When it comes to managing and maintaining facilities, Procurement teams have a lot on their plates. Including a diverse variety of spend areas (janitorial services, waste management, pet control, and uniform rentals are just a few), the category forces purchasing groups to contend with countless suppliers at varying degrees of maturity. What's more, the service-oriented nature of the category often makes it challenging to assess and optimize.
A challenging category is by no means an impossible category. Source One's spend management specialists have enabled clients in countless industries to reduce costs and conduct strategic sourcing initiatives for their facilities purchases. Check out some of the tips they've learned over the years.
1. Identify Data Gaps Early
Many facilities management sub-categories are based on time and material costs. That means your team has to consider labor hours, material costs by line item, and a slew of ancillary fees. Most suppliers (particularly your 'mom and pop shops' are unlikely to track these independently. This can put your team in a tough spot when it comes time to forecast savings. So, how can Procurement perform damage control? They should take care to identify these gaps during the baseline stage of any sourcing initiative and develop plans for ensuring these gaps don't survive into the future.
2. Insist on Details
Once you've identified gaps in your spend data, you've got to take action to close these gaps and ensure they stay closed. In all likelihood, these gaps exist because of lax negotiations in the past. You can't let a hands-off approach to contracting become the norm. A good best practice to encourage effective billing is requesting that all invoices include line item-level details. This will make it easier to revisit and accurately assess these documents on a quarterly or yearly basis. You should also take care to ensure contracts include language that compels suppliers to provide the most visibility possible.
3. Get Your Priorities Straigtht
It should be clear by now that facilities management includes countless subcategories. It's unlikely that any team, however well-appointed, can devote their full attention to each of them. Before embarking on an optimization initiative, your Procurement department needs to conduct a thorough assessment of the category. Analyzing existing contracts and supplier relationships, they can devise strategies for effectively tackling high-impact subcategories. For example, customer facing subcategories like security services might take precedence. Your team might also uncover service level concerns during its analysis that would have otherwise gone unseen.
4. Consider Every Option
Once you've assessed your facilities spend and conducted events to refine operations within the category, it's time to implement a solution. There are dozens of resources available to today's Procurement groups. It's important to take a look at every possible option. These include essential, transactional, functional, and strategic software solutions. From contract repositories to more nuanced tools, these empower your company to optimize its operations and spend well into the future. Don't forget to consider leveraging the services of a third-party consulting firm. Even in our digital world, there are few substitutes for the human element. The right consultant can supplement your internal efforts and lay the groundwork for future savings and efficiency.
5. Watch Out For Ripple Effects
Any time a change in strategy becomes necessary within the facilities category, the effects are both numerous and widespread. Your team can't afford to ignore any of these. Adjusting timelines, reallocating resources, engaging with stakeholders, and communicating expectations both internally and externally are all key components of a successful implementation. Don't forget, these processes are all the more complicated and time-consuming when your company leverages a large supply base. Take the opportunity, if necessary, to weigh the benefits of a consolidating your selection of facilities vendors.
Want to learn more about optimizing spend and supplier relationships for your facilities purchasing? Contact the Procurement specialists at Source One today.