CHEMICALS & DOSING EQUIPMENT


‘concentrates’ and expensive dosing equipment, which also needs to be fitted by qualified technicians, only to find that the investment they have made in capital equipment and engineering costs has eaten a significant chunk out of the available profit and has meant that the potentially profitable customer account has broke even at best.


This is where there is a ‘difference of opinion’ within the cleaning industry about the price of the chemical product and its perceived cost. The reputable suppliers’ chemical price quite simply should support the cost of the associated equipment and engineering support and make a reasonable profit, whilst delivering savings to the client. Getting the balance of this equation right is not as simple as many people think, and can be financially disastrous through inexperienced assessment or a blind commitment to give the customer whatever they want – at any cost.


To do it properly, supplier businesses should expect to invest up to a double digit percentage of its company turnover into the provision of free- on-loan equipment and professional engineering services each year. Therefore the business model needs to support this investment in their clients’ business. This is where both parties need to be clear on who is investing in what and who benefits from such investment. The supplier hopefully will get a longer-term supply commitment, with the customer gaining the in-use cost benefits of dilution control. But it is important to remember that the investment made and associated costs of maintaining this equipment throughout the duration of the supply relationship remains in the hands of the supplier, not the distributor or the customer.


The title of ownership of dispensers can invariably become a hot topic where customers or distributors can (wrongly) believe that over time ownership of the equipment can justifiably be transferred from the manufacturer to the customer. This is legally wrong and can lead to dispute through ignorance – free-on-loan means exactly what it says. By lending


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the equipment, the supplier always retains ownership no matter how long the equipment has been in-situ, unless the supplier transfers title in writing.


The assessment as


to whether a dosing system is suitable or commercially viable


needs to be well thought through, otherwise the customer may be


receiving a Rolls Royce when a Mini Cooper may fit the bill better.


My mind is cast back to the conversation Trigger had with Del Boy in a classic ‘Only Fools & Horses’, episode when he said that he had used the same road sweeping brush for 15 years. It was only when he added that he had gone through 15 brush handles and sweeper heads over that period that we discover he had in fact had 15 brushes, not one. Dosing equipment can be viewed in the same way, it may be perceived as the same original piece of kit, but will have had many pump head, tubing or component replacements over the duration of the contract to keep it in working order. Whether it is one year old or 10 years old, as long as it is in working order and is fit for purpose it still has a significant value, and is still free-on- loan from the owner.


Return on investment is a key consideration because if there is little or no return there seems little point in installing expensive dosing equipment on a free-on-loan basis, if the product is being sold at a nominal commodity cost to the end-user. It is not because manufacturers are greedy or trying to pull the wool over unsuspecting customers eyes, it is simple maths.


A £12.50 per litre price of a concentrate which dilutes to 100:1 is just over 6p per 500ml of ready-to-use solution – how cheap do we need to be here? The


misconception regarding the meaning of price and cost allows some chemical suppliers to try and talk about these two in the same breath, to offer a double benefit of cheap concentrates at lowest in-use costs. So, at £2.50 per litre of the same concentrate – or 1.25p per bottle – how does this work as a commercial model bearing in mind there are 50x500ml bottles that litre of concentrate? The customer basically gets free chemical, the supplier gets no repeat sales and has to fund the provision and the installation of the dosing equipment – no wonder some companies get cold feet.


Some notable chemical suppliers have moved away from chemical concentrates because they don’t see regular repeat purchases and their salespeople don’t like selling them because they don’t get their regular order and in their minds are missing out on sales commission. But surely they are getting the same commission on a higher figure – only less frequently. It does make you think about how much is being sold to businesses that are in effect wasting chemicals on a daily basis by not controlling them responsibly?


We focus so much on health and environmental safety nowadays that perhaps we are ignoring an equally important issue: wastage. Wanton wastage is a crime, when it can be eliminated easily at no extra cost through controlled dispensing systems. There are far too many ready-to-use products being used in today’s professional cleaning world, and it is something we are keen to reduce significantly as a company, but only if customers are willing to play their part too.


Customers need to cast aside the red herring of a perceived higher unit price of concentrate and focus on the in-use bottle cost instead. Although it may be associated that with the old adage that people are much better at spending other peoples’ money than their own, businesses need to stamp out wastage and insist on suppliers and staff getting as much out of the bottle as possible, not as little.


www.rpadam.co.uk Tomorrow’s Cleaning January 2016 | 55


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