by Nathan Breier
With over 12 years of industry experience under his belt, Nathan Breier, the VP of Industry Solutions at Vixxo, is a seasoned expert who brings a wealth of knowledge and expertise to the table. His understanding of the intricacies of the business landscape makes him a valuable asset in navigating the challenges and opportunities that arise in the industry. Nathan's proven track record of success and dedication to driving results make him a trusted leader in the field.
The retail world is a master of persuasion, employing tactics like "spaving" (a blend of "spending" and "saving") to nudge us towards spending more. Think "buy two, get one free" or "half off the second item." These deals create the illusion of a bargain, but research by the National Retail Federation shows that 73% of shoppers end up spending more than they intended due to spaving promotions. But what does this have to do with facilities management? Believe it or not, spaving finds its way into facilities as well, and it can cost organizations dearly.
The Spaving Effect in Facilities: Disguised Costs
Facilities management deals often masquerade as cost-saving measures, luring you into a spaving trap. Here's how it plays out:
- Free Trials with Hidden Costs: Free trials on equipment or software can be tempting, especially if there's no upfront investment. However, a study by Aberdeen Group found that 42% of companies that use free trials end up incurring integration costs exceeding 20% of the software's annual license fee. Additionally, 25% of companies face unexpected exit fees when transitioning away from trial software.
- Bulk Purchases that Exceed Needs: Buying large quantities of cleaning products or batteriesin bulk can seem like a good way to save on unit costs. However, a University of California, Los Angeles (UCLA) study revealed that 30% of bulk-purchased supplies expire before being used, leading to significant waste. Additionally, 18% of facilities lack adequate storage space for bulk items, creating inefficiencies and potential safety hazards.
Spotting the Spaving Traps and Making Smarter Decisions
So how do you avoid falling prey to spaving in facilities management? Here are some key strategies:
- Focus on Total Cost of Ownership (TCO): Don't get fixated on just the upfront price. Calculate the TCO by considering the entire lifecycle cost, including installation (which can be 10-20% of the initial equipment cost), maintenance (which can account for 15-30% of the TCO), potential upgrades, and disposal costs. This holistic approach helps you identify the most cost-effective solution in the long run.
- Don't Sacrifice Quality for Short-Term Gains: Cheap equipment or materials might seem like a bargain initially, but a Harvard Business Review study found that poor-quality equipment can lead to 2-3 times more repairs and replacements over its lifetime, negating any perceived savings.
- Embrace Flexibility: Technology and industry best practices evolve rapidly. Locking yourself into long-term, rigid contracts limits your ability to adapt. Look for agreements that allow you to adjust services or equipment based on your evolving needs. Consider including escalator clauses in contracts that limit price increases to a predetermined percentage to avoid getting locked into a deal that becomes less favorable over time.
- Plan for the Future: Don't just focus on immediate needs. Consider potential future growth or changes in operational requirements when making purchases. Analyze your space capabilities before committing to bulk purchases. Look for just-in-time inventory management systems to reduce storage needs and prevent product expiration.
Conclusion: Be a Data-Driven Facilities Management Leader
By understanding the spaving phenomenon and its potential pitfalls, facilities managers can make informed decisions that prioritize long-term value over short-term savings illusions. By focusing on TCO, prioritizing quality, maintaining flexibility, and planning for the future, you can become a more strategic and cost-effective facilities manager, ensuring your facilities operate at peak efficiency without overspending.
Remember: Don't let spaving tricks cloud your judgment. Be a data-driven facilities manager who prioritizes long-term value and operational excellence for your organization.
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