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There’s no need to blow a gasket if in dire need of, say, a bellhanger bit. Ditto for patio umbrellas, zone valves, cabinets, rubber stoppers and duct tape. Today’s apartment maintenance suppliers will overnight a flange or quickly send some grout. These “one-stop” suppliers carry parts many may not even recognize—until they are needed.
Rental properties consume enormous quantities of maintenance parts and “make-ready” products. In the multifamily housing industry, where the onsite presence of managers and maintenance staff is essential, it usually doesn’t make sense to send employees “out to the store” when they should really be “minding the store.” And if time is money, shopping around for the lowest price is actually a losing proposition.
Fortunately, a service-oriented economy has led industry suppliers to market maintenance parts and products in myriad ways, including online ordering. On one end of the spectrum is Maintenance USA, a company that does not employs field sales representatives and has worked diligently to make online ordering an easy and cost-effective supply strategy.
Not surprisingly, Eric Overhage, General Manager of Maintenance USA, which services 40,000 active accounts through 44 distribution sites nationwide, sees Internet marketing as a win-win situation for both apartment managers and suppliers. Using a hypothetical scenario in which a maintenance worker drives to the store to purchase a faucet, Overhage identified several loss factors for property management.
“First of all, the faucet will cost more at the store than it would online,” he said. “Added to that are the costs of transportation, the employee’s time (salary plus benefits) and lost productivity. Like most shoppers, the worker will probably spend extra time browsing and may even buy additional, unnecessary items.” Even the cost of Workers Compensation figures into the equation, Overhage contended. “The worker is more likely to be injured in an auto accident than at work on the property,” he said.
The simple act of ordering online can bring its own financial rewards. At Maintenance USA, for example, order-it-yourself customers receive volume discounts even if they are ordering just one of any item. And for orders totaling more than $50 or $75, some companies offer free delivery.
A Matter of Style
Not all maintenance supply companies share this bare bones approach to e-commerce. Century Maintenance Supply, The Home Depot Supply (formerly Maintenance Warehouse), Johnstone Supply, Lowe’s Home Improvement Warehouse and Wilmar Industries also sell maintenance supplies over the Internet, but each company has a different philosophy when it comes to online ordering.
Wilmar Industries and Century Maintenance Supply, for example, specialize in the personal touch. Their sales reps develop relationships with property managers and follow up to ensure customer satisfaction. “We consider our sales reps to be a ‘value added’ for our clients,” said David Record, Wilmar’s Director of Corporate Sales.
E-commerce represents only about 4 percent to 7 percent of Wilmar’s sales. Record agreed that Internet purchasing is the most efficient way to order, but added, “Each person has a different comfort level: Some prefer to order face-to-face from a sales rep or over the phone with a customer service rep.”
The company finds other ways to reduce costs. “At Wilmar, we focus on ordering efficiencies,” Record said. “Some customers place orders daily. Our average order totals only about $150. But if managers place bigger orders less frequently, less labor is needed at each end of the process.” He cites the case of a California management company that encouraged managers to order less frequently, which raised the value of the average order to $450 and saved the company $200,000.
Century Maintenance Supply has expanded rapidly since its inception in 1988 and now boasts 39 distribution centers around the country. The company relies on its private fleet of trucks to ensure speedy delivery, often the same business day. “Some management companies order in volume to insure that they won’t run out of commonly used items, which then creates storage problems at the property,” said Bill Hall, Vice President of Operations. “At any given time, Century has more than 99 percent of our products in stock at each of our distribution centers. Because customers can rely on receiving parts immediately, they don’t need to keep extras on hand. We serve as their warehouse.”
Internet sales accounted for more than 2 percent of Century Maintenance Supply’s $300 million in revenue in 2003. Based on Internet sales for the first six weeks of 2004, online business is expected to double this year. In keeping with its commitment to superior customer service, Century listened to clients’ feedback and redesigned its e-commerce web site to be more user-friendly. In fact, the company unveiled the updated web site in February.
The Home Depot Supply offers more than 14,000 products specifically selected for multifamily and property management professionals. Shoppers can order these products—hardware, electrical and lighting parts and fixtures, plumbing fixtures and supplies, appliances, HVAC hard goods and replacement parts, janitorial products and tools—via the Internet, phone or fax. Thanks to its nationwide network of warehouses and its fleet of more than 260 trucks, The Home Depot Supply can offer free, next-day delivery on most catalog items.
