Are You Focusing on What You Do Best?

August 10, 2015

Spending time on peripheral functions can detract from your core business. Here’s how outsourcing can help.

By Martha Spizziri

It seems easy at first. “We can just get a washer and clean the staff uniforms here.” “It’ll be cheaper if we do our own landscaping—it’s not that hard!” “We can print the forms we need from the computer.”

But pretty soon, taking on that little task doesn’t seem so smart. The company grows, new staff is added, and it takes more time to clean all those uniforms. The lawn mower breaks down and you have to spend money on a new one. You have no place to store all those forms, and you’re not even sure what you have. That simple job becomes a slow drain on internal resources.

Personnel, space, equipment, and supplies can all be freed up by offloading noncore tasks, which can be deceptively labor intensive. Outsourcing such tasks to a third party could well turn out to be a better option. An outside company may be able to do those chores more cheaply simply because it has the right equipment and expertise, and it can afford to keep up with the latest in both areas. For instance, a laundry service has the space for efficient, professional clothes-pressing machines and can afford to upgrade to high-efficiency washers to offset rising electricity costs. Your business just might do better to free up space used to store lawn-care equipment or house washers and dryers or a high-speed printer for revenue-producing activities.

Outsourcing Energy Efficiency

Participating in an energy audit by an energy service company (ESCO) is one example of how having an outside company do the heavy lifting can save you money. These companies provide a free evaluation of heating, cooling, and power use. They come up with a list of recommended actions to improve efficiency, along with the projected savings. They make their money by performing the installation work and maintenance, but they guarantee the savings they project. Some ESCOs, such as Keen Technical Solutions LLC in Traverse City, Mich., allow clients to use the projected savings to finance the recommended improvements, says Ted Shaw, energy solutions consultant for Keen.

According to Shaw, “Too many energy audits [are] done and then put on the shelf.” Including the service component as part of the package makes companies more likely to follow through. “We don’t just do [the audit] and then leave and never talk to them again,” says Shaw.

Return on investment varies greatly. “We see ROIs sometimes [within] less than a year, when energy systems are on 24/7. And then we see them sometimes [within] five years. It depends on how inefficient the system is that’s in place,” says Shaw.

Outsourcing Print Materials

Stevens Worldwide Van Lines began to outsource management of its printing in 2013. The moving and storage solutions company was providing forms and marketing materials not only for its own corporate offices, in Saginaw, Mich., but for nearly 150 moving agents nationwide. With about 120 different forms, as many as 70 different marketing pieces, and several different vendors providing them, Stevens knew it could make the process of creating, storing, and distributing those materials more efficient. The van line brought in The F.P. Horak Company, a full-service printing and marketing solutions provider headquartered in Bay City, Mich., to help. A team of Stevens and F.P. Horak employees evaluated the company’s processes.

“We were able to find at least two avenues for cost savings,” says Barb Muessig, APR, marketing director for Stevens. “One of them [was] having Horak’s experts manage and fulfill all the orders. Another avenue was consolidating our printing and our purchasing functions, and having them (F.P. Horak) manage that.”

Stevens got volume discounts from consolidating its business with F.P. Horak, of course. It also benefited from F.P. Horak’s information technology. Stevens had previously purchased ordering software, but the technology quickly went out of date. It lacked reporting capabilities and features such as automated email order confirmation and order tracking, says Danielle Munsch, marketing brand specialist and strategy leader for the van line.

Because printing and purchasing systems are part of its core business, F.P. Horak is able to invest in features such as automated confirmation notices and order tracking—and Stevens benefits. The van line now gets reports showing what each agent is charged for forms and marketing materials.

“That will help us internally and help the agents to get clear information,” says Muessig.

F.P. Horak also assumed warehousing and inventory management, and the visibility it provides into supply levels has enabled Stevens to avoid under- or over-ordering.

Benefits Realized

Stevens also improved service to its agents—who are, in essence, the company’s customers.

“The increased confidence in what we have available and how quickly we can get it out to our sellers and agents is an improvement,” says Muessig.

Marketing still “owns” the process and is ultimately responsible for customer service, though F.P. Horak helps out. (Munsch adds that the customer service provided to agents is split 50/50 between Stevens and F.P. Horak, which helps reduce the workload for Stevens.) Stevens checks in with its agents to make sure they’re getting good service and that the process is working for them. The van line is monitoring costs to make sure the savings are in line with what the company was expecting.

While Stevens doesn’t yet have enough data to say how much money it’s saved to date with its outsourcing initiative, Brad Bitzer, eCommerce manager for F.P. Horak, says customers generally see savings in the neighborhood of 17 percent.

The biggest benefit so far for Stevens? “Better utilization of resources within our department,” says Munsch. Stevens was able to reassign people to functions that contributed to its core mission.