One of the longest cycles in multifamily history may still be healthy, but a prevailing industry tone is the need to get fit and be ready when the tables turn. At NMHC’s 2020 OpTech Conference and Exposition in Dallas, top brass said now is the time to hone operations processes from A to Z. It’s a similar message offered at RealWorld 2019 in Orlando.
Fine-tuning spend and vendor management processes can help operators and owners stay ahead of a slowdown. Essentially, that means controlling expenses by getting the best deals from vendors and eliminating unnecessary or “maverick” purchases.
Jason Lindwall, Senior Vice President of Spend and Utility Management, said companies that don’t have a comprehensive spend management program should look at one while the time is still right.
“It’s really important to be working on that,” he said at RealWorld in July. “What we’ve seen in past cycles is that expense hasn’t been the focus. It’s been more about the deal, closing the deal, and finding the deal.
“What we’re seeing in this cycle is that our customers are paying more attention to the expense side of things. You need to be thinking about how you’re spending your money and where you’re spending your money, and get a good understanding of that through a spend management program.”
Getting a lasso on ‘maverick’ spends
As a former property owner, Lindwall saw plenty of avoidable spending. Those are the kind of purchases that may seem small at the time but add up to serious money over the long run. It’s the maintenance and front office teams making impulse buys for products that may or may not be necessary, and send the budget into overdrive.
He recalls one meeting where someone asked what could be done about a pile of screwdrivers that had accumulated in the maintenance building.
“Every time our maintenance guys would go to Home Depot they would walk out with that orange screwdriver that was at the counter,” Lindwall said. “They didn’t know what to do with all of them. It’s a funny story, but it’s a reality that we talk about, it’s when we’re making those trips to the store and buying things that we don’t really need.”
Those kinds of purchases get reeled in with an integrated spend management platform through purchasing protocols that start with checks and balances, and includes a network of vendors that are the right fit for an organization. Lindwall says the solution reduces maverick purchases and brings structure and efficiency to spending so apartment portfolios are getting the most out of their investments.
Understanding how the money is being spent
RealPage has increased focus in recent years on spend management by employing a team of spend marketing strategists that help customers create the right approach to procurement, as well as launching an improved platform that brings visibility to the buying process.
Vice President Spend Management Sarah Upchurch said the system is more than just about data.
“We’re taking that a step further,” she said. “We’re looking at vendors, categorizing vendors and we’re putting them in different categories so you can actually understand your spend. After we do that, we’re talking to our clients about what’s next. We use this data and we take it down to the site staff, and we retrain the sites on how to utilize this system, and your corporate office and your regional support.”
Finding the right vendor ‘on the fly’
RealPage recently launched Vendor Marketplace, a platform where vendors and property management companies can connect. Property managers can quickly search to find the right vendor and service companies can market their products and services to potential new customers.
Property management companies can look for a new vendor on the fly.
For more on improving purchasing efficiencies through a comprehensive spend management platform, watch the video.