The Home Depot Supply encourages ordering through its web site, www.hdsupply.com, by offering special online services such as quick order, saved lists and access to manufacturers’ Materials Safety Data Sheets. Online customers also can apply for credit, request a catalog or sign up for free training classes in air conditioning, electrical, appliance and plumbing maintenance.
Customers of The Home Depot Supply who need special assistance can get live support from the company’s Special Orders team, which helps source hard-to-find items. Its Renovations Department can coach owners and managers through small and large rehab/renovation projects with product specifications, volume discounts, project management support and single-source solutions.
Johnstone Supply is a co-op wholesaler that consists of 272 individually owned stores across the country. The co-op is supported by a corporate office that provides marketing support in the form of catalogs and flyers, two distribution centers and the co-op web site. Each store maintains its own “storefront,” which consists of corporate information and information of special interest to that particular store’s customers.
Although a high percentage of Johnstone’s business consists of over-the-counter sales, the company accepts catalog orders for its 21,000 items, which can be either picked up at a local store or shipped to the customer. The company’s catalog can be viewed online, but prices are not visible until an account number is established.
Online orders can be placed through the Johnstone storefront with which the customer has an account. Currently, Internet sales account for a small part of the company’s $625 million in total sales, but in areas such as South Dakota, where there are few Johnstone stores, e-commerce is thriving.
Whether with the intention of ordering online or not, a visit to Lowe’s web site, www.lowes.com, is well worth the trip. A click on “Commercial Services” on the bottom right of the home page will take the shopper to “For Pros,” which provides a wealth of information that is geared toward professional contractors, but which will be of interest to maintenance staff and property owners. In addition to selecting from a huge variety of products, through the link “Commercial Desk,” shoppers can set up a national program, open a small business account or sign up for an e-newsletter. The site is user-friendly and appealing even for the novice Internet shopper.
Get It Here
Maintenance USA and Wilmar Industries each carry upwards of 15,000 products used in apartment upkeep, including pool supplies, such as motors and chemicals; janitorial products, such as pesticides and cleaners; electrical and HVAC parts; lighting; hardware and plumbing, right down to the kitchen sink.
“We carry everything from a 1-cent washer to a $4,829 commercial water heater,” Overhage said. Interestingly, the heater holds just 80 gallons, but recovers and heats water five times as fast as other models.
Because Century keeps everything in stock and rarely back-orders, the company’s product line is somewhat less expansive, with approximately 5,500 products. However, “where other companies may carry 50 different windowcovers, Century offers what we call our ‘value-added products’ such as cut-to-order mini-blinds in five different styles,” Hall explained. “Our Construction Services department can fabricate mini-blinds, cabinet drawers and fronts, as well as other custom products, to a contractor’s specifications.”
Other maintenance suppliers stock similarly comprehensive product lines. In fact, choosing among the various companies may be a challenge.
Quality Products for Any Budget
In many instances, apartment managers can choose between brand-name and less costly private-label products. Century Maintenance Supply, for example, carries Aspen faucets, Champion mini-blinds and Boss janitorial supplies. “We believe that private label products enhance customer loyalty, which benefits both Century and our customers,” Hall said.
Overhage points out that “not all apartments are created equal.” For example, he said, “People who pay $1,500 to $3,000 in rent expect to see upgraded faucets, towel bars and appliances—such as double-door refrigerators with ice makers—and other creature comforts that lower-cost apartments cannot offer.”
To meet the varying needs of apartment owners and managers, Maintenance USA offers many products in good (private label), better and best quality.
Maintenance warehouses carry many of the same products as their competition. Comparing price is one way to shop around, but the economics of purchasing supplies isn’t quite that simple. Less obvious factors, such as the ordering process, can significantly influence the bottom line.
Keep It Simple, Supplier
How to order, and from whom, is a question of matching the supplier’s style to the buyer’s. Do you like individual attention? Do you just want the item without service frills? What is the difference between a “purge and balancing valve” and an “anti-scald mixing valve”? Are you an insomniac who e-shops in the middle of the night? Are you prepared to share your purchasing history and change habits to save money?
