When creating a Category strategy Facility management, which is a critical procurement category for many organizations, the strategy encompassing a broad range of services related to building maintenance, security, and support services. Developing a comprehensive procurement category strategy for Facility Management (FM) can help organizations optimize costs, improve service delivery, and mitigate risk. In this blog post, we will explore some key considerations and best practices for developing a procurement category strategy for facility management.

Learn more about Category Management in EFFSO’s course and the course Category Management – how to get started.

Key Considerations for Facility Management Category Strategy

1. Define the Scope of the Category: The first step in developing a procurement category strategy for facility management is to define the scope of the category. This includes identifying the specific services and areas of focus within the category, as well as any relevant regulatory or compliance requirements. And, not to forget, learn the history of the Category. How come we ended up as we are today?.
2. Conduct a Spend Analysis: A spend analysis can help organizations identify opportunities to optimize costs within the category. This involves collecting and analyzing data on past spending within the category, including total spend, suppliers, and pricing.
3. Identify Key Suppliers: Identifying key suppliers within the category is critical to effective supplier management. This involves evaluating the performance of existing suppliers and identifying potential new suppliers.
4. Develop a Sourcing Strategy: Based on the spend analysis and supplier evaluation, organizations can develop a sourcing strategy that outlines the optimal sourcing approach for the category. This can include determining the best procurement methods, negotiating with suppliers, and managing risk.
5. Establish Performance Metrics: Once suppliers are selected, it’s important to establish performance metrics to monitor supplier performance and ensure that they are meeting agreed-upon service levels. These metrics can include cost savings, service delivery, quality, and compliance.

Scope of the Category – Sub categories

• Building Maintenance and Repairs: This includes all activities involved in maintaining and repairing the building, such as plumbing, electrical work, painting, roofing, and general maintenance.
• Cleaning Services: This includes all activities related to cleaning and sanitation of the building, such as floor cleaning, trash removal, and restroom cleaning.
• Security Services: This includes all activities related to security, such as security personnel, access control systems, surveillance cameras, and alarm systems.
• Landscaping and Grounds Maintenance: This includes all activities related to landscaping and grounds maintenance, such as lawn care, tree pruning, and snow removal.
• Pest Control Services: This includes all activities related to pest control, such as rodent control, insect control, and fumigation.
• Energy Management Services: This includes all activities related to energy management, such as energy audits, energy-efficient lighting systems, and renewable energy systems.
• Waste Management Services: This includes all activities related to waste management, such as waste disposal, recycling, and hazardous waste management.
• Furniture and Fixtures: This includes all activities related to procurement and maintenance of furniture and fixtures, such as chairs, desks, and shelving units.
• HVAC Systems: This includes all activities related to heating, ventilation, and air conditioning systems, such as maintenance and repair, energy management, and installation of new systems.
• Fire Safety and Prevention: This includes all activities related to fire safety and prevention, such as fire alarms, sprinkler systems, and fire extinguishers.

Stakeholder management – build your team.

Effective stakeholder management is crucial to the success of procurement in the FM category. Stakeholders in this category can include building owners, occupants, maintenance staff, vendors, and regulatory bodies. When managing stakeholders, there are several factors to consider.

• Firstly, it is important to understand each stakeholder’s unique needs, expectations, and concerns. This involves engaging with stakeholders to gather feedback, identifying key issues, and developing strategies to address them.
• Secondly, clear communication is essential for effective stakeholder management. Communication should be tailored to the needs and preferences of each stakeholder, and it should be timely, transparent, and accurate. This can help build trust and maintain positive relationships with stakeholders.
• Thirdly, stakeholder engagement should be an ongoing process that is integrated into procurement activities. This involves creating opportunities for stakeholders to provide feedback, sharing progress updates, and involving stakeholders in decision-making processes.
• Finally, it is important to consider stakeholder management throughout the procurement lifecycle. This includes pre-procurement activities such as market research and requirements gathering, as well as post-procurement activities such as contract management and performance monitoring.

