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Why is Spend Analysis a Necessity for Reducing Facility Management Costs?

Jan 6, 2019

The market for facility management services is a multi-billion dollar industry in the U.S. alone. Facility management involves the integrated management of multiple and interdisciplinary technologies, personnel, systems, and processes. The ultimate goal of facility management is to promote an efficient and collaborative environment to meet and fulfill the key objectives and mission of an organization. However, this requires business owners to invest in strategies that are going to allow their facility management personnel to work with large sets log compliancy information, asset maintenance information, and every process through the facility management lifecycle. One of the primary challenges involved in facility management is that as more data points enter a facility, it becomes harder to ensure that accurate asset maintenance records are kept. Due to such factors, companies in the facility management industry are unable to reduce risks and increase operational control.

Key facility management challenges

Efficient facility management involves constantly tackling critical issues every day in the face of a host of obstacles. They are also responsible for bringing together a multitude of distinctive elements. Diligence and flexibility in handling facility management not only defines their success but also that of an entire company. Both large and small businesses must devote a considerable amount of their capital and energy to ensure their facilities are properly maintained and are prepared to meet the challenges of the future.

Cost management

Every instance of demand placed in a facility management enterprise has a cost associated with it. This includes costs incurred on repairs and maintenance, hiring of staff, inventory and supplies, and safety and security. We at SpendEdge, help clients in facility management organizations track cost expenditures, including detailed historical analysis, to allow for proper administrative reporting and reduction of operational costs.

Resource management

Another key facility management challenge is the need to rely on many resources to operate the facility efficiently. This includes both full and part-time staff. It also requires different types of service providers. Furthermore, due to limited budgets, facility management teams are expected to deliver more at lower costs. In this case, facility management companies are left with no choice than to identify their optimal staffing requirements and maintain a constant flow of communication between the team so that they are aware of how to increase the overall productivity and improve efficiency.

Meeting compliance guidelines

It is essential for companies to ensure the statutory regulations for managing their documents. This requires a process to ensure that data is stored correctly. In order to remain compliant, it is also important to stay updated on the legislative changes. Facility management professionals often face problems associated with inadequate record keeping that do not meet the expected compliance standards.

 

One of the best ways to resolve facility management challenges is to bring in a professional and competent solutions provider to help you carry your load. SpendEdge has been helping facility management professionals across the world to build strategies that increase their profits while staying within the budget. Contact us today!

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Cutting facility management costs: What businesses must do


As businesses face the need to utilize state-of-the-art infrastructure to remain competitive, controlling facility management spend becomes more important than ever before. Strategic planning is critical to align capital spending with budgets and ensure proper allocation of resources in facility management. While budgets are typically controlled by individual departments within the organization, there are certain steps every facility management professionals can take to contain costs. Here are five ways facility management can control the overall spend:

  • Purchase Pre-owned, Refurbished or Rental Equipment
  • Preventative maintenance of existing equipment can help reduce operating expenses and create a safer work environment
  • Research the supplier and the equipment through product reviews and testimonials for optimal prices and service.
  • Organize data and analytics to gain better visibility of expenses across the organization and enable the allocation of resources in the most efficient manner
  • Leverage spend analysis to get all the possible benefits from the company’s current spend cube

What is spend analysis?

Spend analysis is the process of identifying, cleansing, grouping, categorizing, and analyzing an organization’s spend data with an ultimate goal of decreasing procurement costs and improving efficiencies.  Companies can gain the insight that they need to save money and gain efficiency by using real-time data and analytics. It is used to visualize all the data so that businesses can make better sourcing and supplier decisions.  Additionally, it also helps in improving compliance, reducing cycle times, and uncovering maverick spend. A sourcing program that seeks to become successful hinges on the ability of an enterprise to thoroughly understand its spend. Getting spend analysis right is an obligatory step toward actual cost reduction, continual process improvement, and value creation. Some of the key steps involved in spend analysis include:

Identify and consolidate spend data

The company’s data may be stored in a variety of places. In several cases, each department or each project within each department has a separate accounting and budget system. Each of these separate sources may have its own internal process: general ledger, accounts payable, eProcurement systems, and other financial software. The first step involved in spend analysis is to identify all invoices and payments from various sources and consolidate everything into a central database.

Clean the data

Information that is gathered from different sources must be standardized. Fields may need to be added to identify where the order originated or define the purpose of the order, and purchases from international sources may require currency conversion. Once the data is standardized, compare duplicate entries to ensure double payments were not issued.

