Redefining the integrated facilities management best practices’. Progressive buyers have started opting for an integrator model for sourcing IFM services. This approach ensures streamlined delivery of business processes both by sub-contracting and self-performing activities. New operating models and value-driven procurement offer various facilities management best practices for facility managers to provide strategic value to the bottom-line of their organizations. However, most procurement trends in the IFM industry will be disrupted by upcoming technological enhancements. The main challenge that lies ahead is in terms of creating more sustainable facilities. Bundling janitorial services, pest control, landscaping, and hardscaping maintenance typically offers the highest cost benefits (almost 40% savings) to buyers. Versatility is the key.
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The Changing Landscape of IFM Services Contracting
How can facilities management services be improved?
The integrator model is the latest flavor in the Integrated Facilities Management (IFM) industry. Bundling of services offers cost optimization, enhanced buyer engagement and loyalty, alongside reliance on the latest technologies and procedures that will encourage long term contracts that are linked with proven performance KPIs. However, alongside the obvious advantages, there are a plethora of challenges too.
What are the Roadblocks Impacting the Industry?
- High focus on cost driven factors rather than service competencies (which includes integration, standardization, and resolution)
- Increase in inflation and labour cost pose a great threat to the adoption of long-term contracts
- Increase in market competition due to low-cost unorganized service providers
- Different buildings have different requirements, demanding for various levels of automation control
What should smart procurement managers focus on to mitigate the challenges?
- Transition from executive sponsorship to executive ownership
- Engage in long term contracts linked with performance KPIs
- Enforcement of big data and analytics to improve decision-making
- Focus on globalizing and centralizing IFM operating models
Progressive Procurement Trends
Shift toward hard services specialization
Major buyers have started preferring service providers that possess strong technical expertise to perform hard services. This is expected to minimize the gap between MRO and FM spends in the future. The acquisition of the technical services division of GSH Group by ISS in 2015 was done to gain strong hard service capabilities.
Focus on providing one-stop solutions for all needs
Since the real-estate and brokerage market is volatile in nature, most leading real-estate service providers have started offering facility management services as well. The acquisition of Johnson Controls Global Workplace Solutions helped CBRE in enhancing its competitive position by providing REFM services through a single platform.
Integration of sub-contracting and self-delivery of services
In large IFM deals, buyers generally prefer self-delivery of services over sub-contracting. However, currently the integrator model is being widely preferred as it integrates process, performance, and reporting, across the supply chain. The KBR Group offers integrator contracts to its buyers which ensures that all the FM services are supplied as per the contract terms.
Most buyers prefer engaging with service providers that provide value-added services such as waste and energy management. Chubb Alba Control Systems, a subsidiary of United Technologies Corporation acquired EcoEnergy, a business division of Wipro. The acquisition is expected to assist UTC in developing its remote monitoring and building analytics capabilities.
Engagement Models – Integrated Facilities Management Best Practices
- Organizations can either integrate the functional areas vertically where all facility services are combined or horizontally, where services categorized as strategic, operational, and tactical, are merged together
- Vertical integration can help in reducing the number of service providers and attaining economies of scale through TFM contracts
- Horizontal integration can help not only in attaining economies of scales, but also economies of capabilities, where the same set of services are bundled for standardized delivery
- Is a Hybrid sourcing model the way forward?
Streamlining Supplier Selection
- Select providers with successful records of GMP contracting as success against the rigorous GMP requirements is an easy way to shortlist a service provider’s capability to consistently deliver quality service
- Performance benchmarking and facilities management best practices to be implemented against a baseline set by the buyers. Connect the outcome of periodic audits to performance-based payment terms
- Select an IFM service provider with careful due diligence by checking references to understand their history of process ownership and the benefits that they brought in versus an in-house team
- Structure outcome-based performance metrics to monitor performance Carefully structure a transition period between the existing FM process (In-house or Outsourced) to an IFM model
- Adopt an internal process facilitator to overcome the communication gap between the IFM working committee and the key business stakeholders
Developing a competitive procurement process is crucial for companies to develop effective strategies. Stay ahead by requesting service on our procurement platform to gain the latest insights into integrated facilities management best practices.
The SpendEdge Advantage
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Every business needs smart procurement intelligence to stay at the top of their game; we provide actionable insights utilizing lean methodology to help enterprises make better purchasing decisions. We provide businesses with the precise combination of resources, tools, and techniques to help them redefine sourcing and procurement capabilities. We cover a wide spectrum of industries starting from pharmaceutical and life sciences to transportation with expertise in supply market intelligence, spend analysis and benchmarking, supply chain risk assessment, and category management.
We invite you for our upcoming webinar on Cost Modeling and Deal Benchmarking: Best Rescue for Procurement Organizations on Wednesday, September 28 at 11 AM UTC and Thursday, September 29, 2022 at 10 AM PST.