Due
to our size (over 20,000 apartments), we have developed
a program of bidding our material and service needs on an
annual basis. We add up what each site spends for the goods
and services they use during the year, then take this projected
volume and ensure this amount of business to the vendors
we eventually choose. The vendors chosen must have the lowest
price without sacrificing service and quality. We also make
sure our vendors are promptly paid. By assuring vendors
and suppliers of a certain volume per year and payment they
can count on, we have been able to get better response time
and substantially lower prices. We’ve had this program in
effect for over 20 years, and we have a corporate reputation
of being an excellent company to do business with. We have
asked our vendors and material suppliers what their prices
would have been on five of our sites if they were not assured
of the projected annual volume of business and prompt payment.
They responded by telling us what we have saved over what
others would have been charged. The average savings was
$127.41/unit/year.
In
addition, if you take the savings from our purchasing program
and subtract it from the management fee paid to Bernard/Allison
and re-compute the management fee as a percentage of gross
operating revenue, the average fee was reduced by 1.88%.
