Keeping down off-hire costs: 8 ways to maximise procurement efficiency

Byline: Dani Hodges, Chief Commercial Officer

Infrastructure projects are unique in terms of long timelines, cyclicity, complex stakeholder network and long- and short-term procurement strategies.

Against this web of challenges, supply chain management has grown organically over the years to become, dare we say it, too much of a patchwork quilt of process, policy, sourcing and reconciliation.

Why is procurement efficiency important?

Improving procurement efficiency is key to P&L, impacting multiple commercial areas. The procurement process itself has a huge impact on project efficiency and on time, on budget completion, and as such, has a strategic role to play.

According to Sievo, achieving an -8% reduction in spending can be comparable to a +30% increase in sales, and this is especially apparent in industries with large, fixed materials costs.

But the hire industry - key to project success - is notoriously fragmented and well overdue an update.

And while it's clear that procurement and project management need to work hand in hand to minimise downtime, it's difficult to achieve in practice without the right knowhow.

Ask yourself: can you quantify how much money is lost each month, while human resource is on site, waiting for the tools to do the job? Do you know how long unrequired equipment is left idling on site before someone remembers to off-hire?

If no, it's likely that your central teams are struggling to get a clear picture of the ad hoc issues that crop up on site and require immediate off-hire, from breakdowns to maintenance issues to misplaced orders.

So, while efficient sourcing and prompt off-hire are key, that’s an easy thing to say. So let’s uncover eight things you can do to improve procurement efficiency.

Meet HSS ProService Marketplace, a new way to manage and monitor everything from small tools to large powered access, building materials and site consumables. To find out more about your free account, book in a demo with a member of our team.

8 ways to maximise procurement efficiency.

1. Off-hire in an instant.

Imagine the scene. A site contact finishes with a piece of equipment at 4.30pm on a Friday. They email the central team to arrange off-hire. But the central team is already enjoying an afterwork drink. The off-hire isn’t arranged until Monday - when emails and phone calls between the central team and supply don’t confirm off-hire until end of play. The invoice comes in, the site contacts challenges the off-hire date, and the dispute admin begins.

It’s a common scenario, and when multiplied over a huge equipment base, it quickly adds up.

Thankfully, new tools and technology allows the site contact to off-hire immediately, so as soon as you're finished with equipment, all you need to do is go online, click off hire, and costs will stop. This saves money, manpower and miscommunication.

2. Look to the long term.

Strategic contracts allow you to lock in favourable prices and ensure a stable supply of materials. Incredibly important given today’s inflation rates and supply chain issues.

However, finding the right sellers - and even knowing which equipment you’re using the most - can be tricky without a single source of insight.

To overcome this, it’s key to work with a distributor who works with multiple suppliers to ensure the equipment you need, or a like-for-like equivalent, is always available.

3. Just-in-time delivery.

Unlike the previous example, just-in-time inventory management practices help you receive goods from suppliers just as you need them.

While this can help minimise storage costs and reduce the risk of overstock it brings the risk of interruptions to supply. So if you’re considering this route, you need to have an large and engaged base of suppliers on hand just in case.

Our streamlined hiring process means equipment arrives on your site just as you need it. When you’re done, you simply log into the HSS ProService Marketplace, click off hire, and charges stop. Minimal cost, maximum usage? Now that’s what we call PROgress.

To find out more, book a no-obligation demo with a member of our team now.

4. Location, location, location. 

Your engaged supplier base? Better kept close to avoid excessive transport fees, especially on last minute deliveries.

Again, building a network of reliable, reputable suppliers in your area is key, as an ecosystem local to your site or sites keeps costs low and emissions down.

Have more than one site? Look for reputable suppliers with national coverage. These suppliers are more likely to have local depots to ship equipment from.

5. Seek the sustainable.

As ESG criteria becomes increasingly important in supplier selection and management, reducing the environmental impact of procured equipment and materials adds further complexity to the equation.

Although sustainable sourcing can involve higher upfront costs, it often leads to long-term savings through resource efficiency, risk mitigation, and enhanced brand reputation. So, when looking to maximise your procurement efficiency, it’s vital to choose a supplier who also offers a range of hybrid or low emission equipment.

6. Value engineering.

Look for suppliers that can help you find alternative materials or equipment that offer comparable performance at a lower cost, or with greener credentials.

This is difficult to manage when disparate site teams, or differing contacts within the same team, are liable to choose a favourite bit of kit. That’s why it’s essential to build value engineering into the point of order.

Look for systems that prompt users with greener or more cost-effective alternatives to drive behaviour change and make granular improvements that move the needle on your metrics. Those metrics should allow you to monitor and manage behaviour at both a user and site level, so you can continuously spot opportunities to improve.

7. Standardising by site or project type.

Creating custom lists of the materials, equipment and fuel you typically use for a certain project type or site allows you to massively simplify the procurement process.

It requires a little work upfront, liaising with site teams to define common terminology and create delivery requirements, but can save hours in the long run.

HSS ProService Marketplace offers your Greener Alternatives to your favourite equipment where available at the point of order. If you use them and like them, add them to your favourites list, helping you come back and hire them again and again.

To find out more about the platform, book a free, no obligation demo now.

8. Monitor supplier performance.

Just because you’ve used a supplier for years doesn’t mean you’re getting the best value for money or efficient service.

Holding supplier assessments for competitiveness, health and safety, sustainability and social value both before and after you've signed a contract is key.

Creating your most efficient procurement process.

The buying and hiring market is complex. The back and forth and admin and emails and phone calls needed to simply order, off-hire and invoice. It should be straightforward, but it’s not. And adoption among people is perhaps the biggest driver of success for any new digital solution.

That’s why tools need to be accessible, intuitive and easy to pick up by anyone that uses them, from job site order to central approval to C-suite insight.

Clearly, there are a lot of strategies to consider when assessing how to improve procurement efficiency. But there are solutions on the market that can help you streamline these processes, such as HSS ProService Marketplace.

HSS ProService Marketplace is an easy to use and free to access one-stop-shop for everything you hire, buy, or manage.

The marketplace connects you to over 550 pre-vetted and verified suppliers, allowing you to streamline your supply chain, reduce manual errors, save time and, ultimately, cut costs during your procurement process.

By implementing a platform like HSS ProService Marketplace into your business, this will help you to maximise efficiency while minimising overhead costs.

But, before you select a modern procurement method to implement into your business, you need to test different platforms and methods to see which merges into your business best.

Book a free demo.

Unsure if HSS ProService Marketplace is the right solution for your business? Why not book a free, no-obligation demo with a member of our team.

In this 30 minute call, we’ll run through how to use the platform, and how it can help you to minimise admin and maximise efficiency across your business and procurement process.

To find out more, book a demo now.