Overall, effective stakeholder management in the FM category requires a proactive and collaborative approach that prioritizes communication, engagement, and relationship-building with all stakeholders involved in the procurement process.

Conduct a Spend Analysis

When conducting a spend analysis in the procurement category of Facility Management, there are several factors to consider.

• Firstly, it is essential to gather complete and accurate spending data from various sources, including purchase orders, invoices, and contracts. This data should be consolidated and categorized to provide an accurate and comprehensive view of spending across all sub-categories of Facility Management.
• Secondly, it is important to identify the key suppliers and their performance in terms of quality, pricing, delivery, and service. This analysis can help identify areas where consolidation or optimization of supplier relationships can result in cost savings or other benefits.
• Thirdly, the analysis should look for opportunities to streamline processes, eliminate redundancies, and improve efficiency. This could involve consolidating contracts, standardizing specifications, or implementing technology solutions.
• Finally, the analysis should identify any risks associated with the category and develop strategies to mitigate these risks. For example, identifying single-source suppliers or critical components that are subject to supply chain disruptions.

Overall, conducting a comprehensive spend analysis in the procurement category of Facility Management requires a deep understanding of the category and a data-driven approach to identifying opportunities for cost savings and process improvement. Learn more in EFFSO’s course about Spend analyses

Identify key suppliers

Here are ten well-known suppliers in the European FM market (from 2021) as examples:

• ISS World: A Danish company providing facility management services globally, including cleaning, security, catering, and technical services.
• CBRE Group: An American commercial real estate company providing facility management services globally.
• Sodexo: A French company providing facility management services globally, including catering, cleaning, and technical services.
• Compass Group: A British company providing catering and support services globally, including facility management.
• Vinci Facilities: A French construction and facilities management company providing services globally, including technical services, maintenance, and cleaning.
• Veolia: A French company providing environmental services and facility management services globally, including waste management, energy management, and technical services.
• JLL (Jones Lang LaSalle): An American commercial real estate company providing facility management services globally.
• Bilfinger: A German engineering and facility management company providing services globally, including technical services and building management.
• G4S: A British security and facilities management company providing services globally, including security, cleaning, and support services.
• OCS Group: A British company providing facility management services globally, including cleaning, security, and technical services.

Examples of Sourcing strategies

Here are examples of relevant sourcing strategies that can be applied in the area of Procurement category Facility Management:

• Consolidation: This strategy involves consolidating the number of suppliers providing facility management services to achieve cost savings and improve supplier performance. By reducing the number of suppliers, it becomes easier to manage supplier relationships and monitor performance.
• Outsourcing: Outsourcing is a strategy where a company engages a third-party service provider to manage all or part of its facility management activities. This strategy can help reduce costs and improve efficiency by leveraging the expertise of specialized service providers.
• Co-sourcing: Co-sourcing is a hybrid approach that involves working with a mix of internal and external resources to manage facility management activities. This strategy can be useful when a company wants to retain some control over facility management activities while also benefiting from the expertise of external service providers.
• Strategic partnerships: This strategy involves building long-term relationships with strategic suppliers to achieve cost savings, improve quality, and enhance innovation. By working closely with suppliers, companies can achieve better outcomes and gain a competitive advantage.

Above strategies assume a complex multi-service delivery with significant effort to change supplier. But smaller organization can benefit from sourcing service by service and use a more competitive oriented sourcing strategy (moving to the left side of Kraljic’s Matrix).

Contracting supplier and defining services.

In a Category strategy Facility Management defining the services is a key exercise. See blogposts about SLA and Service Description (ADD LINK) for inspiration on supplier can be contracted and services can be defined.

