RESULTS
Case Study 1: Loyalty and Savings
We worked with a contract office furniture manufacturer who shipped their product fully assembled. This meant that they used a significant amount of packaging supplies to protect their product. We identified this expense as being out of line. When we brought this up to the purchasing team, they assured us that the vendor they worked with was the best. Indeed, for the last 10 years, this vendor had been an excellent partner and had gone out of their way to give quality service to our client. We proceeded with the bid process anyway as it had been so long since the market was checked. What we found shocked our client.
The existing vendor had been giving price increases to our client when material costs went up but had failed to give them price reductions when the cost of materials went down. This resulted in Tri-Logic Solutions being able to identify another quality supplier who was able to lower costs by 30% while still maintaining the level of service our client needed. We also negotiated language into the contract with the new supplier that allowed prices to adjust both up and down over time periods based on published indexes of raw materials. This ensured that our client would not get back into the same situation as a vendor taking advantage of them on pricing for such a critical item.
Vendor loyalty is great and long-term partnerships can be incredibly beneficial to everyone involved. However, those relationships must be periodically checked to keep them honest. Just because you get great service from one vendor, does not mean that you can’t get the same from another.
Case Study 2: Organization is Key
Our client managed and maintained properties in a coastal North Carolina town. They arranged vacation rental bookings when the homes were unoccupied and most importantly for this business case, they handled all maintenance for the homes. House maintenance was a substantial part of their business model that customers paid for. The client was concerned as they felt that they were losing profit in this area and asked us to evaluate their expenses.
We followed their technicians to establish a process map. We uncovered excessive spending and time lost by their current process. The technicians would meet at the office in the morning to receive their work assignments for the day. They would then proceed to the assigned houses and conduct routine maintenance and repairs. For each instance, the technicians would drive to the local hardware store, procure the materials they needed, and then complete the job before moving to the next location and restarting the process. Our study found that each of their technicians spent up to 1/3 of their day driving to local hardware stores to get supplies.
To combat this waste of time and money, we established a supply room at the company offices with common supplies. We then standardized the layout of each work truck and stocked them with these standard items. We implemented kanban inventory controls for the technicians to replenish their truck supplies from the central supply room. Next, we negotiated pricing with a maintenance supply company to stock the central supply room at a much lower rate than the retail costs the technicians were paying. Finally, we sourced inexpensive planning software that would plot optimal routes for the technicians to take based on the locations and types of work for the properties that needed servicing.
These actions resulted in a 20% reduction in material costs and significantly reduced fuel spend on company trucks. The added efficiency meant that the technicians were much more productive. This allowed 2 technicians to be reassigned to other value-added open positions in the company, reducing our client’s payroll expenses.
While all these changes may seem straightforward and common sense, the business owner was not in a position to work this out and implement changes due to his workload in other areas. Tri-Logic Solutions can serve as that extra set of hands that you need to make your business thrive.