How Spend Analysis Helped a Facility Management Services Client Enhance Cost Effectiveness and Process Efficiency by Over 60%
Importance of Facility Management
Over the past few decades, facility management services have developed into a thriving industrial sector and, as a discipline, continues to grow globally. This is mainly because well-managed sites and buildings enable businesses to function at their most efficient and effective level, achieving collaborations and offering added value to the organization’s core business needs. Some of the key reasons behind the rising popularity of facility management services are:
- Its ability to enhance the cost-efficiency of businesses
- Increase the lifespan of assets
- Help monitor and maintain compliance
- Better manage health and safety requirements
By leveraging and integrating smart procurement solutions, facility management companies can transform themselves into self-aware, flexible structures that are capable of adapting to the ever-changing industry trends.
Having a robust spend analysis solution in place has become more of a prerequisite for a professional sourcing organization. But do you get all the possible benefits from your current approach to spend analysis? Get in touch with our experts today!
Spend Analysis for Facility Management Service Providers
About the Client
The client is a leading facility management services provider in the US. They offer facility management services to businesses operating in the private and public sectors in the US.
The Business Challenge
The client recently merged their business with a multi-national Fortune 500 facility management services provider with several US subsidiaries and spend categories spread across five different businesses. The facility management industry player was attempting to develop a coordinated post-merger spend management strategy. Their main aim was to standardize spend data and analyze spend across all categories. The facility management services provider, therefore, approached SpendEdge to leverage its expertise in spend analysis and enhance their process efficiency.
In the face of increasing cost reduction pressures, facility management companies are on the constant lookout to find alternative ways to increase efficiencies and tackle challenges such as the ones faced by our client:
Problem Statement 1
The facility management services provider lacked the basic ability to classify spend data and improve spend visibility across their business units.
Problem Statement 2
The facility managment services provider faced increasing pressures to adapt to a fast-evolving marketplace with dynamic regulatory requirements.
Problem Statement 3
The facility management industry client faced major challenges in identifying long-term savings opportunities and areas for cost reduction to facilitate process improvement.
Problem Statement 4
By leveraging spend analysis, they wanted to effectively manage risks and manage maverick spend to ensure regulatory compliance associated with the facility management services.
Problem Statement 5
Overcoming these challenges is easier than you think with SpendEdge’s customized spend analysis solutions. Want to know how? Request a FREE Proposal.
To help the facility management services provider tackle all the above challenges, the spend analysis experts at SpendEdge adopted a comprehensive four-step approach. The approach offered several benefits, one of which included enhancing the efficiency and effectiveness of processes across all business functions. This approach not only helped the facility management services provider to enhance their procurement strategies and cut down on maverick spend but also enabled them to optimize their working capital. The valuable insights offered by our advanced spend analysis solutions helped identify price arbitrages, thus, helping the facility management services provider to benchmark their performance against market developments while maximizing their process efficiency by over 60%.
Regardless of how disparate your spend data is or how poor your existing data quality is, SpendEdge’s spend analysis solutions provide continuous improvement processes that will give your procurement on-line access to flexible reporting of procurement expenditure within weeks of implementation. Also, our spend analysis solutions are crafted to offer organization-wide access to spend reporting, enabling increased identification and execution of savings opportunities through improved spend management approaches.
Understanding the core challenges faced by facility management companies and phasing out the rollout of our spend analysis solutions helped minimize the implementation risks to a great extent.
The solutions offered were divided into the following four phases:
Phase 1: Identification of spend data sources
The initial phase revolved around tracking the extent of spend. This was analysis was carried out by segmenting the spend into different groups to determine all the sources available for spend optimization across all departments and business units owned by the facility management services provider.
Phase 2: Consolidation of all the gathered data into a central database
Consolidation of the gathered spend data required the facility management services provider to narrow down their scope and capture all the available spend data. Since the captured data was in different formats, consolidation proved to be challenging. But by enhancing, refining, and optimizing the raw spend data the facility management industry client was able to successfully consolidate the gathered data into a central database.
