Supply Cost Comparisons Can Lead to Supply Cost Reductions
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.
"This is something building owners and managers rarely do," says Wilson. "But invariably once they do, they find their 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."
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.
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."
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