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Savings Stashed in the Janitorial Closet

Focus on supply purchasing habits to find savings

Often we hear that cleaning solutions only amount to 5 or 10 percent of a cleaning contractor’s overhead. However, this 5 or 10 percent can really add up as a contract cleaning business grows. And, just like any other astute business owner, cleaning contractors want to keep costs in line. This is why you should view looking for ways to reduce the expenses associated with supply costs as an ongoing journey no matter the size of your operation.

The first step is to simply put more time and attention on supply purchasing. Supply purchasing often gets lost in the shuffle of day-to-day operations, falling behind dealing with customers, staff, etc. But when this information is lost, that’s when costs can start rising and eat into profit margins and even stymie future business growth.

In addition to putting much more focus on supply purchasing, here are some tips to stay on top of supply costs and help bring them down:

Establish baselines. Look at what you have spent previously on cleaning supplies. Contractors can do this on an account-by-account basis or for all their supply purchases. The goal here is to establish a benchmark. This will also give you a very good idea of how often you need to re-order products.

Note irregularities. Once you have established baselines, you can monitor supply costs. For instance, say you spent US$3,000 per month in supply costs for the first quarter of the year, but have found those costs for the same products have now jumped to $3,500 per month. There can be several reasons for this, but the most important thing is that you find out why it is happening.

Buy in bulk—selectively. If cash flow permits, purchase selected products in larger quantities for greater savings. However, choose carefully. With some products, the savings on a larger quantity purchase is minimal. Also, always consider what that supply money could be doing if it wasn’t sitting in your supply closet. Could that money be used for marketing or training?

Catch “walking” products. After establishing baselines and noting irregularities, pay attention to certain cleaning supplies “walking” out of the closet. There can be a host of reasons why this happens, but because your focus is to monitor and reduce supply costs, you want your purchases to stay put in the closet until needed.

Double-check invoices. When you purchase supplies, always check the delivery against the original order and the supplier’s invoice. Delivery errors happen all the time, and sometimes a charge that was supposed to be waived is still listed on the invoice. You can catch errors quickly by double-checking invoices.

Avoid rush orders. Invariably, you will pay a premium for rush orders. If you have established a baseline, you should have a pretty good idea of when you need to re-order a product, which helps to avoid costly rush orders.

Buy in case lots and larger sizes. Most distributors offer discounted prices for 4- and 6-gallon cases, plus buying in this manner can help reduce shipping costs. Also, purchasing concentrated products in 5-gallon containers is not only a cost savings, but it helps promote sustainability as well.

Have a supply fund. Very often, you only consider or purchase cleaning solutions when needed. But what if a distributor offers a sale on those products or provides a special manufacturer’s rebate? One of the best ways to reduce supply costs is to start a supply fund. Put a small percentage of gross sales in the fund every month so you can take advantage of these special deals. Remember, luck is when preparedness meets opportunity.

Check dilution ratios. Always read the labels, check the suggested dilution ratios, and do the math. If product A and B cost the same, but product A must be diluted with three parts water and product B can be diluted with five parts water, product B will be the cost saver.

Track usage. What if a floor machine historically uses a gallon of cleaning solution per week but now uses two? Is the machine malfunctioning? Is the user not using the machine correctly? Very often contractors do not track product usage until they notice their supply charges seem to be escalating, and by then, it’s too late.

Select compatible products. Products from the same manufacturer are usually designed to work together as a system. There’s a “synergy” between them, and the result can be better product performance, requiring less cleaning time. This can help reduce supply and labor costs.

Keep an open mind. Always ask your supplier for samples of new cleaning solutions. Many new cleaning solutions are designed to address some of the weakness of older products, whether from the same manufacturer or another manufacturer. If the product performs more effectively, it may help reduce cleaning times, which helps to reduce costs.

Multi-purpose products. Finally, one of the best ways to reduce supply costs is to select products that can be used for many cleaning tasks and on many different surfaces. This helps reduce the number of products purchased overall, can help contractors purchase in larger volumes to take advantage of discounts, streamline supply ordering, and make monitoring product usage much easier—all of which can help you keep more money in the bank.

Posted On August 29, 2016

Terry Sambrowski

Vice President & Executive Director for National Service Alliance

Terry Sambrowski, vice president and executive director for National Service Alliance, has been with the organization since July 2001 and contributed years of contract and negotiation experience to the group. She played a major role in expanding the vendor partnerships offered to members. National Service Alliance (NSA) is the industry-leading group purchasing organization for independently-owned building service contractors and related businesses in the U.S. NSA is headquartered in Charlotte, North Carolina. Visit NANSA.org for information.

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