In our last blog, I discussed five recommendations to be considered in defining the right FM strategy , progressing from that, it’s worth looking at the specific subject of supplier selection which has a number of unusual aspects.
Firstly, unlike most other categories, your selected supplier is unlikely to come from your existing supplier base, if you don’t have a total FM solution in place right now, and you determine that to be the right strategy for you. You may of course have a potential supplier providing for example existing canteen services, security or any one of a number of soft services, but even in this case an FM solution would mean a multiplication of the contract value and therefore dictate a full sourcing process to ensure compliance and good governance. Note that a total FM solution is not always the right answer – see my previous blog on defining strategy.
Secondly, the cost for a potential supplier to provide you with a detailed and costed proposal is high, both financially and in resource. They need to be motivated to make this commitment by being one of a short list of possibly three contenders or so, and that your business fits within their strategy and preferred sector. Partner selection is going to have to work both ways! And to put your spend into perspective the market in the US alone is estimated this year at $700bn.
For example, on a recent programme for a mining company, one organisation despite being global were not inclined to quote as they had limited resources in Africa, another global player had just announced a major new contract in the same sector, and therefore were very keen! Despite often being considered a canteen company that company is now the global number 1 for FM, proving that perspectives and reality changes all the time, so keeping on top of the FM supply market is critical.
Another organisation is driven predominantly by real estate, which needs to be a major factor to ignite their interest; although they managed the prestigious London HQ, the rest of the potential portfolio was relatively unattractive for them as it didn’t fit their strategic focus. And yet another firm is a significant player in the UK and Europe, but has no interest in expanding to the US or Asia. All these examples serve to demonstrate how important it is for you to understand their company vision, mission and strategic objectives, as without that understanding, your theoretical strategy could fail in implementation.
The value of in-depth supplier analysis and a well-designed, rather than a generic RFI, at the earliest opportunity is absolutely critical in the creation of category strategy but especially in markets like FM where such strong personal motivation needs to be accounted for. Using the expertise of the potential suppliers wisely helps to assist in gathering data and preparation of a later RFP or RFQ. It’s vital that work is started to review potential suppliers at the outset of the process.
If you would like further information about the FM market, or a detailed supplier and supply market dynamics profile created to support your category strategy development please get in touch with myself, or Allison Ford-Langstaff.
Tagged by topic: Facilities Management