Local First Arizona recently spent time working with locally owned taxi company, Clean Air Cab, on a pilot program called Source AZ, which studies the procurement practices of LFA members. Our collective goals were to find out how many Arizona owned businesses Clean Air Cab supported, and find areas where they could shift a percentage of their sourcing from national to local companies. The first step was for Clean Air Cab to outline the companies they procure from – everything from office supplies, auto repair, cleaning supplies and coffee. LFA staff analyzed which companies were based in Arizona and which were based outside the state, calculating that Clean Air Cab is sourcing an impressive 83% of their goods and services from Arizona owned companies. Clean Air Cab selected five industries that they would consider moving from national to local, and together we started researching local options. Here is what we found in each industry.
Banking: Clean Air Cab has been using Wells Fargo, based in California, for their business banking needs. The decision to move to a local bank was due to a considerable amount of fees charged and a high staff turnover at the bank. Roadblocks: Being close to a bank branch is important for Clean Air Cab. They also are thinking through the amount of work it would take to reset bill pay and the administrative work involved in moving to a new bank. End result: Work in progress. Clean Air Cab met with several local banks and is excited about the prospect of banking locally. The banks addressed the issue of the administrative labor by advising Clean Air Cab to gradually transition over, and that it would take a couple months to get things squared away. Clean Air Cab is seriously considering switching to a local bank in the coming months.
Recycling/Waste disposal: Clean Air Cab has been using Waste Management, based in Texas. Roadblocks: Waste Management’s contract is long term & can be tricky to get out of. End result: Success! It was easy for Clean Air Cab to switch to Sonoran Waste Disposal as their contract with Waste Management was almost up. An added bonus is they are spending almost half as much with this locally owned company.
Coffee Supplies: Clean Air Cab has been using Costco, based in Washington, for their coffee. Roadblocks: Cost End result: Not switching at this time. Clean Air Cab has been purchasing from Costco based on the low price and after doing some research, we found that it was hard to beat their price.
Payroll Services: Clean Air Cab is using ADP, a payroll company based in New Jersey. Roadblocks: Cost & amenities End result: Not shifting at this time. Clean Air Cab has significant needs from their payroll company. After meeting with several local companies, they found that both could offer the same services as ADP, however there was some cost increase, mainly due to the cost of background checks which Clean Air Cab does frequently.
Office Furniture: Clean Air Cab is currently using IKEA for office chairs, based in Netherlands. Roadblocks: Cost End result: Success! Clean Air Cab is able to purchase office furnishings at a comparable price with added benefit of saving items from the landfill. They also will be looking into preowned office furnishings when they move into their new offices.
Clean Air Cab shifted to two locally owned companies, and bumped their local sourcing up to 84%. The project was rewarding and eye opening for both Clean Air Cab and Local First Arizona. Clean Air Cab Director of Operations Brandy Lovato provided feedback about her experience with the Source AZ project:
“I loved this project and loved working with other local businesses to see what we could move over to local. I think if a company did not have a lot of local vendors to begin with this would be an easy project but since we are already sourcing local at 83%, it is a little harder because those pieces to move over are big items such as banking, payroll, etc. The easiest was the supplies, chairs, and the little things. I feel like you get more of a personal service with the local companies as opposed to a huge corporation that as a business you really have no connection with. I know that we are spending less money by doing business with the local companies. This could have been done without the help of LFA BUT it would have taken forever. Their help and connections for each category made things simple to contact people and set up meetings. I would encourage all businesses to look at their business spending and make at least a 10% shift. If our little company can have 83% of our business with local vendors I challenge all others to at least do 10%!!!”
Takeaways & tips from LFA:
- Analyzing Clean Air Cab’s local versus non-local spending was really interesting. We knew Clean Air Cab was consciously using locally owned businesses before we started this project, but it was great to come up with an actual number. This is an area that businesses usually don’t measure, so it was an “a-ha” moment for Clean Air Cab as well, and something they are very proud of.
- There are some areas where there are not local options. Clean Air Cab uses technology for cab fare calculation etc. that cannot be sourced from an Arizona company.
- It’s smart to meet with several different local companies. Our goal was to meet with three potential vendors in an industry before making a decision.
- If the cost is too high, ask your local service providers to work with you. Sometimes they can get a price closer to what you want. It is important to understand that in some cases national companies and big box stores’ prices cannot be beat, as they have deals with manufacturers and distributors that a local company does not. When looking to switch to a new company, consider factors other than just going with the cheapest, and think through the type of company you want to support.
- Don’t assume local is more expensive. Clean Air Cab is saving a significant amount by switching their recycling and trash disposal to a local company. They are also saving money and keeping items out of the landfill by sourcing from the ASU Surplus store verses Ikea.
- Moving one or two high dollar accounts could have a big impact. When analyzing your purchasing, look at the non-local companies that you are spending the most money with and start there if you can.
- Have an office Localist. Clean Air Cab believes heavily in supporting their local community and their Director of Operations was excited to work on this project. Having someone in your place of business that is passionate about supporting local businesses and can devote time to a project like this is important.
- Be excited and shout about your local sourcing! By switching to a local vendor or service provider you are keeping up to 3 times more dollars in Arizona. Your decision to shift to local provides higher quality jobs, and a more vibrant community. You build relationships rather than make someone in another state richer. Include information about your local sourcing in your marketing materials, sales kits and brag to your social media followers.
- Interested in going through the Source AZ program? Watch our video and email [email protected] for more info.