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The Savings Corner – Part I – Cleaning up Janitorial Spend April 5, 2010

Posted by solutionsbconsultants in Accountability, Increase Profitability, Procurement, Savings Corner.
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I have received more than a three dozen requests from executives who want to know how to drive instant or (near instant) savings for their company’s bottom line. 40% have come from CFO’s, and the rest from President’s and CEO’s. The Savings Corner will detail lowest prevailing pricing for a variety of commodities. And not just for Fortune 1000 businesses but for businesses from 10 to 100 employees.

Let’s start with an easy one, janitorial. First, don’t fall into a trap by signing up with a pure janitorial company. They have no way for them to take a small 10-15% profit without going out of business. Sure, they will razzle dazzle you with their “cleaning systems” that mount on the wall and their claims that their products will clean 40% more than the household equivalent. Besides, most of the cleaning systems that I have experienced over the years have a proprietary mount that will only allow that company’s product to be used with it – locking you into an overpriced solution. Best practices disallow proprietary solutions unless there is a huge (and I mean HUGE) benefit for your company – Let it be said now that any company that fails to use a universal dispensing system should be hustled away from the negotiating table.

Many of your other suppliers have drifted into the janitorial supplies arena because of the enormous profit potential. A good example of this is your Office Supplies vendor. Oftentimes, you can leverage the office supply store by requiring them to sell janitorial products at 10% over cost – or you take the entire block of business elsewhere.

And now for a secret. The single best place for janitorial supplies is not Walmart or Sams or Costco – it is your local dollar store – Dollar Tree, Dollar General, Dollar Store, etc. – Where else can you pick up 21oz of Comet for a buck – which is half the price of Amazon or Staples. And they have a wide breadth of cleaners, mopping agents and the like The key to buying these supplies is to have your procurement specialist do it once a month, write a number on each product (with a Sharpie) and have your cleaning staff perform a daily inventory. Don’t forget to invest five dollars for a hasp and padlock.

Incidentally, requiring a daily or regular inventory (not only for cleaning supplies) deters shrinkage – thieves usually take advantage of a place that is operationally sloppy – if they know you are watching, they will choose an easier target.

Annual savings for a small company averages more than $1500 annually including the monthly staff time for picking up the cleaning supplies. For larger companies, it makes sense to look at outsourcing the janitorial function – one company that I audited had the in-house staff emptying office trash cans three times a day just so they could appear busy. I favor limited outsourcing, making the employees responsible for keeping their desk, kitchen and common areas clean and using the janitorial service for dusting, mopping and zone cleaning.

Steve Gordon specializes in procurement and logistics cost saving initiatives – call him today at 865.356.3575

Steve

Remember what the Aberdeen Group says……….

“For a typical enterprise, it takes an increase
of $5 in sales to equal the impact of
a $1 reduction in procurement costs.”

Solutions is happy to complete a complimentary audit of your firm’s expeditures. Just call or write to get started.

If you want to know how to save money on a particular commodity, just send me a comment or email me directly. I would like to hear from you!

Respectfully,

Steve Gordon
Senior Consultant
Solutions Business Consultants
http://www.costavoidance.org
__________________________________
”Bringing Service, Value, and Efficiency to the Supply Chain”

steve@costavoidance.org
(865) 356-3575
Skype: stevegordskype
Blog: https://innovativeconsultant.wordpress.com/
Linkedin: http://www.linkedin.com/in/stevegordonthecostsavingsguy

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