BRE Properties Cleans Up Purchasing with OpsTechnology

  It started with a very basic need,” says Steve Snell, director of business applications at San Francisco-based BRE Properties. “We’re a sophisticated public REIT, but as of 2005, we didn’t have a purchase order system in place at our communities.”

Snell is quick to point out that even without one, BRE’s purchasing function was under control. “Maverick spending at our communities wasn’t a problem,” he explains. “But a purchase order system is a pretty basic tool for expense control, efficiency, and reporting, and we knew we had to have one.”

At that time, site staff simply phoned or faxed in orders to vendors of products and services; when invoices were received, they were approved by the community manager and typed into the Yardi accounting system to be routed to AP.

“This was a bit backwards, of course,” says Steve Jensen, vice president of information technology at BRE. “What you want is a purchase order that initiates and follows any purchase and applies it against the budget prior to incurring the expense.” Jensen adds that there was also no formalized system for managing vendors. “We did have a preferred vendor program, but there was no centralized way to access an order from them.”

CHOOSING AND IMPLEMENTING A PURCHASING SOLUTION

A team was formed comprising BRE professionals from accounting, finance, operations, and IT to evaluate potential purchasing solutions. “We explored our options,” Snell says,“and it became apparent that OpsTechnology was probably the way to go, due to its specialization for multifamily. But we still created a short-list of three solutions for conference room testing to be absolutely sure we were making the right choice.”

For the tests, the evaluation team brought in site staff from the front lines that would actually be using the chosen solution. The team judged each solution for its functionality and usability (at this time, only OpsTechnology incorporated an online catalog of vendors and products.) OpsTechnology was ultimately chosen by the team as the best of the three.

A pilot at several properties came next, to refine the configurations and documentation. This was followed by a region-by-region rollout, with associates brought into training facilities over a three-month period. “We trained them in the morning, and by the afternoon they were doing actual purchasing and approvals using the system,” says Snell.

A BETTER AND FASTER WAY OF DOING THINGS

“Overnight, these properties went from a loose and largely manual purchasing process to a tightly controlled, automated, paperless one,” Snell explains. “They create purchase orders online that are automatically coded to the proper accounts. The purchase orders go to the vendors, who fulfill the orders and create electronic invoices that come back to us. The invoices show up on our manager’s dashboard for approval, and after they have been approved, they are routed to AP. It’s a simple, streamlined, efficient process from beginning to end, with no paper floating around to mail, fax, file, or lose.”

The system has facilitated accrual accounting and expense control, with purchases accumulating against budgets rather than matched to budgets after the fact, inviting overages. “There’s no more waiting for an end-of-the-month operating statement to find out that I’m way over budget,” says Snell.

Not only is OpsTechnology easier and more efficient for site staff, and an aid to staying on budget, it’s also a critical tool for management to monitor purchasing centrally. “The streamlining of the purchasing workflow at the sites is a huge benefit, but I would say the added transparency into our purchasing is just as important,” says Steve Jensen.“Management can pull reports to look at purchasing by site or region, by vendor, or by product type; they can study spending trends, product and service cost fluctuations, all sorts of things that were difficult to analyze before.”And of course, he adds, they can also more easily monitor compliance with purchasing standards; OpsTechnology gives management a measure of control that wasn’t possible before.

Where regional managers once were required to be in their offices to receive a physical package of purchase documents to approve, they can now handle approvals via a Blackberry since it’s all electronic. “And the vendor payment process is much more efficient now,” explained Jensen.

THE VENDOR NETWORK

Following implementation, over time, BRE began requiring their suppliers to join their online vendor network, consolidating them all in the OpsTechnology system. This was done in conjunction with the establishment of a centralized procurement group at BRE, leveraging the buying power of entire portfolios and regions. Today, most vendors must join the OpsTechnology network to sell products or services to BRE. Though there is occasional pushback, it is normally from small “mom and pop” vendors who do not fit BRE’s purchasing plan anyway: to consolidate purchasing with larger vendors and achieve economies of scale for better discounts.

“We would have had a centralized procurement group and pushed volume discounts with or without OpsTechnology,” says Steve Snell, “but it would have been a lot more difficult and inefficient; this has given us a ready-made platform to build upon.”

Where at first, site staff felt nervous without paper, they now say they would never want to go back, says Snell. “The paper gave them a certain low-tech comfort level, but now they realize how time-consuming, inefficient, and expensive moving all that paper around was; and if they need an invoice, they can pull it up right on their computer a lot more quickly than they could have in some crowded file cabinet.”

From on-site users to regional managers, everyone seems to be pleased with the new system. “OpsTechnology has allowed people to do their jobs more efficiently, while making their lives easier; and it has greatly improved our ability to manage and control purchasing centrally,” concludes Snell. “It is already hard to remember what it was like doing things the old way.”

Guy Lyman is a Dallas-based freelance writer who specializes in the multifamily industry.

BRE Properties, based in San Francisco, Calif., owns and manages apartment communities convenient to its residents' work, shopping, entertainment and transit in supply-constrained Western U.S. markets. BRE directly owns and operates apartment communities in California, Arizona and Washington. The company invests in communities through acquisition and development. BRE Properties is a real estate investment trust (REIT) listed in the S&P MidCap 400 Index. For more information on BRE Properties, please visit www.breproperties.com.

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