Strategically Sourcing Facilities Services

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Strategically SourcingFacilities Services

• Gary Rudkin, Senior Facilities Manager
• Spirit AeroSystems- Wichita, Kansas

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Determining the long-term strategic sourcing
planDeveloping proposals and supplier
qualification processAwarding contracts and
managing supplier relationshipsfor long-term
valueMaintaining strong relationships with
employees andunions

• Course
• Objectives

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Reduce operating costIncrease competitive
spirit with employeesFocus on core
activitiesStaff to the valleys of the business
cyclesOffset demographics, attrition and
decline of entrants Reduce employee health and
safety issues

• Outsourcing
• Opportunities

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Increase cost- price escalationImpact to
customer satisfactionCost and effort to manage
service providersLoss of skill and control of
servicesLiability of safety and environmental
risksDamaging relationships with employees

• Risks of
• Outsourcing

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Long-term Strategic Sourcing Plan

• Take advantage of the opportunities and mitigate
  the risks
• Analyze your companies long-term growth plan
• Asses the skills and age of your facilities staff
• Identify customer service and cost issues
• Determine possible sourcing opportunities

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• Long-term
• Sourcing
• Strategy

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Determine Possible Sourcing Opportunities

• Identify facilities processes and services
• Building and grounds maintenance
• Janitorial service
• Painting service
• HVAC and chiller maintenance service
• Capital and expense projects
• Project management service
• Engineering service

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Rating the Services

• Asses the importance and need of all services
• Core competencies and operational impacts
• Technology may eliminate the need
• Requirement went away but the service remained
• Identify the workload and size of the services
• Opportunity must attract service providers
• Bundle with other services

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Rating the Services

• Identify the cost of the services
• Understand internal cost to perform services and
  internal competitive advantages
• Perform market research on service provider costs
• Consider response time requirements
• Identify response time impacts for each service
• Asses internal ability to respond

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Rating the Services

• Asses the skill and ability requirements to
  perform the service
• Higher skilled service generally cost more
• Physical demands raise safety concerns
• Maintaining internal ability and control
• Future risks if internal skill is lost

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Rating each service provides a short list of
possible sourcing opportunities!
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Proposals and Supplier Qualification Process

• Identify a clear and thorough Statement of Work
  (SOW)
• Base-line internal performance
• Develop Request for Proposals (RFP)
• Identify and qualify potential service providers

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Developing a SOW

• Involve the employees if possible
• Determine level of scope
• Process level- Building and grounds maintenance
• Service level- Janitorial
• Describe the tasks, frequency and volume
  (headcount optional)
• Provide work management data
• Process flow diagrams
• Work order history
• Project logs

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Developing a SOW

• Identify tools, equipment and software needed
• Provide material and inventory requirements if
  applicable
• Describe roles, responsibilities and expectations
• Identify Key Performance Indicators (KPI)

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Base-line Internal Performance

• KPI examples
• Cost to self-perform
• Labor
• Burden
• Tools and equipment
• Efficiency and effectiveness
• Response time
• Schedule compliance
• Customer satisfaction

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Develop Request for Proposals (RFP)

• Develop a proposal team
• Procurement
• Facilities Management
• Legal
• Operations customers
• Embed the Sow into the RFP

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Develop Request for Proposals (RFP)

• Incorporate KPIs as a performance scorecard
• Identify performance incentives
• X of implemented cost reductions
• X for an X increase in customer satisfaction
• Include standard terms and conditions
• Develop selection criteria matrix

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Selection Criteria Matrix
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Identify and Qualify Potential Service Providers

• Research the Web, FM consultants, peers in the FM
  community and suppliers
• Contact and meet the potential providers-
  Data/intuition
• Understand their capabilities and financial
  position
• Visit their customers sites

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Identify and Qualify Potential Service Providers

• Distribute RFPs to qualified service providers
  with a timeline
• Schedule on-site visits to answer questions
• Receive and review proposals for compliance
• Narrow the list of potential service providers to
  three or less based on best value
• Consider your in-house team as one of the options

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Awarding Contracts and Managing Supplier
Relationships for Long-term Value

• Schedule pre-contract clarification meetings with
  the remaining service providers
• Perform final negotiations
• Complete the selection criteria matrix

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Awarding Contracts and Managing Supplier
Relationships for Long-term Value
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Awarding Contracts and Managing Supplier
Relationships for Long-term Value

• Select provider based on best value
• Develop contract document- Mitigate risks
• Increase cost- price escalation clauses, CPI
• Impact to customer satisfaction
• Cost and effort to manage service providers
• Liability of safety and environmental risks
• Incorporate SOW and RFP
• Determine contract duration- Three year, option
  for two more
• Define audit rights and record retention
• Develop scorecards with quarterly reviews-
  Criteria matrix

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Awarding Contracts and Managing Supplier
Relationships for Long-term Value

• Identify Contract Manager
• Provide supplier management training
• Develop implementation plan and timeline with
  supplier and affected employees
• Sign the contract
• Anticipate upfront energy and effort developing a
  partnership and working through the
  implementation
• Keep in contact with the customer- seamless
  transition
• Conduct quarterly reviews with diligence

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Maintaining Strong Relationships with Employees
and Unions

• Job security is a major issue
• Most craftspeople and Facilities Professionals
  are proud of what they do
• Change can be painful
• Outsourcing may violate their trust
• Unions lose work, members and dues

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Maintaining Strong Relationships with Employees
and Unions

• Secrets are hard to keep in most companies
• Be upfront and open with employees
• Strategically sourcing Facilities services can
  minimize employee impact long-term
• Involve the employees and union when possible
• Communicate, communicate, communicate

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• Questions?
• Thank You!