Tighten up those budgets, we need to cut our costs
Budget cutting directives like this coming down from above have become commonplace in facilities of all types in recent years. This “do more with less" mentality creates frustrations for Facility Directors, Property Managers and others with facility responsibilities who often have challenging enough roles. Add these perceived unrealistic expectations and the stage is set for a rocky road ahead.
How could this have happened? How did our costs increase when we got better prices?
Upper management may step in and order the consolidation of essential supply category purchases in order to negotiate lower prices or rebates and other upfront attractive “carrots” used to combine purchase volume. Other times, upper management will force the facilities' staff to negotiate pricing contracts that appear attractive on the surface, but both situations may result in missed targets.
There are hidden factors that impact the cost of facilities changing to cheap cleaning supplies and janitorial equipment over the long term. When the primary focus of products and equipment is line item pricing, price discounts, or rebates, many of the factors that drive the facility’s clean and healthy outcomes are not addressed.
Without aligning programs to overall cost goals and other key performance goals, outcomes quickly become misaligned from actual results.
Uncovering the hidden factors of cheap cleaning supplies that lead to increased costs
Post implementation, when the “what happened?” questions are asked, the diagnosis can be boiled down to key points that were not covered in the quest for lower prices.
- Product specifications and product use differences - lower upfront prices resulted in higher costs-in-use
This hidden factor can be avoided by using cost comparison tools to compare total use over a period of time to a single product, price and packaging. When working with consultants or suppliers, ensure they provide proposals outlining proposed cost-in-use and comparing current cost-in-use to the new solution to better understand expected outcomes.
- Costs of acquisition - additional work by staff increase costs and frustrations
This hidden factor can be avoided by detailing the existing process and comparing new proposals to that process to ensure proper comparison. When working with consultants or suppliers, ensure they provide proposals that clearly define the new process of acquisition in comparison with the existing process and all related costs.
- Holding costs increases - Minimum orders, lead times and service related changes can cause increased inventory holding costs
This hidden factor can be avoided by identifying historical holding or carrying levels and including this factor in comparisons. When working with consultants and suppliers, ensure they provide proposals that spell out the comparison of this important factor for your review.
- Decline in outcomes related to health, safety and cleanliness - Gradual declines in performance over time become dramatic and costly to recover
These hidden factors can be avoided by identifying the most important stakeholders' (staff, guests, students, patients and executives) priorities to properly manage expectations and deliver organizational success on those priorities. When working with consultants and suppliers, ensure that proposals clearly quantify how the proposed solutions will help achieve and maintain desired goals.
- Staff labor cost - Low prices that drive up labor costs are common and can be difficult to identify when looking at a product price list
This hidden factor can be avoided by completing a comparison of the existing scope of work and process map to the proposed new solution. By identifying all changes necessary to achieve organizational goals, differences can be identified and the impacts can be properly communicated and understood. When working with consultants and suppliers, ensure that proposals clearly quantify impacts on your staff labor.
- Change is difficult - In general, change is difficult for people, including facilities staff, however, when people feel involved in the decision making process, that change becomes more palatable
This hidden factor can be avoided by including your team in decisions that impact them. Communicate that you value their input and want to understand the perspectives they can offer. When working with consultants and suppliers, have them include in their proposals a plan outlining their contribution to your ongoing success.
Informed decisions lead to better outcomes
When a facility is faced with inevitable need to cut costs, prepare yourself and your organization with the necessary information required to succeed. Informed decisions lead to better outcomes.
When engaging with consultants or suppliers for assistance, find partners equipped to help you ensure the project delivers the outcomes you expect. Avoid "price list" based decisions.
Weighing your options and the impact of those options on your success will help you avoid the issues that lead to the questions, “what happened?”, “how did we miss that?” or worse yet, pointing fingers and passing off blame which destroys teams and ULIMATELY COSTS MORE!
The fact is, with most things, including your janitorial supply requirements, there is always room for improvement. Working with the proper tools leads to more informed decisions, making improved outcomes possible.