The Cost of Lower Prices

The other day, I was talking with a large client whose company was looking for a lower price on chemicals, paper and other cleaning materials. All of my client’s customers were extremely price-sensitive. The company was trying to respond by providing services at a lower cost.

I explained to this client that even if his supplies were free, it still wouldn’t have much of an impact on the savings he could pass along to his customers. Most cleaning organizations spend just 5 to 10 percent of their total budget on supplies.

The lion’s share of costs are labor-related. Improving performance, not pinching pennies on supplies, is going to keep your company competitive.

At Janitor University, we teach students about what we call the Productivity Wheel. At the top of the wheel is increased productivity. As you move around the wheel to the right, you’ll find lower cost to perform work. At the bottom of the wheel is lower price. Finally, moving up toward the top of the wheel again is increased demand.

Increased productivity lowers your cost of work. That allows you to lower your price, which in turn increases demand. Increased demand forces you to find new and better ways to increase productivity.

The Productivity Wheel has been spinning hard since the turn of the century. Every year, we expect to buy products cheaper, with more features or both. Data storage devices are a great example. Drives and discs offer more space at lower prices.

How does the Productivity Wheel affect your company? If you’re still stuck on trying to improve productivity, you can’t take advantage of the momentum. You’re more likely to be run over by the wheel than to be the driving force behind it. Let’s examine some strategies to improve productivity.

Reduce the number of tasks
It sounds almost too easy, but it’s true. Contract bid specifications often contain many tasks that are unnecessary. Recently, I reviewed a contract used by a major government organization. The contract called for stripping floors once every 30 to 60 days. But properly cared for, the floors would probably only need to be stripped on a multi-yearly basis.

This boilerplate contract was probably written during World War II. It’s been endlessly recycled since then with no one empowered to change it. Because of that, cleaning contractors do messy, dangerous, environmentally unfriendly tasks that have largely been made obsolete since the mid 1970s.

Suggest to your clients changes in specifications and technology.

Reduce frequency of tasks
Let’s say you have a contract where you are required to empty every wastebasket five times a week. Is that really necessary? Perhaps only the wastebasket in the copy area needs to be emptied every day. If you could skip one day for every wastebasket, it would theoretically drive an automatic 20 percent savings to your customer’s budget.

Are there other tasks that are being done too often? Give your clients some strategies on how to adjust frequencies without impacting cleaning quality.

However, in order to reduce how often a task is performed, you have to have a way of tracking and measuring work. The assigned frequency may not be the performed frequency.

Reduce the number of cleaning products
Reducing the numbers and types of products you use can lower costs in inventory flow and tracking, and reduce the number of complaints. It also gives you more control over exactly which products are being used.

But changing products costs you money — not because of the cost of the item itself, but the training issues related to making the change.

Automation and ergonomics
The same cleaning tools and processes you’ve used for the last 20 years won’t be the ones that will keep you in business during the next 20. Automation and ergonomics play a key role in improving productivity.

Replace mops and buckets with auto scrubbers and, in certain instances, replace regular auto scrubbers with riding machines. Even changing a 48-inch dust mop to a 72-inch mop can dramatically affect productivity.

Ergonomically designed tools also will help. These tools reduce bending, stretching and lifting. They allow workers to clean faster, and better, with less fatigue.

Workloading
I seldom work with companies that feel they have too many cleaning workers. Most of the time, managers are certain they need more help to deliver the quality of cleaning that’s been promised.

However, these same companies have productivity rates that range from 2,000 square feet per person, per day to 100,000 square feet per person, per day. Many companies aren’t sure how much each worker actually is cleaning.

That kind of disparity usually causes animosity among the work force and endless headaches for supervisors. It’s virtually impossible to manage workers, projects and clients.

A standardized cleaning system is at the very heart of improved performance and lower costs. At a recent meeting in Montreal, Canada, a speaker from the University of New Mexico reported an 80 percent reduction in accidents since the school switched to team cleaning. We frequently have clients that report a 5 percent to 20 percent budget benefit by using team cleaning processes.

What could your company do with that kind of savings? What could your customers do? Forget about trying to trim three cents from your chemical costs. A closer look at the way you work is more likely to yield a significant savings.

John Walker is a regular Contracting Profits columnist. He is a veteran building service contractor; owner of ManageMen consulting services, Salt Lake City; and founder of Janitor University, a hands-on cleaning management training program.