Even old brooms sweep well
In the following interview, Stefan Reiterer, Senior Consultant at Kloepfel Consulting, reports on a successful project in the area of facility management. He demonstrates that the client was able to reduce costs considerably as a result. How exciting and worthwhile it can be to take a closer look at facility management becomes particularly clear here.
What topics did you work on as part of the facility management project?
We mainly dealt with rental carpets, cleaning cloths for production, air purification and scenting of wet rooms (changing rooms and toilets) as well as the maintenance of floors, water systems, heating and ventilation. These were our core issues in the area of facility management.
How did you go about identifying the areas and uncovering potential savings?
First, we made the data situation in these areas transparent. Then, we reviewed the annual volumes of recent years and weighed the effort and potential savings with each supplier. We compared these prices and conditions with numerous already completed projects to get a sense of where savings could be made through direct negotiations and tenders.
So, one could say you did a benchmark check to see what others are paying for these services?
Yes, exactly. Thanks to our experience from previous projects with similar suppliers, we were quickly able to determine if the prices of the client’s existing suppliers might be too high.
What specific measures did you take to reduce costs in the mentioned areas?
For suppliers with lower order volumes and for products or services that were not easily comparable, we opted for direct negotiations. These included areas like floor maintenance, water systems, heating, and ventilation.
For the rental carpets and entrance mats, which are cleaned and replaced by the same service provider, we conducted a tender. To ensure we had valid offers, we requested samples from the most attractive competitors. The buyer for facility management was involved in this process. After consulting with strategic procurement, we were able to present the comparison to the market to the existing supplier in a personal meeting. They quickly submitted a new offer with a 40% price reduction. Ultimately, we achieved a price reduction of over 50%.
Later, we also negotiated the air purification and scenting of the restrooms with the same provider, aiming to reduce the number of suppliers from two to one. Since the contract was very old, a new contract needed to be signed anyway. We presented the prices of the competitors to the sales manager, who didn’t want to lose the long-term customer, and he conceded.
How successful were you?
We were able to reduce the costs for rental carpets and scent systems for restrooms from 30,200 euros to 15,900 euros. Additionally, we reduced the number of suppliers and stayed with the existing supplier for rental carpets, who now also provides the scent systems for the restrooms.
Why were the negotiations with the existing supplier for carpets and air purification so successful?
The existing supplier had earned well over the years and was motivated to renew the contract. Especially in the facility management sector, there are many field employees who work on a commission basis. Contrary to popular belief, old contracts are not necessarily cheaper. With valid offers from competitors in hand, you can negotiate openly and honestly.
How did the client benefit from this project in the long term?
We shortened the cancellation periods and changed the automatic renewal terms. The carpets were standardized, and billing was switched to a monthly flat rate. Additionally, there is now better data available to provide a clearer overview of expenses in these areas.
How was the collaboration with the client?
Building trust with the key contacts and establishing a good interpersonal foundation were crucial. Professionalism and transparency are top priorities. Bringing experience from other projects into the initial discussions was a great start.
Do you see opportunities for improvement in your company’s facility management? Get in touch with us and benefit from the extensive experience of Kloepfel Consulting.
Contact:
Kloepfel Group
Damir Berberovic
Tel.: 0211 941 984 33 | Mail: rendite@kloepfel-consulting.com