For most clothing retailers, price tags are a necessary but negligible cost of business. For Penny Friedberg, the tags - and their printing - are items that can siphon tens of thousands of dollars in profit from a company.
Friedberg, owner of the Purchasing Manager, is in the business of shaving costs for small and medium-sized companies in pens, paper, staples, even price tags - items most people take for granted.
Her company of three full-time and two part-time employees acts as a purchasing department for the companies, handling the comparison shopping, deal-making, ordering and supply management. Her clients say they save 20 percent on their purchasing expenses each year through the service.
In 10 years, the company has grown from a one-woman enterprise to a small office in Columbia with about a dozen clients, and it is likely to further expand next year. The company recently negotiated a contract with Almost Family Inc., a group of adult day care centers, that is expected to triple the Purchasing Manager's volume and revenue by 2004.
The company, which serves private companies and nonprofits in Maryland and Friedberg's native Kentucky, handles $1.5 million in orders a year. With the latest contract, Friedberg says, she might hire up to three more people, and she could have to move or expand her Atholton Square office.
Although the company started working with the adult day care provider this summer, within 18 months the Purchasing Manager is expected to handle buying for all of its locations nationwide - about $4 million in orders each year.
It is no surprise that Friedberg's services are popular. According to the Outsourcing Institute, a New York-based professional association for outsourcing companies and clients, supply inventory is one of the top areas executives were considering outsourcing in a recent industry survey. The group said outsourcing has become a much more viable option for midsized companies as well.
"Today, more and more companies are outsourcing more and more types of services - and, thanks to the rise of Internet technology, an increasingly wide range of firms now provide these companies with the services they're seeking," Frank Casale, chief executive officer of the institute, wrote in a report on outsourcing for midsized companies. "Outsourcing has moved from being strictly the province of the world's largest corporations to being an increasingly accepted - and critical - resource for midsized companies."
Although more companies may be looking into outsourcing procurement functions, it is not always an easy transition, Friedberg said, because the service requires a culture change some offices are not ready to take on.
The managers responsible for supplies may fight the change because they "might be worried they'd lose their job, or they may have their own relationship with suppliers" that includes certain perks or freebies, she said.
"It requires changing the culture at your organization," she said.
Friedberg said she came up with the idea for the company after she went shopping for bargains for a kitchen remodeling project and saved her family $10,000. She thought her cost savings were a service other companies could use and would be willing to pay for.
The Purchasing Manager does not store or ship any items. It places orders that are delivered and billed directly to the client. When it is necessary to make those one-time large purchases - such as a copying machine or refrigerator - Friedberg's company researches options based on the clients' needs, checks suppliers and service providers, negotiates pricing and maintenance agreements and places the order.
If things go wrong, it is also Friedberg who works with suppliers to correct the problem. Customers say that is a big bonus of her service.
"It saves my time as a director because if there would be a missing piece in an order, they follow up," said Rhonda Ruigrok, director of Almost Family, Harford. "I'm hardly involved in it at all any more, my staff is getting so good at it. It's nice. It absolutely is customized to our needs."