MRO stands for Maintenance, Repair, and Operations. MRO supplies are used by property and facility managers to keep a building and surrounding land operating properly. According to the BusinessDictionary, MRO products are not part of a finished product and not central to a companies output. In the case of real estate, maintenance is important, however it isn't the end product delivered to a tenant. Maintenance, Repair, and Operations is a general expense account on the income statement for a property management company where all costs associated with the upkeep of the grounds and buildings are recorded.
Maintenance, repair, and operations products are needed to manage a property or building on a day to day basis. A facility manager may need to repair a leaky faucet, replace light bulbs, or change furnace filters. The maintenance team collects garbage and puts new trash liners in the trash cans, then adds more paper towels and toilet paper in the common area bathrooms before changing the locks on a few units. In the office, a property manager needs copy paper and ink toner to print documents, foldersto keep the paperwork in order, and coffee k-cups for the refreshment station in the club house. You get the idea. MRO supplies are purchased regularly to keep locations humming.
Since MRO products are purchased on a regular basis, a keen maintenance supervisor and property manager will have a system to manage these supplies. Instead of running out to a store several times per day for items that are needed, they may build a small inventory in a closet in the building or in a shed on the property. That may work well for one location, however as a real estate empire grows, it can become complex to manage a team of maintenance and office staff to make sure they are buying the right MRO supplies.This is where MRO supply management becomes important. Without oversight, these items can quickly add up if smart purchases are not made. It's also an area where errant spending can quickly escalate out of control since staff may not have spending limits. As a property owner, you won't see what your staff is buying until after the fact. Obviously this creates headaches and impacts the NOI (net operating income).Dedicating resources to MRO supply management is a smart choice. Some companies may have a lead purchasing manager while others have an entire department. What all property management companies should have is technology to standardize, monitor, and automate the MRO supply chain.
Standardizing products across properties or portfolio of companies has never been easier with technology. With eProcurement the corporate office can create an e-catalog of the right MRO products they want their staff to purchase. Think of the corporate catalog as a 'Favorites' list on an e-commerce site. The staff can quickly access the e-catalog via a website or mobile app and know which products to buy for cleaning, painting, and repairing.The corporate office will also see price consistency across the MRO supplies being purchased and from approved vendors. In addition, standardizing increases productivityand makes it easier for maintenance staff to do their job. They learn the products and parts needed to make repairs in and around the property, allowing them to identify problems and implement repairs more quickly.
Controlling spend in the MRO supply chain has previously been a headache for regional managers and the corporate office. By the time a supervisor sees how much was spent on day to day items, it's too late. Staff has already made the purchase and if they paid too much, either someone returns it or tries to negotiate a better deal after the fact. Both of these situations cause extra workload. Technology in eProcurement enables approval workflows, which means the corporate suite can see what the onsite managers need to purchase before the transaction takes place. This streamlines the process and prevents errant spending.Setting up spend limits and order approvals is a fast and easy way to gain control of spend. When a maintenance person enters an order via an eProcurement site with approval workflows, their supervisor is notified via email or text with the details for approval. Supervisors will be able to monitor the team in realtime to be sure they are buying the right products for the right prices.
Once MRO products are purchased, the property managers then must be sure the costs are accounted for correctly. Either the person making the purchase or a supervisor must determine which account the expense should hit, then keep track of the paper receipts and invoices for the Accounting team. Once it's passed off to accounting, they spend additional time inputting and storing. Automating this process through eProcurement increases accuracy and saves time for staff in both property management and accounting.
MRO supplies in an e-catalog are digitally categorized for easy shopping. With eProcurement, the products in these categories are mapped at the onset to a company's chart of accounts, so any purchases made by the team are automatically assigned a general ledger code. To illustrate, say a property manager buys a kitchen faucet, a bucket of ceiling paint, and ink toner for the office printer. The purchase data automatically stores the business unit (location) placing the order and assigns each product to the correct expense account, which would look like this:
This data is then transmitted to the corporate accounting system via an API or .csv file, which reduces errors and paper in the old way of processing. The accounting team can focus more on accounting and less on scanning and filing receipts.
Interested in learning more about the technology that can help you manage MRO supplies? We can help! Contact us today.
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