Anatomy Of A Purchase
There is no cookie cutter approach to the way jan/san end users purchase products. There also isn’t any sort of purchasing model for customers to follow.
However, it’s apparent that the level of sophistication differs across the board when comparing building service contractors (BSCs) and in-house service providers (ISPs). Each sector has its own preferred way to order and some companies purchase quite differently than their counterparts.
The level of sophistication in the purchasing process for national and larger-sized building service contractors (BSCs) is one that can’t be matched by any other sized BSC.
What sets large BSCs apart from the rest, says Greg Zifcak, commodity/subcontract manager for UNICCO, a Newton, Mass.-based large BSC, is that they have the personnel set in place to make informed purchasing decisions and have the strength to deal with national suppliers.
With assistance from national suppliers, large BSCs are able to expedite their purchasing through Web-based e-procurement platforms.
An e-procurement platform is a Web-based user interface that allows a company to generate requisitions, create purchase orders, track and receive orders and leverage advanced searching techniques to ensure a company receives the right goods at the correct price.
When successfully implemented, e-procurement platforms facilitate greater contract compliance, better prices from vendors, accuracy of orders, reduction of delivery time and faster payments through precise matching of invoices and purchase orders.
Through its vendors,UNICCO has utilized an e-procurement platform where all of the company’s jan/san purchases are completed through the Web. The platform allows a user to log on with a username and password and grants access to the listing of products by their vendors, says Zifcak.
The user can create a requisition, that requisition then goes through an approval process and then from that point, it gets electronically generated as a purchase order to the vendor. The vendor then fills the order and ships it to the designated site.
“Reporting structures are in place so we know what we’re buying, how often we’re buying it and where we’re buying it,” Zifcak says.
An added incentive for large BSCs who are using an e-procurement platform is that with a company’s large business portfolio, the BSC can gather statistics from the platform and determine if each portfolio is matching market trends.
“An e-procurement platform is not only a control, it’s also an avenue for us to see what the trends are and what people are wanting to use,” Zifcak explains. “For example, if we have a new Green Seal-Certified soap that comes out and if that starts to take over and our clients want that, we can see where it’s being used, where it’s being bought the most, how it’s dispensed, whether it’s hands-free or not, and we can bring that innovation to our clients.”
An e-procurement platform also gives the BSC a higher level of control and more in-depth reporting, says Mark Browning, senior vice president at Varsity Contractors, Boise, Idaho.
“You set up your vendors, the platform allows you to set budgets and set up purchases,” says Browning. “You set budget parameters and upper management can kill orders based on if they exceed budgets or request higher level of authorization on orders that exceed budgets.”
Small And Mid-Size BSCs
With fewer resources and limited personnel available to make detailed purchasing decisions, smaller BSCs often serving a local market, purchase products quite differently than their larger, national colleagues.
Small contracting companies traditionally rely on their site supervisors and area managers to handle more of the purchasing, while approval comes internally from upper management. Typically, area managers and site supervisors are in charge of verifying what was ordered and what was received.
Even though the industry has transformed into an Internet-savvy community, a majority of small BSCs still find purchasing products and supplies via telephone and fax easiest. The small contractor also relies on limited face-to-face time, telephone, and e-mail conversations with suppliers to stay informed about product offerings and current trends. But there is always room for growth for how small BSCs currently operate, says Jim Sutton, owner of Better Business Cleaning, Erie, Colo.
Fearing that small BSCs will be left behind by larger competition, Sutton says they must change their current ways of purchasing.
“The way we’re currently doing it, there’s lots of room for improvement,” says Sutton. “Lots of room for less confusion, lots of room for more specifics, lots of room for us to have a set product line to be working from.”
Small BSCs view their sector as a stone that has gone unturned in the jan/san industry, Sutton says. Because small contractors lack sophisticated purchasing models, some suppliers overlook their value. Small contractors want suppliers to look past the “no-value” stereotype and recognize their potential as growing companies.
Growing mid-sized BSCs, often operating at a state or regional level, find themselves somewhere in between. As they’ve grown, they’ve been able to hire additional staff designated to head the purchasing.