Identify scope of spend analysis

The next step is to determine the minimal time period that will return an accurate picture of the company’s current spend and still allow to identify all recurring expenses. Companies with decentralized budgeting systems may seek to limit the scope of each spend analysis process by department, project, and division.

Categorize expenses

By breaking the organization’s spending into general categories, companies will be able to see exactly where their money goes. Be as specific as the situation demands, whether the company orders building supplies, outsources digital services, or sends engineers to assess damage in remote locations. Furthermore, it is essential to make a category for every major expense: personnel, travel, outsourced programming, legal, manufacturing supplies, and office supplies.

Analyze the data

Once the company’s spend data is consolidated, the next step is to take a close look at how the businesses’ money is spent and make appropriate changes and informed decisions about future spend. Keep the data up-to-date in order to remain on top.

Spend analysis services from SpendEdge have helped leading companies from across the globe to identify and realize multimillion-dollar savings opportunities previously unknown to them. Our spend analysis experts are motivated by the same goals and measure success just as you do — through actual realized savings. Get in touch now!

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Benefits of spend analysis in facility management

Minimize maverick purchasing

Sourcing organizations often tend to focus only on what happens before signing a contract. But in several cases, the available contracts go unused, this proves to be true especially in the case of indirect spend. Minimizing maverick purchasing in facility management is not only about getting better prices and terms that have been negotiated, but more importantly ensuring legal and CSR compliance using approved suppliers. After starting a systematic measurement.

Direct savings

The primary aim of any business is to maximize profits and minimize spend. Facility management companies may realize unexpected savings with strategic sourcing by switching to preferred suppliers and negotiating volume discounts or eliminating duplicate orders or by reducing waste incurred by overbuying – which wastes money, man-hours, and storage space.

Rationalize supplier base

one of the most common levers of easy savings identification for facility management companies through spend analysis is by rationalizing supplier base. This can be achieved through strategies including recognizing inefficiencies after growing through acquisitions and sourcing selected categories globally. It can also be done by managing tail spend by reducing the number of suppliers.

Benchmark performance

It is vital for businesses to compare themselves against market development. Organizations must identify ways to systematically benchmark their performance in selected categories against relevant market indexes. This helps facilities management businesses ensure that they are not only performing well against their past performance but also keeping up with the market. Spend analysis solution help facility management service providers to benchmark their performance against their peers in the market.

By implementing spend analysis, facility management professionals can start making use of the endless streams of data available to them to create positive, innovative changes in the workplace. Request a proposal!

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Optimize working capital

Optimizing working capital is one of the quick-wins that facility management organizations can take through robust spend analysis. Identifying categories and suppliers with lower-than-policy-level payment terms. This provides a great starting point for freeing working capital.

Category-specific opportunity levers

In the case of facility management service providers, not all categories are similar. There are a lot of category-specific levers that can be utilized to identify opportunities – be it controlling travel class in air travel, harmonizing job profiles in temporary labor or analyzing packaging premiums in chemicals.

Improve data quality

One of the most common points of discussion related to spend analysis in facility management organizations is the lack of data quality that meets the expected standards. However, the only way to improve data quality is to use it. Moreover, it is important for facility management companies to understand that unused data will always be bad data.

Manage risk

Facility management companies can use spend analysis to prevent potential vendor issues by keeping track of the vendors’ annual revenue and credit score. Dealing with preferred vendors may put the company’s supply chain and project progress at risk if the vendor fails. Note that the company is often only as timely as its suppliers.

Automate and improve internal systems

The spend analysis data can provide facility management organizations the basis for informed decisions on areas of improvement for different processes. If the payment processing is consistently slow, companies may consider an eProcurement System to streamline and speed up the process.

Why SpendEdge?

SpendEdge is a forerunner in offering smart procurement solutions to several Fortune 500 companies across the globe. We provide in-depth, powerful insights that help our clients in the facility management sector to develop effective procurement strategies to maintain a winning edge in the market. Our spend analysis solutions for facility management service providers are designed in collaboration with several professional consultants and provide and host of benefits including optimized design and execution process, insights into the usage of modern equipment, and overall cost management and control. SpendEdge’s unique approach to procurement transformation encompasses robust procurement strategies and technological innovations to help facility management businesses build the infrastructure required to fuel high-performance digital procurement enterprises. Request a demo to know more.

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