Lessons from Amazon
27 June 2018
Internal efficiency is the key to improving profit margins – and online retail giant Amazon is a great example to follow, according to Nick Whiteley, CEO at HFX
The market for contract cleaning has increased over the last two years but unfortunately that is where the good news ends. Increased demand has created an increase in competition (some estimates put this at up to 40,000) putting already slim margins (averaging 4%) under even greater pressure.
Safeguarding that 4% margin is the over-riding concern among many charged with leading the business whilst balancing this with the need to win contracts and grow the business.
Many in the sector have already been burnt by the vanity of growth over sanity of profit and recognise the need to keep a strong handle on costs. But with strong competition they are struggling to find anything left to save and are in danger of cutting too far and risking quality and reliability which can soon descend into a spiral of cancelled contracts.
The secret to many within this and other sectors is to borrow some of the lessons from Amazon (their international margins are not very far off from contract cleaning) who relentlessly focus on efficiency whilst providing excellent customer service.
The focus is never about cutting the service they provide, but the internal focus on simplification, automation and efficiency of the internal activities that deliver the service.
Automation through technology enables organisations to eliminate much of the administration and paperwork whilst enabling them to get real insight into their organisation’s performance and profitability – or otherwise – of contracts. It provides real-time information enabling quick decisions and adjustments to be made to keep the business on track. The impact of this cannot be underestimated; it enables early intervention, not a retrospective post-mortem. This is not just simply about profit or efficiency but also tracking quality and outcomes. The importance here is that poor quality or reliability will at some point turn into customer attrition. After all you can’t prevent what you can’t predict.
However, the rush to implement IT systems should be kept in check. Software solutions will deliver enormous benefits, but not by themselves! Software isn’t a miracle cure nor a mind reader for your organisation. You need to invest not just money but critically time to ensure that the software delivers your objectives.
Before rushing into any investment there is a need to review the processes being automated; A key objective should be to simplify these processes and methods. Simplification and clarification of processes is a precursor and will yield positive returns. Often organisations are unaware of the growth in complexity of processes and contracts as there is very little visibility (often as paperwork creates “data islands”). Secondly, if you do not understand in detail your processes then you have no hope of any software replicating them. Thirdly, complex processes will impact on the solution, the cost and the implementation of the solution.
Start small. An expensive ERP (Enterprise Resource Planning) solution might seem attractive, but will it really address your key pain points or just replicate or, worse, make operations even more complicated than they need to be?
Time and Attendance
Be focused. What’s your greatest cost? In most organisations your greatest cost is your people. Automating pay through Time and Attendance will significantly improve efficiency, accuracy and savings by removing payroll errors, fraud and overpayments.
But there is more to be gained by Time and Attendance than simply automation. The ability to track employees at each client site in real-time, for instance, enables you to maintain quality of service. With real-time attendance information you can mitigate non-attendance by deploying other resources ensuring that the customer is not impacted by absence – this level of quality assurance keeps you at the top of the contract pile while others are discarded through poor reliability.
Avoid IT complexity. Many organisations are going lean and demanding cloud/SaaS solutions to avoid the complexity and overhead of managing the solution internally. SaaS also brings its own financial rewards as well by spreading the cost and providing Pay As You Grow payment models.