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Send  Share  RSS  Twitter  25 Jun 2010

PROCUREMENT: More Benefits Of Multi-service Procurement Strategies


Recent Gauteng Business News

Over the last year, international organisations have seen a distinct shift towards 'flight-to-price' procurement strategies; in other words they are looking towards outsourcing to reduce the cost of Facilities Management (FM). With benefits including access to sustainable supply chains and the latest FM innovation -- multi-service procurement strategies delivers far more than a 'flight-to-price' to reduce costs.

In January, research conducted in the UK by MTW Research published findings that suggest companies have a strong desire to significantly cut FM costs.
This debate has been going on for some years now and on a regular basis we see examples in the FM press about the latest outsourcing initiatives.

So why the 'dramatic' shift towards flight-to-price in 2010? To answer this we need to look at the how economic instability over the last few years has impacted the provision of outsourced FM. During recessions, businesses often outsource to save money - the financial crisis of 2008/2009 was no different, and as the MTW report discovers, multi-service providers did increase their slice of the outsourced FM pie. One reason they achieved this, put simply, is economies of scale in the supply chain. Large, multi-service or integrated-service providers are able to buy in bulk and achieve significant cost savings which trickle down to their clients - it makes business sense for companies and the public sector to tap into these supply chains and reduce spend. At Johnson Controls Global WorkPlace Solutions the global sourcing team achieves these efficiencies for our customers and is part of the wider Johnson Controls supply chain in securing goods and services for its own global operations.

The point here is that multi-service or integrated-service providers are in a great position to reduce costs in the supply chain; that is why the trend over the last few years has been an increase in multi-service FM contracts spanning access control and CCTV to landscaping and plumbing. However, there is more to this than meets the eye. Ostensibly, companies with large property portfolios only did this to save money, often very quickly, thus improving the bottom line. Delve a little deeper and the reality is that organisations are seeking far more from multi-service or integrated-service providers. Those adopting this model not only wish to reduce costs, but also have a strong desire to improve the triple bottom line of: people, planet, profit - the so called 'three pillars'.

At Johnson Controls Global WorkPlace Solutions, we are able to demonstrate to potential customers that over the last 10 years we have saved over $3 billion US Dollars for our clients across the globe. Reducing property costs is still important - but potential customers are increasingly basing the final decision whether to outsource or not on far more than savings targets alone. Apart from a flight-to-price, potential FM clients are also flying towards a number of important benefits offered by multi-service or integrated-service providers. The 'three pillars' are increasingly being seen as an expanded spectrum of values and criteria for measuring business success. In the critically acclaimed book - 'Green to Gold', Andrew Winston looks at 'how smart companies use environmental strategy to innovate, create value, and build competitive advantage'. If a potential client's CEO hasn't read this book, you can bet that the Director of Sustainability has. If he or she hasn't, someone with influence in the company will have done. And in the FM industry multi-service or integrated service providers are in the unique position of offering the capability to contribute to the increasingly important three pillars.

To demonstrate why this is true we can look once again at supply chains.
Today's CEOs, chief procurement officers and supply chain professionals are beginning to embrace supply chains that have sustainability - not only speed and cost - as an important facet. Yes, speed and cost are still important, however, sustainability in the supply chain is now viewed as essential for the long-term success of the organisation. Due to size and being part of a wider company, organisations like Johnson Controls Global WorkPlace
Solutions are in a strong position to meet these requirements.

Today's business leaders are also looking at new and innovative ways to manage facilities. For example, how does FM operate around an efficient workspace that improves the well-being and productivity of employees? This is win-win: not only does this reduce cost, but it also makes for a more productive workforce. Again, multi-service or integrated service providers have teams in place lead by industry thought-leaders who are able to think outside the box and add value. At Johnson Controls Global WorkPlace Solutions, we have a workplace consulting team advising clients daily on how to maximise the value of workplace assets, such as desk layout, to increase efficiency, reduce energy usage whilst meeting commercial objectives. On the subject of energy, energy efficiency is now high on the agenda in any boardroom - especially with the pressing issue of reducing a company's carbon footprint and the impending additional electricity hikes that Eskom proposes. Providers like these are able to offer clients a plethora of sustainable FM solutions ranging from web-based energy management software, which can be accessed on any computer with an Internet connection, to energy audits that eventually help organisations improve their triple bottom-line.

To conclude, there has been a shift towards outsourced multi-service FM to reduce costs, with the 2008/2009 recession acting as a catalyst. However, organisations are increasingly looking for far more than cost reduction, why? Because of the triple bottom-line. With environmentally-friendly consumers increasingly expecting companies to be green and the pressure to contain energy costs with the imminent price increases, organisations are indeed looking for solutions that enhance their brand and contribute to long-term success.

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