4 Ways Multi-family Can Overcome Price Hikes from Supply & Labor Shortages
Stay ahead of inflation and shortages
4 MIN. READ
The pandemic and natural disasters have ravaged the supply chain over the past 20 months. In addition, HVAC and electrical trades have been experiencing serious labor shortages even before the pandemic, which has only worsened. Property managers should be ready for current and future price increases for both ongoing maintenance as well as supplies in response to the multi-family supply shortage.
Causes for price increases and the multi-family supply shortage
Shortages of supplies, high prices, longer lead times, and general supply chain disruption have many property managers looking into ways to alleviate these headaches. Here are some reasons for the multi-family supply shortage:
- Supply chain disruption: Logistics, manufacturing shutdowns, and COVID-19 restrictions all have added to the massive supply chain disruptions that have impacted every corner of the globe. This has led many property owners to scramble to try and meet project deadlines and keep on budget.
- Labor shortages: Skilled trades such as HVAC contractors and electrical contractors are in high demand. There is a net loss each year in the number of electricians in the U.S., which complicates the labor issues in the construction and real estate sectors - there is simply not enough skilled labor to complete the jobs at hand. This drives the prices up for labor across the board.
- Suppliers and contractors: When suppliers and contractors' costs go up, these are usually passed down to their customers. This is not unusual in everyday commerce, but today's market is dealing with multiple issues and bottlenecks that compound and make their way down the supply chain.
- The market: It is difficult to predict future pricing. However, it would be pragmatic to glean that pricing may continue to rise into the next year and possibly beyond. There are many resources (more on this below) that can give your company the necessary information to keep you in tune with economic conditions.
Looking to the short- and mid-term, property managers (as well as suppliers, contractors and consumers) should prepare for more of the same environment, with hopes that the multi-family supply shortage will wane and normalize.
What multi-family managers can do to prepare
The disruption in the market and overall supply chain are causing multifamily owners and managers adjust their buying behaviors so they can best weather the current market storm. They are taking action to help them better prepare for price swings, product delays and shortages. Here are a few strategies that can help you get through the current multi-family supply shortage issue.
Create strong relationships with suppliers and contractors in advance
In these times more than ever, strong relationships matter. These bonds need to be built over time and cannot be knee-jerk reactions to the current circumstances. Building positive and productive bilateral relationships from the beginning can help you in times of need. Calling in a favor from a long-time partner can get you through a pinch.
Do any necessary efficiency upgrades to properties early before inflation hits
Staying on top of preventative maintenance and upgrades is good business practice. This will keep your appliances and mechanical systems in good working order so they will perform longer and with better efficiency. With replacement equipment and parts in short supply, preventative maintenance will reduce the risk of failures.
Forecasting market pressures
It is important to stay in tune with trends and projections in the supply chain sphere. Tapping into resources that track and forecast inflation and supply chain statistics is a good business practice. Avendra is one such resource. Avendra's annual cost outlook report breaks down inflation, commodity pricing and market trends, and it can help you adjust your budget in the near term.
Automate the supply and maintenance chain with software
Another strategy to help you navigate through the current labor shortages and inflation crisis is to automate your business's supply chain with software. Software enables your company to gain visibility into the supply chain and gives you information on pricing trends and product availability. It also can automate your purchasing process, so you can save time and increase efficiency. The software monitors product available, and gives you access to top national suppliers that can give you access to thousands of products and low negotiated prices.
Having knowledge and tools can get your business through these difficult economic times. Savvy property managers will take advantage of these strategies and implement software and tools that automates operations.
Raiven can help streamline your business operations
Raiven can help you create a supply chain capable of dealing with supply chain shortages, inflation, and other challenges coming in 2022. Tap into industry-leading suppliers that can provide you with your property's routine supplies. You can generate detailed reports that give you visibility into your purchasing trends to help your team save time and money.
For more information, reach out today.