Supply Cost Comparisons Can Lead to Supply Cost Reductions
Tuscaloosa, Ala., Feb. 16, 2016—Facility owners and managers are advised that they should consider comparing their supply costs with similar sized facilities in order to find savings opportunities.
This advice comes from Michael Wilson, vice president of marketing for AFFLINK, developers of the ELEVATE process.
“This is something building owners and managers rarely do,” says Wilson. “But invariably once they do, they find there can be some eye-opening savings.”
According to Wilson, an effective supply cost comparison includes taking the following steps:
Determine what is a “similar sized” facility. This can involve several metrics but key are the following: the buildings have about the same amount of cleanable space; are used for the same or similar purpose; have comparable amounts of carpet and hard surface flooring; have about the same number of tenants as well as cleaning staff.
Decide what is and is not an expense. “This can be more complicated than you realize,” says Wilson. “If the facility leases an auto scrubber, for instance, is that a supply cost or a building operations cost? Sometimes supply costs get buried into capital or operations expenses or lost in service contracts. Determine what will and will not be considered a supply expense.”*
Start small and grow. Some cost comparisons start with just a few items – paper products, light bulbs, cleaning supplies – and if there is a significant difference, build from there.
Typically, it is best for each party to average supply costs over a three-year basis. That helps smooth out any temporary situations that might skew the results.
“It is very important for building owners and managers to be open to the results,” adds Wilson. “If they turn out unfavorably, some managers reject them, saying their building is different. Better to find out why there is a [supply] cost difference and take steps to address it.”
*Wilson defines a “supply expense” as the net cost of all tangible items purchased for a facility less rebates and refunds. This excludes labor costs, payments for outside services, taxes, repairs, or costs to upgrade the facility
AFFLINK, www.afflink.com, provides an array of comprehensive sales and marketing solutions to more than 300 distributors and 250 supplier organizations in key segments across various channels. Fostering connectivity among distributors, manufacturers and end-use customers, AFFLINK serves to develop the tools and technologies necessary for its business partners to obtain a competitive advantage in today’s global marketplace.