Establish Performance Metrics:

Key Performance Indicators (KPIs) are important metrics used to measure the performance of Facility Management delivery. KPIs can help facility managers monitor performance, identify areas for improvement, and make data-driven decisions. There are several KPIs that are commonly used in Facility Management delivery, including following examples:

• Maintenance Cost per Square Meter: This KPI measures the cost of maintenance per square meter of facility space. It can help identify cost-saving opportunities and track changes in maintenance costs over time.
• Facility Availability: This KPI measures the percentage of time that a facility is available for use. It can help identify areas where facility downtime is impacting business operations.
• Energy Consumption: This KPI measures the amount of energy consumed by a facility. It can help identify areas where energy-saving measures can be implemented to reduce costs and improve sustainability.
• Response Time: This KPI measures the time it takes to respond to facility-related issues. It can help identify areas where response times are slow and take steps to improve efficiency.
• Customer Satisfaction: This KPI measures the satisfaction of facility users with the quality of services provided. It can help identify areas where customer service can be improved and ensure that the facility is meeting the needs of its users.

Overall, KPIs are a valuable tool in Facility Management delivery as they can help monitor performance, identify areas for improvement, and drive continuous improvement in facility operations as a core ingredient in your Category strategy Facility Management.

Best Practices for Facility Management Procurement Category Strategy

• Engage Key Stakeholders: Engaging key stakeholders within the organization can help ensure that the procurement category strategy is aligned with the organization’s overall objectives. This can include engaging with facility managers, finance, and legal departments.
• Establish Strong Supplier Relationships: Building strong relationships with suppliers is critical to ensuring high-quality service delivery and optimizing costs within the category. This can include regular communication with suppliers, establishing clear service level agreements, and conducting regular performance evaluations.
• Continuously Monitor and Improve: Continuous monitoring and improvement of the procurement category strategy is critical to ensure that it remains relevant and effective. This includes regularly reviewing supplier performance metrics, identifying areas for improvement, and adjusting the strategy as needed.

Procurement consultants that support developing your category strategy (examples)

Examples of procurement consultants and companies with category management in their service portfolio:

North America:

Accenture: A global professional services company that offers procurement consulting and category management services. They help clients in multiple industries, including automotive, retail, and consumer goods, to optimize their procurement process and manage categories such as IT, marketing, and logistics.

GEP: A leading global procurement services firm providing procurement consulting, category management, and other procurement solutions. They cater to various industries and manage categories such as direct materials, indirect materials, and professional services.

Europe:

Efficio: A European-based procurement consultancy that offers end-to-end procurement services, including Category strategy Facility Management. They serve various industries, such as manufacturing, retail, and financial services, and manage categories like raw materials, packaging, and professional services.

Proxima: A UK-based procurement services provider that offers category management as part of its portfolio. They cater to various industries, including healthcare, financial services, and retail, managing categories such as marketing, IT, and facilities management.

Asia:

Infosys: An Indian multinational corporation that offers procurement consulting services, including category management. They cater to various industries, such as telecommunications, retail, and manufacturing, and manage categories like IT, logistics, and professional services.

Chain IQ: A global procurement services provider with a presence in Asia that offers category management as part of its portfolio. They serve various industries, including financial services, pharmaceuticals, and automotive, and manage categories such as direct materials, indirect materials, and professional services.

Conclusion Category strategy Facility Management

Developing a procurement Category Strategy Facility Management can help organizations optimize costs, improve service delivery, and mitigate risk. By following these key considerations and best practices, organizations can develop a comprehensive strategy that is aligned with the organization’s objectives and enables effective supplier management.

About Learn How to Source

Learn How to Source (LHTS) is an online platform based in Sweden, offering a range of procurement courses accessible globally. It serves as a community where procurement experts share their knowledge through online courses, designed for various experience levels from introductory to expert. Courses are concise, about 30 minutes each, and cover different aspects of procurement, tailored for different buyer roles. The courses focus on practical knowledge, presented by seasoned professionals, and include quizzes and certificates. They can be accessed from any device, emphasizing microlearning for flexibility and efficiency. More about LHTS in Swedish.

Note. Illustration created with Chat-GPT on Jan 12, 2024.