Companies and supply management departments naturally devote most of their attention to their major, top-line expenses, and with good reason. However, this can leave the bottom 10 percent to 20 percent of the operating budget ignored and unscrutinized. While this segment of expenses represents a smaller piece of the budgetary pie, it also presents the most opportunity for improvement. If you’re looking for the best way to quickly move the needle, it can be worthwhile to take a second look at recurring facility expenses and service charges. Below are some of the challenges companies face in keeping their basic facility services and other overhead expenses under control, and some strategies for dealing with them.
Negotiate Hard (and Smart) For the Best Deal
The most important thing you can do to save money is drive a hard bargain for your company. This applies just as much to minor expenses as major ones. It is important to be assertive with incumbent suppliers that may be taking your business for granted. Even if you have great working relationship, don’t be afraid to push on pricing – after all, the relationship could have room for improvement if you discover you’re getting overcharged.
Don’t Assume Service Levels Are Optimized
An organization can suffer from a “set it and forget it” mind-set regarding finances for supplier services a year or two ago, a lot could have changed since then. Employee may have come and gone, sales volumes could have risen or fallen, and new technologies or pricing plans may have entered the marketplace without your knowledge. For these reasons, it make sense to continuously re-evaluate your services to make sure they fit the company you are today, rather than the company you used to be.
Read the Fine Print (and Check it Again Later)
When it come time to bid out services or renegotiate a contract, there is a flurry of activity associated with securing the very best rates, terms and conditions. However, many companies act as if the work is finished once signatures are on the page. If you’re looking at contract compliance with your won suppliers, price increases should be a focal point. We’ve encountered annual increases of 10 percent to 15 percent to 5 percent. Just as egregiously, we have found instances of “annual” increases being applied every nice or 10 months, rather than every 12 months. Over the life of a contract, this practice could add up to thousands of dollars in unnecessary expenditures.