Due
to our size, 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%.
