Vendor management in asset management plays a pivotal role in maintaining the performance and value of properties. Effective vendor management ensures that there is a network of reliable and high-quality service providers who can take care of various aspects of property maintenance and repair.
Below are a few key rationales for why effective vendor management plays a crucial role in asset management:
Consistency in Service Quality
Asset managers, property managers, investors, and owners can protect their properties by carefully choosing and overseeing vendors. This careful management keeps properties in top shape, important for keeping residents happy and maintaining the property's value. Creating a list of preferred vendors beforehand is an often-missed yet key tactic. Having a reliable team of vendors ready for any situation is crucial for effective vendor management.
Q: Do you have a pre-qualified vendor for all major asset needs? When is the last time you did a resident satisfaction survey to see if your residents are happy? When is the last time you visited your asset to see if it is maintaining value?
Cost Efficiency
Effective vendor management can lead to cost savings by negotiating better rates, setting up bulk service deals, or getting special prices from long-standing partnerships. Simplifying the number of vendors can also cut down on the costs of managing many contracts. It's essential for asset managers, property managers, investors, and owners to pay vendors on time. Like them, vendors rely on steady cash flow. Late payments to vendors can impact a building's upkeep and how easy it is to rent out, as well as customer service and the business's reputation.
Q: Are you completing a quarterly financial audit to ensure that all vendors and payments have been accounted for? Have you checked your vendors that are in your system against the bills that have been logged to ensure all have been entered?
Timeliness of Repairs and Maintenance
Keeping an up-to-date vendor list is key to prompt repairs and regular maintenance, helping to avoid downtime and potential loss of income. This is especially important for commercial properties where tenants depend on working facilities. Poor vendor management can damage your reputation with residents who shouldn't have to wait long for repairs. Properties can quickly go from full to 80% occupancy in just a year if facilities are not managed well, showing that even new assets can face major occupancy issues due to poor service.
Q: How long is your repair turnaround time? That's an entire other blog!
Compliance with Regulations
Vendors who work with asset managers, property managers, investors, and owners must know and follow industry and local rules and regulations. If they don't, they could face legal issues and fines. It's important to understand the laws that apply where a property is. Gone are the days when a handyman could just swap out a water heater. Now, many areas require a city permit and a licensed vendor for this work.
Q: Are you up to speed with the local regulations for facility repairs concerning your assets? Are you aware of the laws regarding marketing and demographics? How about the legalities of the software systems you use? These matters have been particularly relevant in our industry lately. Staying informed is crucial, as is working with vendors who are equally knowledgeable.
Risk Mitigation
Collaborating with reputable vendors reduces the risks of substandard workmanship, undependable service, and possible fraud. Asset managers, property managers, investors, and owners can verify that all vendors comply with insurance and licensing standards. Have you ever scrutinized your invoices and questioned the identity of the vendor to whom you issued a $15,000 check for what seemed like a minor repair? It's crucial that all vendors undergo a comprehensive vetting process.
The vetting process should encompass elements like background checks, client references, and insurance minimums. For large-scale projects, you may include an assessment of financial stability such as profit and loss statements. Additionally, it's wise to establish clear communication channels and service level agreements (SLAs) to ensure that expectations are set and met on both sides. This not only protects your investments but also fosters a professional and transparent relationship with the vendors.
Q: How much more than your budgeted 3-5% R&M budget did you spend last year? How much did you try and put below the line in CapEx to save your budget? Yes, I called you out. That's also another blog!
Adaptability and Scalability
A robust vendor management process enables asset managers, property managers, investors, and owners to swiftly adjust to evolving requirements, like emergency repairs or enhancements, without compromising on quality or incurring excessive costs for services. Additionally, it provides a structure for assessing vendor performance and maintaining adherence to service level agreements (SLAs). This forward-thinking strategy not only reduces risks but also cultivates enduring relationships that can result in improved pricing and more inventive solutions.
Q: What is your emergency spend allocation on your asset? Do you have a plan?
Enhanced Communication
Maintaining relationships with vendors enhances communication, simplifies the coordination of large-scale projects, and allows for efficient issue resolution. Furthermore, these relationships can lead to improved terms and conditions due to the development of mutual trust over time. This often translates into cost reductions and priority service during peak times, which helps in adhering to project schedules with minimal interruptions.
Q: How much time does your asset staff spend a year looking for vendors? How much time does that take away from resident satisfaction?
Effective vendor management is key to keeping properties in top shape and protecting their value. It helps asset managers, property managers, investors, and owners deliver high-quality, affordable, and prompt maintenance. Plus, it makes sure properties meet regulations and reduces the risk of operational issues.
If you have any questions about how to approach a vendor solution, we are always happy to assist you on your journey. Feel free to reach out.
Happy Vendor Sourcing & Management!
DC & Mox
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