Trying to keep tight tabs on a uniform rental program is not on top of anybody’s list. In fact, it’s likely not on many category managers’ lists. Unfortunately, most companies rely on audits to determine their provider’s compliance and performance. Audits are also used to ascertain if service levels are correct. Obviously, the main problem with audits is time. They take up your team’s bandwidth, and the results may yield absolutely nothing of value. Maybe you’ll find back credits. Perhaps you’ll find a rate error. Possibly you’ll find a massive mistake. Too many maybes for too little return. And that’s just stating the obvious pieces of an audit.
More problematic is the expertise of the audit team. No matter how deep the skillset is from an accounting or operational perspective, there is an inherent gap. The domain gap. Is anyone on your team a seasoned professional from the industrial laundry domain? Likely not. And it matters. The service design of uniform rental invoices and the products they describe is complex. To make matters worse, some of the key indicators that an audit team would look for are missing from the invoice. How can you make sense of something that’s missing? If you lack the domain expertise to know it’s missing, then you won’t know it’s missing. Catch 22, right?
AUDITS ARE NECESSARY AS A RESULT OF INCOMPLETE SERVICE DESIGN
Is it worth your time to audit your uniform rental invoices? It’s indirect spend that is likely on the tail. And paper invoices on top of all that. The odds are, you feel like it’s not worth it. And if you were to do it, you’d feel like you were looking for a needle in a haystack. And, again, there’s that whole thing about not knowing what might be missing. The service design of your uniform program makes it difficult to audit. It’s that simple. Most customers do not audit their invoices, and this makes the industry remain status quo.
There are solutions, of course (hint hint), but we’re not just about self-promotion. We’re on a mission to make the industry better. If you don’t think Unirithm’s services are for you, we’ll hope you’ll at least get informed. Learn about industry practices through our Knowledge Share and be a master category manager. The best way to avoid having to do audits is to proactively detect changes as they happen. Nothing deflects an off-cycle price increase better than a customer who sees it ahead of time.
MAKE UNIFORM AUDITS OBSOLETE
Audits serve their purpose, but imagine not needing them. Some audits will always be around – the ones that have to do with legal regulations and compliance. We’re not talking about them. We’re talking about service and contract audits. We think those can go away if you have a comprehensive system of analyzing incoming data and service activity. Think: garbage in, garbage out. If you always prevent garbage from happening in the first place, then you never need to audit for garbage later. As invoices flow in, they should be checked not only for contract compliance, but service standards as well. Why audit a year’s worth of invoices for inventory positions? Instead, evaluate and confirm or adjust all inventory positions on each invoice as you receive them. Why audit thousands of invoices for rate discrepancies? Instead, flag them as soon as they appear on an invoice.
We hear over and over again stories of customers that didn’t catch a price increase until they audited six months after the fact. And after expending cost to conduct the audit, they learn from their provider that it’s too late. Because they accepted the price increase, it’s now a valid charge. Now the notion of an audit is even more hollow – even a successful audit can result in zero returns. We want to plant a very simple seed – audits are only marginally effective at recouping cost. They’re even worse at helping you avoid cost. They may help you with future supplier conversations, but they generally result in “water under the bridge” negotiations. We think invoice audits should be a thing of the past. As you demand better service design from your uniform supplier, you’ll notice less and less of a need for them as well.