When it comes to spend visibility, not all spend is created equal. A recent Chicago Tribune blog entry proves this point in describing how the city of Chicago is paying 1000% more to transport bodies to morgues than other Midwestern urban enclaves. According to the column, "An influential alderman is arguing that Chicago pays far too much to transport bodies to the morgue, but the attorney for the company that does the work says it must charge that much to make a profit under strict city regulations ... The city currently pays $915 a trip [to the company that does the work]. Under the company's previous Chicago contract, it was paid $200 a body, or $300 for two bodies, a city web site shows. In Dayton, Ohio, where the company is based, it only receives $75 a body."
Now, this old volume-discount model clearly was ahead of its time. Whoever negotiated the multi-body discount with the provider should immediately stop working for the city and head straight down to AT Kearney Procurement Solutions or Accenture Headquarters in the loop and apply for a job paying four-times what they're making as a buyer for Dick Daley Jr. Seriously, not only did this person anticipate a booming murder rate in the city, they also understood their supplier's cost structure, allowing this prescient negotiation tactic. Too bad -- like the bodies the supplier is hauling away -- that it's now dead.
Today, despite the drop-dead cost, the supplier is not exactly meeting the performance thresholds expected. The Trib investigator found that the company hauling the bodies "has mixed up bodies, routinely overbilled for services, failed to meet commitments to use minority subcontractors and violated contract rules designed to preserve the dignity of the dead ... [stuffing] five or six bodies into a single van, even though one was the maximum the city allowed in most cases and never more than two." Given the fact that "the Cook County Sheriff's Police ... pay $130 per body" to transport corpses in the exact same geographic area, the cost seems more appalling still when we factor in these infractions. As an aside, I'd love to be a fly on the wall in a vendor performance review when the city tells the supplier that it is "not preserving the dignity of the dead".
While it's not clear why the cost went up despite these supplier performance infractions, perhaps it's the service level agreement that the contract requires which ironically led to the booming body costs. To wit, "Chicago requires body pickup at all city locations within 75 minutes of a call to dispatch," requiring a 24-hour a day operation. Or maybe the rising costs are due to the fact that "Employees who work for the company also have unionized". Maybe this makes sense. After all, if you can join a union for hauling garbage, why not for dead bodies? It also makes it much easier to pool contributions for alderman and mayoral election campaigns (the real reason unions have so much clout in Chicago and why unionized companies get these contracts in the first place).
Regardless, one thing's for sure. And that is that our city is getting stiffed on more than one account here, proving that even after death, the need for spend visibility never goes away.
- Jason Busch and Lisa Reisman