Executive Briefings

E-Procurement of Maintenance Services May Result in Big Savings

In the last two years, retailers and grocers that used e-sourcing to competitively procure facilities maintenance service contracts saved approximately 22 percent per event, according to data from Intesource.

Floor care, store cleaning, and snow removal services presented buying organizations the highest average savings per event. Consider the following:

"¢ Floor Care: 24.15 percent per event

 Store Cleaning: 27.15 percent per event

 Snow Removal: 15.92 percent per event

Organizations that competitively sourced lawn care services achieved the highest average percent savings per event -- 36.23 percent. Additional categories presenting high savings percentages include trash hauling services (7.6 percent) and parking lot maintenance services (15.21 percent).

"Profit margins in the retail and grocery industries tend to be very small, forcing procurement teams to check under every stone for opportunities to reduce costs, " said Len Kaplan, vice president of sales at Intesource. "Yet our data shows that facilities maintenance suppliers are often left unchallenged -- and it costs buyers hundreds of thousands of dollars each year. "

An earlier study from Intesource found that many procurement executives are mistakenly overconfident in the value their organization derives from its suppliers. According to the report -- The Sourcing Confidence Bubble -- 75 percent of buyers that don't use e-sourcing feel that they get the best possible value from their suppliers. Contrarily, market reports from Aberdeen and Intesource found that companies save an average of 16 and 18 percent, respectively, when using e-sourcing techniques.

Source: Intesource

Floor care, store cleaning, and snow removal services presented buying organizations the highest average savings per event. Consider the following:

"¢ Floor Care: 24.15 percent per event

 Store Cleaning: 27.15 percent per event

 Snow Removal: 15.92 percent per event

Organizations that competitively sourced lawn care services achieved the highest average percent savings per event -- 36.23 percent. Additional categories presenting high savings percentages include trash hauling services (7.6 percent) and parking lot maintenance services (15.21 percent).

"Profit margins in the retail and grocery industries tend to be very small, forcing procurement teams to check under every stone for opportunities to reduce costs, " said Len Kaplan, vice president of sales at Intesource. "Yet our data shows that facilities maintenance suppliers are often left unchallenged -- and it costs buyers hundreds of thousands of dollars each year. "

An earlier study from Intesource found that many procurement executives are mistakenly overconfident in the value their organization derives from its suppliers. According to the report -- The Sourcing Confidence Bubble -- 75 percent of buyers that don't use e-sourcing feel that they get the best possible value from their suppliers. Contrarily, market reports from Aberdeen and Intesource found that companies save an average of 16 and 18 percent, respectively, when using e-sourcing techniques.

Source: Intesource