When contracting goods and services, getting the right deal is essential for both client and supplier. The recent failure of a major building services company shows the impacts if this doesn’t happen. Jan-Hein Hemke offers his advice on ways to ensure contracts are sustainable.
Profit for all
We often hear about a ‘race to the bottom’ regarding contract pricing, especially in industries like cleaning, but that’s not the way to true value and long-term solutions. It’s important for the procuring business to make a profit, but margins shouldn’t be so tight that the supplier can’t do the same.
A healthy return is a prerequisite to continuing to invest and to guarantee the
progression of the company, the provision of goods and services to clients, and employment. If your supplier can’t afford to pay its employees and its own
supply chain then the service it provides will fail. For example, the recent Channel Four exposé of ineffective cleaning in a major hotel brand linked the poor
practices to low pay and overexacting targets. If a contract can’t be maintained then a
further round of procurement will be needed, with increased financial and time implications for the procurer. In contrast, a profitable supplier can invest in training
and development, and has scope to introduce innovations, with improved service as the result.
The procuring and supplier businesses can grow together achieving sustainable levels of profit.
Fair for business, fair for people
One of the most important aspects of ensuring high levels of service and commitment - essential for the successful implementation of a contract - is to know that the people carrying out the work are being treated well.
It is important to look beyond the numbers on the proposal or balance sheet
and appreciate that there are actual people being employed. It sounds obvious, but is too often overlooked. Suppliers should have equal opportunities policies, provide regular training and development - especially where health and safety is concerned and, where possible, operatives should be paid the Living Wage.
It’s rather frightening in this day and age, but it is important to be aware of the dangers of modern slavery and know where employees are coming from. As well as the significant human cost of this practice, there is the potential for great reputational
damage if anyone in your supply chain is found to be involved. Suppliers should acknowledge their responsibilities in relation to tackling workforce injustice
and have clear commitments to complying with the provisions in the Modern Slavery Act 2015.
Protecting the planet
Finally, the benefits that suppliers can bring in terms of environmental sustainability
shouldn’t be overlooked. Cleaning contractors, for example, can help reduce water
and chemical use and CO2 emissions. If any business is to be truly green it needs to ensure its entire supply chain has a similar ethos and commitment.
Our C2Zero programme - which means we provide carbon neutral cleaning - is provided at no additional cost to our clients and is an added-value service.
Much like modern slavery and other such issues, there is a chance of reputational damage far outweighing any monetary savings on the contract if suppliers are found to be practicing lax environmental processes. Those awarded contracts should be looking to help create a positive sustainability profile for your business, not take damaging shortcuts. Engaging with suppliers on these three subjects - profit, people and planet - will lead to more sustainable, long-term contracts meaning procurers can concentrate on their own business goals and leave the service provision to the experts, safe in
the knowledge that everyone is committed to making the relationship a success.
Source: Cleaning & Maintenance November 2018