Michael O’Leary, Jr., president of The Grimes Companies, has figures that show he has saved the company over $100,000 in the past two years by utilizing a unique corporate buying strategy - eBay.
The Grimes Companies is a full-service third party logistics firm providing warehousing, refrigerated space, distribution, transportation and packaging support throughout the Southeast.
As president of a logistics company, O’Leary is faced with the purchase of a variety of capital equipment as well as the usual office equipment for their facilities.
“Keeping overhead down in a low margin business is essential,” said O’Leary. “Plus it’s just business practice to get the best deal you can find for your company.”
O’Leary, who is part of the First Coast Manufacturers Association ‘s Lean Consortium, a group that studies ways to make companies more efficient, started searching for a best pricing strategy to tackle the high cost of office equipment. His first task was to address the company’s technology needs.
“After some research I found that many Fortune 500 companies were replacing their computers after the leases were up. These slightly used computers were turning up on eBay through Dell Financial Services,” he said. “These computers were offered directly from DFS but with the market setting the price. We typically paid 30 percent less than the prices listed on DFS’s Web site. Using eBay, we saved at least $10,000 on computers alone.”
Encouraged by his experience with the computers, O’Leary looked next to the company’s furniture needs.
“We knew we had to replace six to eight office stations. So naturally I started by contacting office furniture companies,” he said. “Then it occurred to me to go back to eBay. That’s when I was able to find an upgraded quality of furniture, and because of the price, I replaced 24 work stations. At that point we had saved over $45,000.
“We even needed to expand our time card system, requiring parts that were no longer being produced. Not only did we find a source, but we paid $25 per clock which normally cost $1,500 - $2,000 each.”
At that point, O’Leary then turned his eyes to capital equipment needs. Among a variety of other capital equipment purchases he made was the acquisition of a new tenant floor scrubber. Normally costing about $30,000 - $35,000 used, he sourced one for just $7,000. For the packaging division, the savings on items purchased through eBay was over $5,000 in less than six months.
With such a reduction on overhead, O’Leary feels that Grimes Logistics has a competitive advantage that it can in turn pass on to its clients. “We are changing the culture of our company regarding purchasing methods, he said. “We are now even looking at some of our own equipment that we have outgrown that could be sold on eBay to recoup some of our initial investment costs.”
O’Leary will be introducing this buying strategy to his Lean Consortium group. “Capital equipment purchases are a huge expense for a manufacturer. If there is a way to reduce these costs, then a manufacturer could be more productive and more profitable.”