When you cut costs in a business there’s often unintended consequences. And at times you might not be aware of them. I’ve been guilty of this more times than I can count.
So how do you cut costs and not let the changes you make cost you more in the long run?
We all feel good when we save a dollar but the truth is... sometimes saving a dollar benefits our business and sometimes it actually costs us more. Facility cleaning supplies and washroom products like cleaning chemicals, hand hygiene, toilet paper and hand towels are often an area that gets plenty of attention in the corporate cost cutting world. Going cheaper has its dangers but if you’re smart and a little creative you can reduce costs and boost profitability while at the same time improve hygiene and your guests experience.
Here’s 5 mistakes we all need to avoid…
1. Reduce quality, no-one cares!
Yeah, yeah, yeah… But when it comes to cleaning products, who cares right. We’ve just saved money. That’s what matters. No one will notice. No one really appreciates the hygiene and cleanliness we provide.
I hear you, but the truth is people do notice and judge you by the condition of your facility and their hygiene experience when they visit. More now than ever. And with social media people are speaking their mind. Giving them reason to complain is not smart business. But you can have the best of both worlds… you can reduce costs and improve quality. It does mean you will need to be a little more creative. A culture of compromise in a business is unhealthy. When you compromise on hygiene, absenteeism and illness will be more prevalent. You don’t want to cut cleaning supply costs only to cause a much bigger expense somewhere else in the business. Reducing quality can cost you more, here’s how...
Example: Garbage Bags
You find a supplier with bags 5% cheaper with the same specs. You buy lots so you change to the new supplier. The stock arrives and your cleaners start having more bags break. The cleaners don’t get all their work done and do a little overtime here and there because when a bag break the clean up takes quite a while. They don’t tell you, they just start double bagging the bins that get really full. Usage of bags goes up, labour costs go up, your staff are more frustrated, your garbage bag bill goes up but because you’ve just looking at per carton costs you have no idea. You might even be getting a pat on the back at head office for the mistake you just made.
Example: Cleaning Chemical System
We had an aged care centre client that wanted to reduce costs on their cleaning chemical system. They told us they had a cheaper quote and were going to change if we didn’t match it. We said we couldn’t match the quote and guarantee an acceptable standard of hygiene so we stood aside. They changed. 9 months later they had an outbreak. Some residents died and after several warnings government funding was withdrawn for a period of time. Saving $100’s a month cost that aged care centre over $100,000 that year. Hygiene matters, it’s cheap insurance.
2. Get a lower cost per carton or drum. Apples and oranges are the same thing
Are you comparing apples with apples? It looks the same, it sounds the same, it says it does the same thing, it’s cheaper, let’s buy it. But would that be a smart choice? Suppliers want to sell you their products. They will make them look as good as they can so you buy them. Nothing wrong with that. But comparing products is very difficult. There’s the obvious easy comparisons which are very important like carton quantity, sheets per roll, litres per drum, packs per carton, unit size etc. But the world of comparisons is much more complicated than that. Here’s an example to open your eyes...
Example: Heavy Duty Cleaning Chemical
You use a 15Lt drum of Bonza Heavy Duty Cleaner. You pay $120 per drum for it. You love it, it works, it’s super concentrated… all good. But you find a local supplier selling what looks like exactly the same product, same description, same dilution rates, same colour, same SDS details but a different label. The catch is it’s only $50 per 15Lt drum. What you don’t know is that supplier buys Bonza, dilutes it 4:1 and sells it as a concentrate. Bonza is good enough for this to happen and it still work well. His customers would never know. You make the change, your cleaners use a lot more product to get the same result but you feel like you’ve saved money. Truth is you haven’t, if you did exactly what your new supplier did for you, you would actually be only paying $24 per 15Lt drum. Keep in mind that end use cost is what matters with chemicals.
3. Assume usage and wastage won’t change
Oh boy. I would like a dollar for every time I’ve seen a client hell bent on cutting costs change to a different cleaning or washroom product only to see their usage or wastage go up and their total bill for that product actually go up. From a supplier point of view this is great when total spend goes up but for the client it’s a trap because the increase in spend often goes un-noticed or gets ignored because it’s a part of a much bigger basket of goods. Focusing on a carton price can cost you more.
Example: Toilet Paper
Which costs you more? A $20 carton of toilet paper or a $100 carton of toilet paper? This is a classic example and it depends how many cartons of each are purchased. When the quality of toilet paper is less than what people use at home they are proven to overcompensate. No-one wants poo on their hands so they go overboard with the paper. They make absolutely sure their hand and the poo never get close. Improving the quality of toilet paper can actually reduces usage and wastage. And beware of toilet roll dispensers that don’t control usage. Usage and wastage is the enemy when it comes to controlling costs. You want dispensers that reduce usage and eliminate theft from the user and the cleaning contractor.
4. Ordering from many suppliers many times each month
You can chase that elusive lowest price but it takes time. Time is money. Whenever you order there is a cost to your business. You do a count of what you need, you shop around, you compare, you place an order, you check the delivery, follow up on backorders, receive the goods, process the invoice, pay the bill. If you do that many times a month with many suppliers the money you are saving is for nothing because you’re creating new costs. Consolidate your cleaning and washroom supplies with a specialist in that area who doesn’t have backorders. Communicate openly about the pricing you believe is fair and lock it in. Automating and systemising your business where you can is smart and profitable.
5. Choose the lowest price B2B supplier. The best supplier is too expensive
We’ve all done it, chosen a supplier on price alone. It’s our #1 priority and criteria most times. We don’t want to ever feel ripped off or taken advantage of with the price we pay on anything. But it rarely ends well… delivery problems, delays, hidden costs, backorders, poor quality, inaccurate specs and the list goes on. Regardless of all this we continue to try this method. I’m guilty, I admit it. But what if we could get the best price from the best supplier? What if we choose the best supplier for our needs with proven quality product, integrity, low backorder rates, great delivery, advice, support and customer service? What if we did that first and then communicated to our chosen supplier that we want to work with them? Do you think they will now look after you more on price? Do you think they might beat or price match those lower quality suppliers? I know at XO2 when clients do that we love it. It’s a great way to start a relationship.
With a little bit of thought and creativity you can cut costs, improve quality and add profit to your bottom line. Think out of the box. Leave that ‘price is all the matters’ way of doing things behind and go for quality and cost savings. You can have both and a good supplier will help you get there.
Have you got any ideas or tips on how to cut business cleaning supply costs and improve quality? We’d love to hear about your experiences and thoughts so get in touch. It might be something we can add to this page to help others.
And if you’re looking for ways to save money and improve the hygiene and guest experience at your facility we can help, give the XO2 team a call today on 1300 123 499, or visit XO2's cleaning supplies online store.