Phase 3: Categorization data for better supplier management
Categorization of data into meaningful groups is essential to identify how and where the business is spending money. We adopted a similar approach to ensure our facility management services client negotiated the best contract deals per supplier.
Phase 4: Detailed spend analysis and benchmarking
Our spend analysis and benchmarking solution enabled the facility management services client to identify new improvement opportunities while analyzing the impact of volume variances on the organizational spend. This also helped them monitor what best-of-breed facility management companies achieve and understand how they set their targets.
The spend analysis process involved complete synchronization of different spend categories to deliver a comprehensive dataset containing all the procurement spend data in one place along with all the fields suitably linked, and spend mapped to a unified commodity structure. The ROI for this effort based on the savings obtained in year one exceeded five times their initial investment. Facility management companies that follow these initiatives will find tremendous opportunities for productivity and innovation across all categories of spend. Understanding the external and internal maturity and identifying the key differentiators also helped the facility management services provider to build a failsafe transitional spend management strategy, identify a strategic partner, and execute a robust spend analysis process to achieve maximum value from the transition.
An effective spend analysis process uncovers issues that need to be acted upon and offers insights on the appropriate method of execution and implementation of change. However, spend analysis needs to be done periodically and at high levels of sophistication across industries. Though it can be a lengthy and expensive process, it needs to be well-structured to include clear organizational objectives, business scope, and a statement of anticipated benefits.
Businesses that leverage spend analysis solutions reported a 60% reduction in overall costs. Get in touch to know more about our spend analysis solutions portfolio.
Why partner with SpendEdge?
With over a decades experience in the field of procurement and sourcing, SpendEdge has been a forerunner in offering smart procurement solutions to 500+ businesses across the globe. We offer in-depth, powerful insights that help our clients develop effective procurement strategies to maintain a winning edge in the market in which they operate. SpendEdge’s unique approach to procurement transformation encompasses robust procurement strategies and technological innovations to help businesses rapidly build the infrastructure required to fuel high-performance digital procurement enterprises.
As a true end-to-end procurement solutions provider, we combine our dedicated procurement offerings with best in class innovative approaches to tackle all procurement challenges. What’s more, experts say that our smart procurement solutions not only act as a key driver of productivity and savings but also accelerate the overall impact on the organization.
If we know one thing, it’s procurement should have an ever-lasting impact on the enterprise as a whole far beyond the sum of its counterparts.
We Offer All Things Procurement Under One Roof
SpendEdge offers the industry’s widest range of customized procurement solutions to help facility management companies tackle such challenges. Our procurement services portfolio includes:
- Supply market intelligence
- Strategic Sourcing
- Supplier Management
- Spend Analysis and Benchmarking
- Risk Assessment
- Category Management
This case study highlights the manifold challenges faced by facility management companies and sheds light on how the intelligent use of SpendEdge’s spend analysis solutions can empower facility management service providers to create better facilities for the future.
You simply can’t manage a procurement function or a category without knowing how much you spend. Spend analysis is a fundamental enabler of category and supplier management, and having a good spend analysis and reporting capability at your finger-tips will enable you to successfully manage your procurement function and drive maximum results. Request a FREE Demo to know how you can replicate the same strategy adopted by the facility management services provider.
Why is spend analysis important?
The starting point for superior relationship management and enhanced procurement performance is information. Spend analysis offers detailed insights into the amount of money an organization spends on purchasing materials and services, the suppliers with which it spends most, and whether the value provided by suppliers meets industry standards. Such granular insights can then be used to modify procurement processes to maximize spend efficiency. Once this is accomplished, the organization can adopt other mature procurement practices such as supplier relationship management (SRM) and category management. Hence, it can be said that spend analysis provides organizations with granular spend insights to enhance the mutual value from their suppliers while empowering them to establish efficient, well-organized procurement and sourcing functions.