to my friend's parents' house. Just so we spent the night there where overnight temperatures rose, it froze, so it was a one day catastrophic weather event.
The problem was, I had no sense of trust in the weather people in the morning of saying, we may need to be a little bit concerned about the weather later today. To me, when they said we may need to be concerned, oh great, the sun will go behind a cloud for five minutes. That was what I believed the weather people were saying to me.
The problem is, if maintenance supervisor and community manager, if the maintenance supervisor is saying, I need 10 fill valves, the fill valves are starting to go bad, we need to replace them, I need 10. And if the community manager doesn't believe that we need 10 or they think that the maintenance supervisor is exaggerating, they'll drop the number down. And then the maintenance supervisor gets mad that the property manager doesn't believe them.
Even worse, what if our maintenance supervisor is afraid to ask for the 10 that they can prove they need? What if the maintenance supervisor comes back and says, you know what, I need 10 of them, but my property manager says, we don't have any money, so we'll only order two. What are we gonna do for the remaining eight in our made up scenario?
By the way, it's my supposition that this is one of the hardest reasons to get a preventive maintenance plan started. I mean, if we need to change filters, something that, to do something that a resident right now today is not yelling and screaming needs to be fixed, then if the maintenance supervisor goes to the community manager and says, I need to order $100 worth of air filters to begin replacing them, will it happen? We need trust.
There's got to be an open, honest, two-way street going. If the maintenance supervisor says, we need 10 fill valves and the community manager says, we just have no money, and honestly and truly mean there is no money, that's the beginning place to innovate, figure out other solutions. Maybe instead of replacing the full fill valve, we can replace seals.
Maybe we can come up with some other way of taking care of our residents. But that trust is the beginning place, and it's my supposition it has to be intentional. The last piece of the strategy is review.
Now, the documentation part, many of our communities of the review, the documentation piece of reviewing, for many of our management companies, it's already in place. Many of us are using property management software that includes the possibility or process to tell us live what we have on order, what's on back order, what we need, what we've used. We can do all of those things already frequently.
If your management company, if your property, if your community doesn't have that ability, talk with your vendor partner. Get a history. They can bring it up to date as soon as your last order.
These days, it's almost a requirement that you have that level of detail and that amount of live information. So, talk with your partner. Get that documentation.
That, if I'm honest in my experience, that's what I've seen. But I want you to actually sit down once a month at the end of the month for planning ahead. I know we have to fill out a variance report.
We have to tell why we spent the money we did, but that's too late. We already spent the money. I'm advocating before the month happens.
Make plans. Figure out what you're going to spend. That way, at the end of the month, you already have your variance report written because you know what you are going to do.
And then your variance report is just what did you do versus reality. During this review phase, take a look at trends. See what you've been doing a lot more of and see what you've been doing less of.
This can be done outside of parts. Look at vendors, too. I mean, in your make-readies, are you actually doing full paints in every single apartment?
Or could we get by just doing touch-up? What are the possibilities there, especially if we don't have to do a color change? Take a look at what your needs are.
When you look back at that history of what you ordered, are you ordering different kinds of blinds? Talk with your partner about maybe it would be better if we went with metal. Or instead of ordering the one-inch mini blind, maybe we go with the two-inch larger blind.
What would that look like? Will it be a better experience for our resident? Is it better from a supply standpoint?
Take a look at your history and ask questions. You can even determine from a training level if things are getting done the way they're supposed to. A casing point for this is air conditioning service.
In other words, if you're ordering new condensing units or heat pumps, if you're ordering new evaporating coils or line sets, pieces or parts that you have to pull a vacuum from your air conditioning system in order to perform the repairs, if you're placing orders for new refrigerant tanks and jugs and your logs show that you're using refrigerant, how often are you pulling a vacuum? And the reason why I keep bringing up vacuum is because according to Carrier and other manufacturers, every time you pull a vacuum, it's a good idea to replace the oil in your vacuum pump. What this means is if you are placing orders as if you need to pull a vacuum, but you're not ordering vacuum pump oil, is the vacuum actually getting pulled?
And if a vacuum's not getting pulled, you are drastically getting shorter life out of the equipment that is being serviced. This could be identified just by taking a look at your supply orders. One other area, swimming pool chemical test bottles.
Those bottles under normal wear and tear, they get used up. So you have to order new ones. And most of our suppliers will be able to sell you individual bottles as opposed to having to buy a whole new kit.
A little bit of money savings that we can see there. Take a look at what you've ordered, heck, accumulate it all together and talk with your partner and say, hey, I see here that for some reason today I keep looking at fill valves. I see here that over the past year we've ordered 50 fill valves because we're ordering that many.
Could you give them to us at a discount? Maybe if we bought them all at once and put them in storage? Something to consider.
Take a look at your returns. All of the refunds or rebates. First, most or many suppliers require that return credit to be applied to a new invoice and they don't do it automatically.
That means that when you're going back through your review history, it's possible you have some credit with your supplier that all it needs to do is just be applied to a new invoice and that means that you'll be paying less out of this month's budget because you're actually using money that you already paid to your supplier in previous months back. The last thing to take a look at is overstock. Compare your records for fill valves with what you actually have in stock.
In other words, if I've got six in stock, I don't need to order 10 more. Maybe the expectation is we use a maximum of 10 per month. That means that I only need to order four this month.
That's a part of an intentional review process. So purchasing on site, whether it's supplies, which I know we kind of talked about that a little bit more today, but a lot of these things can actually be looked at in terms of vendors or contractors, service providers. Keep in mind, this is a partnership.
With a little bit of intent, with some review before we need to do it, we can make decisions for next month. Stack a few of these months up and then review back the whole place. And if you're on the same page, same book, property manager and maintenance supervisor, you're going to find that if you haven't saved money, you're at least more prepared for whatever entropy has for you coming up.
Thank you for spending this time with me today. I appreciate it. And I'll see you somewhere.
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