In multifamily housing property management, there is often a lot going on at once. You may wear a lot of different hats requiring you to juggle diverse responsibilities including everything from future resident tours to purchasing refrigerators.
Alleviate your brain by making sure your sourcing process is seamless by avoiding these 7 costly mistakes.
1. Failing to Plan
It is never too early to start planning for sourcing the products and labor needed to complete projects on time, and within budget. With the volatile marketplace we are dealing with today, locking in the necessary pieces to complete the job is critical. Managing RFPs and awarding suppliers can take longer than expected and awarded suppliers may need time to ramp up production, and/or labor.
2. Solo Decision Making
Make sure to include all appropriate internal and external stakeholders early on. Not doing so can be a recipe for disaster. If they are not included and approving, all your hard work might get derailed, or you may get poor program compliance in return. Getting all your relevant stakeholders on board with your sourcing process will help to ensure a smooth supplier program rollout.
3. Overstating Leverage in the Marketplace
Know your organization’s power in the marketplace so that you can confidently leverage your position when conducting supplier negotiations. Don’t overstate your purchasing power and demand too much from prospective suppliers. Conversely, you want to avoid understating your position. It can be a fine line to walk, and if you’re unsure of the current marketplace dynamics, issuing an RFI (Request for Information) to prospects can be a good place to start.
4. Poor Relationship Management
The relationship between an organization and its suppliers is often misunderstood. While the purchaser may think they hold much of the power in the relationship, the supplier may actually hold more cards. The relationship should result in a win-win situation, with both parties helping each other in every possible way. Suppliers should continue to innovate and provide the goods and services needed for your organization to thrive most effectively, and you should endeavor to effectively support them and the agreements executed in partnership. Treating a supplier/purchaser relationship like a partnership and not just a business deal can make all the difference in the success and longevity of a mutually beneficial relationship.
5. Failing to Negotiate
Be prepared and confident in both your requests, and items that the supplier may ask for in return. Prior to the negotiations identify your “must-haves” with internal stakeholders, along with some “like to have” items. The goal is to end negotiations with a win-win scenario for both the purchaser and the supplier, and to start the partnership in a positive light.
6. Absence of Training & Program Usage Policies
The months of research, collecting bids for your RFP, and negotiating terms and conditions with the awarded supplier are complete. Now, your field staff are unaware of the new agreement or refuse to utilize the new program. What could have gone wrong? People inherently react slowly and critically to change management, so easing any pain throughout the organization is crucial. Providing all levels of personnel with clear and concise communication, training, and step-by-step guides are imperative, and will help to facilitate future program compliance.
7. Lack of Standardization & Compliance
When an organization lacks supplier compliance, they lose purchasing power, time, and money. A supplier may be less likely to work with you in the future if spend level promises are not being met. Processing extra POs and onboarding additional suppliers indirectly costs organizations both time and money and have significant downstream impacts. Plus, rogue purchasers may be paying too much for products and services compared to your pre-negotiated rates with supplier partners. Continue to check purchase history and trends to monitor and manage compliance and supplier standardization. Understand why individuals may be practicing rogue purchasing, or whether they are just unaware of your programs and benefits. The key is to work with your supplier partner, to understand all they can do for you, and then work together to maximize the benefit to your organization.
Don't Make These Mistakes!
We know you have a lot on your plate, and purchasing might not be your only duty. Partnering with a group purchasing organization (GPO) allows you to leverage contracted pricing and utilize contracts that have already been vetted. You can find the right products and solutions for your organization all in one portfolio. You can also utilize your GPO to work with industry experts and use their knowledge to make sure you are making the best decisions for your organization.
GPOs can also help you navigate the road to a peaceful partnership with your suppliers. Being a member immediately bridges the gap between your organization and the suppliers you need. You can lean on our team to ensure contracts are compliant and of the best value to you, plus we speak with our suppliers regularly to ensure we are fully aligned. As a member you will have a designated Regional Director that will be available to you and can handle any of your supplier concerns.
Overall, adding a group purchasing organization to your strategy can help streamline the process for you, in turn making it simpler and less time consuming.
Interested in learning more?