One way jan/san organizations can reduce operating costs is to understand the difference between "direct spend" and "indirect spend."

According Michael Wilson, Vice President of Marketing for AFFLINK, a sales and marketing organization for the facility management, healthcare, education, industrial, hospitality, and related industries, "while these terms both refer to the procurement of goods and services, that's about as much as they have in common."

Direct spend, says Wilson, refers to the following:
 • The purchase of goods and services directly related to the production of goods and services of a company
 • Making large quantity purchases in which costs have been pre-negotiated with specific suppliers
 • Typically frequent purchases that have been budgeted for
 • Direct spend costs are usually monitored very closely

"While direct spend items apply more frequently to jan/san manufacturers, distributors and contract cleaners also make purchases that fall into the 'direct spend' category," he says.

As to indirect spend, Wilson lists the following:
 • Purchase of goods and services needed for the day-to-day operation of a business such as office supplies, equipment repairs, consulting services, etc.
 • Costs associated with solid waste disposal, recycling, and environmental fees
 • Small quantity purchases with no advanced cost negotiation with suppliers
 • Purchases made as needed/when needed
 • Indirect spend purchases are rarely monitored

"Here's what jan/san organizations must realize," says Wilson. "It is estimated that 20 percent to as much as 50 percent of an organization's overall operating costs fall under the 'indirect spend' category. So reducing this spending can significantly improve a company's bottom line."

While there are many ways to help control and reduce indirect spending, Wilson says the most important are the following:
 • Notify all employees that indirect spend costs must be brought under control.
 • Make large, less frequent purchases of indirect spend items and seek negotiated cost reductions from suppliers in exchange.
 • Access web-based computer programs, available through some distributors, that can cost compare products and help monitor both direct and indirect spend items.