Saving costs and optimizing services or performance:

Smart strategies also help small companies

Some housing companies already implemented smart concepts, others are still hesitant. Many of the smaller players even feel that they lack the necessary clout for success. Yet, a reorganization of purchasing processes can provide up to 20 % savings.

Christian Kesselring knows the problem from many meetings and talks because, for years already, he has been regularly in discussions with management executives in the housing industry on how procedures and process flows can be improved and potentials used for efficiency increases. Kesselring provides the appropriate concept and moderation for symposiums, working groups and seminars for the European Educational Center of the Housing and Real Estate Industry (Europäisches Bildungszentrum der Wohnungs- und Immobilienwirtschaft – EBZ). With participants in these events, he likes to keep discussions as close as possible to conditions in practice because only then can insights and findings be converted to the respective business reality. Kesselring says: "Managing directors and boards of management of smaller housing companies are often in doubt whether they will have sufficient market clout to be able to achieve savings in purchasing similar to those at large-sized companies. But there is a wise real estate saying: Profits are in buying! The market power of small businesses should not be underestimated. Just keep in mind that in a smaller community even 2,000 housing units will represent considerable market power.“

An important key for the optimization of purchasing processes lies elsewhere: in communications. Because that's a vital element for success. Rainer den Ouden is the partner for projects at Kerkhoff Consulting and an expert on the optimization of procurement processes. He knows: "Overview and perspective are indispensable – both internally and externally. Internally, the company must establish clearly who is allowed to buy which services and at which conditions. If that cannot be achieved, considerable potentials in savings may be lost without that being noticed even. Furthermore, background information on the offering parties is a must. It's vital for companies to keep up-to-date as to how the seller side is structured and how it should be dealt with.“

Thomas Straßberg holds the staff position Strategic Purchasing with the STADT UND LAND Wohnbauten-Gesellschaft in Berlin [City and country-side housing company]. For colleagues on the lookout for savings potentials, he suggests to do an ABC-analysis first of all. "In some areas, it's worth the effort; in others, it's not. Of course, 20 % savings in buying office supplies will not bring as much as 5 % in building processes." Strategic purchasing also includes – according to Straßberg – checking continuously where cooperations with other companies will pay off. "For example, we had good experiences in the purchase of gas and electricity; there are also potentials in the EDP area." In this respect, however, different standards in the individual companies are often a problem. "Moreover, according to our experience, functioning cooperations require partners who are on an equal footing. Our regional market only has a few of them, due to our sheer size."

Dietmar Amels is head of the area Zentraler Einkauf und Technik [central purchasing and technical matters] at LEG Wohnen NRW GmbH and will confirm that, in purchasing, successful performance especially has to do with strategy and setting a long-term course of action. "A clear overview and forward planning based on that are quite simply absolutely essential." Under Amels' leadership, LEG rearranged its purchasing strategy one year ago and introduced, inter alia, a differentiated investment categories management as well as an efficient supplier management. Amels' conclusion: "It's important to implement a coordinated action concept and jointly realize successful results in the company. That's also how they will all get together then and join forces."

Talks about savings in the purchasing of housing companies should not neglect to consider something which is not always a pleasant truth. Volker Riebel, formerly CEO of Deutsche Annington GmbH and of GEWOBA Bauen und Wohnen AG, today is an honorary professor at the educational center of the real-estate industry and college of applied sciences, the EBZ Business School in Bochum, and he will put that truth as follows: "By nature, not everybody is just cut out for a job in purchasing. What's needed is that pleasurable kick when being engaged in negotiations, having the right bite, as it were. It also takes talent to do that kind of work. If a housing company awards the competence of buying services to employees who don't feel all that is really important, that company will give away money one way or the other." However, Riebel says, it's not talent alone to decide on success or failure. "Being a good buyer is also hard work, and employers should therefore specifically develop appropriate specialists. At present, this does not yet happen extensively or on a nationwide basis because not all real-estate companies consider purchasing as a core competence and also because there is a lack of advanced training opportunities with a direct bearing on the real-estate business."

Author: Andreas Winkler / Europäisches Bildungszentrum
[EBZ – European Educational Center]