Are you still using multiple vendors to maintain your facility?
Using a single vendor versus multiple vendors for your facility managed services is an often debated aspect of the industry.
But the truth is, consolidating services as opposed to carrying three or four extra suppliers can help streamline operational efficiency and save you money.
That’s because working with multiple contractors can eat up valuable time and money. What’s more, it can lead to a facility’s managed services being choppy and piecemeal as opposed to fluid and integrated.
According to over 10 years of data from The Hackett Group’s procurement benchmark database, consolidating suppliers within specific supply markets is a proven strategy to concentrate buying power and reduce purchase prices. Here are four reasons why you should consolidate and some of those benefits in greater detail.
1. Reduced Purchase Costs
As the number of suppliers is reduced, you gain access to volume-based pricing because you’ll tap into the efficiencies gained by your preferred vendor in servicing your account.
If you’re able to decrease the number of suppliers at your facility, you’ll see more annual incremental savings associated with purchased costs. These savings will be found in indirect spending, IT, general equipment and supplies, maintenance supplies, and more.
2. Reduced Procurement & Supplier Management Costs
Increased efficiency by way of reduced process costs may be one of the biggest perks of consolidating vendors.
Fewer suppliers means fewer separate transactions and less time spent managing those suppliers. The Hackett Group found that “it costs roughly $700-$1,400 in internal costs (i.e., labor, outsourcing, technology and related overhead) to source each supplier, set it up in internal systems, transact with it and manage the relationship on an ongoing basis.” Therefore, the fewer vendors you have, the lower your overall interaction costs.
Having fewer vendors also makes it easier to automate interactions with them. This, in turn, drives down process costs and frees up your staff for other important tasks.
3. Reduced Noncompliance & Increased Stakeholder Satisfaction
Having fewer vendors and managing them professionally and actively can help ensure they have capable processes and perform transparently against service level agreements.
The Hackett Group found that facility savings of up to 1-2% of spending are not uncommon when companies first address supplier compliance. Furthermore, the benefit from reducing missed discounts from contract noncompliance results in about 10% of negotiated savings.
Last but not least, you’ll mitigate risk. Multiple vendors with different solutions can mean too much variation in process and policies, which can create blind spots in potential risks that reflect back on your organization. One consolidated solution, on the other hand, isn’t only more cohesive, it’s designed to cover and manage all risks more efficiently and securely.
4. A More Cohesive Team
Instead of being a patchworked team from various different vendors, you’ll have one cohesive team working together towards the same end goal.
Not only does this mean that fewer people will be needed to manage fewer tasks, but all employees will work from the same page and can easily transfer knowledge.
Furthermore, training for new staff will be quicker and simpler, there will be less stress on teams when colleagues are sick or on vacation, the one, familiar interface will increase productivity, and one team means a more connected culture and better value alignment to core objectives.
Ultimately, consolidating your facility managed services can provide these benefits and more.
In fact, our clients experience an average reduction of 18% in client operating expenses. You can find out more about how we make this possible here.