In the two previous blogs my colleague Nick and I discussed developing a clear and complete baseline as well as the criticality of data and scope availability to adequately solicit pricing within the facilities category. Nick discussed how inventory management goes beyond just having a robust management system tied to parts, but also as it relates to operational equipment and scope data. One of the most important takeaways from Nick’s synopsis of a recent client engagement was how we lay the groundwork for future success. This is a great topic for organizations that are in a current state of disarray when it comes to their facilities operations.

Depending on the size and structure of the company, the role that the Facilities operation plays will vary. For example, a company based in manufacturing will likely have a bigger focus on Facilities as it ties directly to how they generate revenue, whereas an organization in the financial industry will focus less on Facilities or even outsource a majority of the work. Whether Facilities is regarded highly or not, it can still be neglected and easily become a category that falls into the unmanaged space from a cost and service level standpoint.

When a company places less of a focus on this category over time they will see a few key concerns arise.

1. Service levels are inconsistent or decreased overall.

2. Costs have increased over time and are not in line with the market based on the growth of the business and the scope of work.

3. The scope of work itself has shifted, either reduced or expanded over time.

4. If multiple locations are involved, multiple providers used for the same service.

These are just a few top issues that can result, while others exist, let’s just focus on these for now. When you have this type of exposure in the Facilities category, getting it organized and under a fully managed program is not something that will happen overnight. A plan of action with clear, logical steps is needed to course correct and some aspects could take years depending on the contracts in place. So where do you start?

First, get organized. Determine what subcategories are going to be reviewed as part of this process and then prioritize from there based on which areas have a bigger impact to the Facilities operation overall. This might include looking at Security Services, Landscaping, and Waste Management to start with a lower prioritization around HVAC Maintenance, Roof Repair Services, and Janitorial Services. This prioritization should be based on a number of factors including what contracts currently exist and what their timeframes are, the total cost of the contract, the criticality to the business (for example if Security Guard Services are customer facing it may hold a greater weight than HVAC Services), and if any major concerns around service levels exist currently.

Once you have a plan for which subcategories to tackle first, make sure that all relevant data is collected and reviewed. This will include contracts, pricing agreements, scope of work documentation, and end user feedback. This information will help to further prioritize your efforts based on contract expiration for example. Additionally, you will be able to use this data to start building a solid baseline, as discussed previously.

Prioritization efforts will follow with developing and executing on an appropriate sourcing strategy based on what the primary drivers within the subcategory are. For example, if the services over time have become decentralized and spread over multiple suppliers in multiple locations, the strategy may be centered around consolidating to a single source provider. Based on this, you will need to understand the supply base beyond the regional level, ensuring that all others elements of quality and cost can be managed effectively.

Once the sourcing and awards are completed the process becomes more focused on managing the category going forward. This includes maintaining all contracts in a database with automated triggers for upcoming expirations, managing the suppliers through a structured supplier management program with designated KPIs as a basis, just to start. While these steps may seem logical and straightforward, there are always going to be situations that arise that will stall the process. It’s important to have a very solid plan ahead of facilitating any activity when looking to begin a category cleanup. Having the right resources and systems in place will also play a critical role in this type of initiative. In the next and final article in this series, we will take more specifically about resources and tools that can be leveraged to help manage the facilities category. Come back soon for this wrap-up!
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Jennifer Ulrich

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