In addition to its redesigned web site, Century Maintenance Supply has made ordering by mail, fax and phone more user-friendly, a benefit most busy managers would welcome. The company has simplified its catalogs and fax order forms, created easy-to-understand invoices and monthly statements, taken the hassle out of returns and made inventory-management tools, such as usage reports, available to apartment managers. Independent rental owners might especially appreciate this user-friendly style.
Like The Home Depot Supply, Century has developed maintenance seminars to inform and educate customers in the latest technology and innovations that affect the industry. One such offering is EPA-approved classes and exams that lead to the now-required certification in refrigerant recovery. Century Maintenance Supply instructors have certified “tens of thousands” of maintenance technicians in this area.
At the other end of the spectrum, for those whose goal is to be on the technological cutting edge and are somewhat adventurous, Maintenance USA may be a better fit. The company has taken full advantage of the wonders of the Internet to save the time which, of course, is money.
“Formerly,” Overhage said, “for a company to order over the Internet, the customer was forced to endure what we call the ‘swivel chair’ effect.” Because many management companies had their own purchase order systems in place, the client would have to enter the data into that system, then turn (swivel) to another computer to order the items online. “That’s entering the data twice,” Overhage said. Business-to-business online ordering, almost untouched by human hands, seemed a worthy goal.
Rising to the challenge, Maintenance USA implemented software that facilitates communication to the client’s own purchasing/accounting software. Maintenance USA’s program automatically “translates” and enters the electronic order data into its own order/invoice system. This entry triggers a series of other electronic processes, such as sending the warehouse a message to pull the items and advising shipping of what to expect. The ideal result is that the data is only entered once for everyone involved.
Most suppliers who are serious about e-commerce have implemented advanced ordering systems that offer amenities such as access to order status, delivery tracking and ordering history. Depending on the sophistication of the property’s management system, Maintenance USA users can perform fund transfers and, in some cases, have related data fed directly into the client’s accounting system. The system automatically updates itself every 20 minutes, which offers the “real time” view of purchasing activity.
An ‘In-House Purchasing Department’
If selecting hundreds of products and negotiating prices with supply companies seem overwhelming, apartment owners and managers can join Buyers Access, which President Jim Sweeney described as “an entire purchasing department” for a company, regardless of how supplies are ordered.
For a modest fee, Buyers Access works with mostly small to medium-sized, highly professional management companies (1,000 to 15,000 units) to seek and obtain the best prices for routine purchases, so no time is wasted shopping around.
In cooperation with most of the major suppliers, Buyers Access analyzes the member’s ordering history, then negotiates a price for a particular item and creates a customized purchasing program for property management that “brings discipline to the entire purchasing process.”
“Oftentimes, when a management company negotiates for goods and services, those programs get lost when there is turnover in property staff,” Sweeney said. Buyers Access sets up a computer program that ensures that the supplier of choice routinely charges the negotiated price.
If necessary, just like an in-house purchasing department, Buyers Access will develop specifications and obtain three bids for any given item or service. The company will also search for suppliers of hard-to-find items, recommend good quality, reasonably priced contractors for particular rehab projects and help members determine what particular item to select. Property management places the order directly with the supplier, as always, although Buyers Access can help with that, as well.
Sweeney doesn’t agree that ordering over the Internet is necessarily cost-effective. “About 90 percent of the time, it’s the maintenance staff doing the ordering,” he said. “He or she is out on the property without immediate access to a computer. Time and motion studies show that it often saves time to order by phone as opposed to taking the time to gain access to the property computer.”
Buyers Access helps client companies select products and standardize their purchases, which has multiple benefits.
“If the same property is ordering different types of faucets, for example, they may be paying different prices for different quality,” Sweeney said. On top of that, they must maintain multiple fixtures that use different parts.
“Letting the maintenance technician order whatever he wants, from whomever he wants, whenever he wants-is what I call anarchy,” he chuckled. Buyers Access can create a program that rejects orders for non-standard items and substitutes the standard item.
Property management spends about $300 to $400 per year in maintenance on each apartment home. With a cost of a few dollars per unit per year, Sweeney said, “our members realize an average savings of 12 to 15 percent—and that’s without taking into account the ‘soft’ savings of time and productivity.”
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