Reducing Costs by Streamlining FRC Procurement
This is the fourth in a five-part series exploring common examples of ineffective FRC practices that have real costs—and practical solutions. So far, we reviewed common scenarios that signify opportunity for savings, and reducing costs by transitioning out of rental/lease and eliminating retail spending. In this post, we review the impact of streamlining procurement procedures, and in our final post we will examine spend avoidance as a cost-saving strategy.
Many companies don’t realize that the cost of procuring FRC can be significantly greater than just the unit price. As your company evaluates procurement processes and seeks to streamline FRC procurement, be sure to factor miscellaneous fees and logistical challenges into your total spend; these can have a material impact on your program’s bottom line. Pay special attention to management and employee time invested in administering – or problem-solving – the program.
The cost of an inefficient vendor can be significant, as companies like Stallion Oilfield Services know all too well. Formerly in an inefficient rental program, members of Stallion’s operations team were forced to spend more than 50-60% of their day problem-solving FRC issues! Hear directly from Todd Mucha, QHSE at Stallion in this brief video:
For large companies like Stallion, these costs are substantial. Consider an average Roughneck making $30 per hour, with a fully-loaded hourly cost of $53 per hour after factoring in benefits and an appropriate factor for overtime. An inefficient clothing program would likely incur the following – unnecessary – costs:
- The worker calls the supplier to place his order, but without sufficient customer service staff, the worker leaves a message after spending several minutes on hold—or worse, hangs up and waits on hold again later.
- The next day, the worker receives a call back, distracting from his work. The order is finally placed.
- The supplier doesn’t have inventory on hand to fill the Roughneck’s order, and orders the item from its vendor. The vendor, without sufficient demand forecasting, is unprepared for the order and does not have the item in stock. The supplier will not receive the worker’s item for four weeks. Meanwhile, without sufficient customer service, the worker is unaware of the backorder situation and checks one day each week for his package.
- The worker, who needs clothing quickly, contacts the supplier directly – with no resolution. The worker asks his supervisor for support, who in turn contacts the purchasing lead to inquire about the delay. Now the time of three Company employees is being invested!
- The purchasing lead contacts the supplier’s salesperson, who is traveling and returns the call the next day.
- After determining the product is backordered with the supplier, the purchasing lead returns the supervisor’s call.
- The supervisor, in turn, relays the message to the Roughneck, who cannot wait that long for a product and starts the process over again to order an alternate garment. Without visibility into the supplier’s supply chain and sufficient customer communication, it is likely that the worker’s “replacement” product will also be out of stock—requiring him to repeat the process again until he orders a garment that is readily available. Or, worse yet, the Worker purchases a garment at retail price – paying a premium and eliminating garment tracking.
The costs associated with this frustrating process add up quite quickly. In fact, to successfully place an order, this inefficient program costs the Company more than three hours in lost work time and nearly $400 in this single instance alone!
Unfortunately, scenarios like these are all too common. Sign up for Tyndale’s webinar series to learn from this company’s mistakes and leverage the experience of others – like Stallion Oilfield Services – who have gone through the process of streamlining FRC procurement.
Case Study: Stallion Oilfield Services
Formerly in a rental program, Stallion Oilfield Services experienced a number of issues that forced the company to invest a tremendous amount of administration time in overseeing and troubleshooting the program.
By having individual employees order directly from Tyndale as part of the allowance-based direct purchase program now in place, Stallion Oilfield Services eliminated virtually all supervisory and administrative involvement with their FRC program. This transition saved countless hours of leadership time, allowing them to drive efficiency in other areas of the business.
“It’s taken our back office out of spending time worrying about FRC,” said Todd Mucha, QHSE at Stallion. Instead, online ordering in the direct purchase program puts the power to order company-approved FRC directly “in the hands of employees on the computer, just like you would buy anything else online in the world today,” Mucha said. “It’s been a life saver in terms of time on the operations side.”
Given the extensive back-and-forth between administrators and workers in an administrator-managed FRC program, or an ineffective program that requires significant administrative oversight, it is reasonable to expect that each “support” issue costs the company $200 in lost time and inefficiency.
On the other hand, Tyndale’s US-based end user Customer Service team resolves more than 95% of inquiries directly with the worker, requiring no additional company involvement. For large organizations with thousands of employees, the savings can be extremely significant!
Ready to unlock savings with a next-generation managed apparel program?
Contact Tyndale today at 800-356-3433 x679, or request a complimentary consultation to help identify opportunities to streamline your current FRC procurement practices.