Growing mid-sized BSCs are taking advantage of simplifying their purchasing processes via Web-based purchasing platforms just like their larger counterparts in the industry. As a contractor company gets larger, there’s more of a need to automate and adapt to technology as a means to save time, says Jim Gambino, president of specialy services for CleanPower, Wauwatosa, Wis.
For example, St. Louis-based Mitch Murch Maintenance Management now equips its account managers with PCs in the field to help expedite purchasing throughout its specific portfolios, says Tim Moore, the company’s Midwest division vice president. Managers now have the ability to submit an order via the Internet while in the field without having to go to higher authority for approval — unless they hit a predetermined budget.
“If they go over budget the online platform rejects the purchase order until the branch manager approves it,” Moore says. “They know exactly what they have to spend and what products are used. And if it’s out of the norm and they add a product, it goes directly to the branch manager in an e-mail that says he or she has requested this.”
With building service contractor companies, the level of sophistication in purchasing can be determined by the size of the company. This is also the case for in-house service providers (ISPs), although sometimes purchasing decisions are scattered across the board as each sector an ISP serves is its own separate entity.
ISPs purchase with set budgets and traditionally have a specific person or department in place to oversee all purchases for the cleaning department.
Whether ordering via the Internet, by fax or personal sales visits from distributors, ISPs purchasing techniques are often based on the type and size of their department. For instance, most health care and educational entities procure the bulk of their goods from suppliers based on price, ordering options and value-added services.
ISPs work with suppliers who give them the option to streamline their processes through the Internet, but some are still hesitant to adapt to the technology and instead rely mostly on in-house ordering templates for faxing and phoning in orders.
At Geisinger Health Systems, Danville, Pa., typically an account manager will fill out an in-house purchasing order for needed products, says Jack VanReeth, manager of environmental services. That person then hands it over to upper management who generates a fax order. That order is then sent to the supplier.
This process can become very time consuming for departments waiting on necessary products.
ISPs, however, recognize that computerizing their purchasing process can lead to better efficiencies, says Dennis Owens, CHESP, director of environmental services at Memorial Hospital of Rhode Island, Pawtucket, R.I.
“We have a homemade order form that we take through the store room and mark what we need to order,” Owens says. “That then gets translated to purchase order requisitions, which is what we fax to the supplier. But it would probably be easier to take the form we have and put that on screen.”
Some ISPs also have in-house computer based ordering templates that allow easier product ordering. Instead of transmitting the order to the supplier electronically, however, they print out the order and fax it to their supplier, says Owens.
At Western Washington University, Bellingham, Wash., unlike some of their counterparts, the institution encourages online ordering and procures the majority of their products via their supplier’s online database, says Michael Smith, senior supervisor of academic custodial services.
As more ISPs experience the convenience and time savings associated with this form of ordering, distributors should expect to see more streamlined online purchases.
Not A One Step Method
If there is one thing that suppliers should understand about their customers’ purchasing processes, it’s that customers like to submit purchases in many forms.
There is no one step method distributors should mandate when it comes to how they accept purchase orders from customers.
Suppliers must realize that end user customers are uniquely different and that not everyone has the resources available to make detailed purchases, says Jill Kegler, president and COO of Kellermeyer Co., Bowling Green, Ohio.
“It depends on the size of the company and what works best for their business platform,” says Kegler. “We have various methods for all of our customers and there’s no one step method.”
Jan/san suppliers have noticed the purchasing process change in the last couple of years as more BSCs and some ISPs have begun implementing Web-based purchasing tools, says Fred Kfoury Jr., president and CEO of Central Paper Products Co., Manchester, N.H. Customers are noticing the benefits to tracking orders online and appreciate the ease of use.
Only time will tell if the current way of purchasing will continue on the trend of going Web-based or if smaller companies will continue to rely on fax and telephone orders.
As suppliers continue to make the push for their customers to streamline the purchasing process, signs overwhelmingly point to the Web being a main component.
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