SiteStuff Rolling Out Buying Power for Octane Alliance

AUSTIN-This month, SiteStuff.com will begin rolling out Internet-based aggregate buying programs for Trammell Crow Co., Jones Lang LaSalle and CB Richard Ellis.

The roll-out plan will take nine months to complete for all of the properties of the “Octane Alliance,” Raj Shah, SiteStuff cofounder, tells GlobeSt.com. The firms represent a 1.2-billion sf portfolio that will be utilizing innovative high-tech procurement for all supplies and services vital to maintaining properties in office, multifamily, industrial and retail sectors.

“It’s a very exciting time,” says Shah. “We’ll have to make sure we do it right.” He says the key to a successful operation lies in staff training.

A recent study by Deloitte & Touche shows SiteStuff can save “tens of millions of dollars each year” on sourcing goods and services. The study’s participants had consisted of five each of commercial and multifamily real estate companies that owned or managed 1,754 properties nationwide. Deloitte & Touche has compared “the old way of doing business” with “the SiteStuff way of doing business.” The dot-com offers high-tech consolidated buying while still allowing property managers “to buy what they want, when they want” on an individual basis, says Shah.

Deloitte & Touche has pinpointed a per order 56% cost-savings for multifamily and a 71% cost-savings for office per order. Per order transactions historically have cost $51 each for multifamily companies and $77 each for commercial property corporations. “With the SiteStuff model, online supply procurement costs could be as low as $22,” the analysis has shown.Shah says SiteStuff has not yet reached the $22 benchmark. “I don’t know when we’ll hit that magic $22, but rest assured, we’re pushing very aggressively to get there,” he emphasized to GlobeSt.com.

SiteStuff clients already are reaping 5% to 10% more from the aggregate purchasing power that the dot-com offers, according to Shah. The savings is a testament to a Deloitte & Touche criticism of the real estate industry for historically relying upon “an inefficient, decentralized purchasing process in which procurement is left to the discretion of local property managers.” And that, says Shah, has been the biggest challenge–convincing commercial real estate firms to change the way they’ve been doing business.

SiteStuff streamlines the ordering process and eliminates “traditional labor costs associated with researching vendors, paying multiple invoices,” assesses the analysis. It also offers customers additional time-saving features such as an on-line catalog of products, personalized shopping lists to automate routine purchasing, on-line general ledger coding, customized order reminders and electronic tracking.

All of SiteStuff’s customized purchasing power “is ultimately translated into the dramatic cost savings,” concludes the Deloitte & Touche study which SiteStuff commissioned in order to assess its operation and potential impact on the commercial real estate industry. Shah says SiteStuff will seek an analysis every six months “just to see where we are.”

With a handle on the present, Shah is looking to the future. About six months down the road, SiteStuff will begin looking at other avenues for its applications . In the meantime, SiteStuff is focusing on core services and its client roster, which presently controls 2.2 billion sf in 5,000 commercial real estate properties nationwide.