Facility
Management
Landscape
Facility management has changed significantly since the early 1990s, when most facility work was decentralized. Store or district managers made service provider selections and managed repair decisions. Corporate headquarters usually played only a small part in facilities issues at the level of individual stores.
By the mid-1990s, centralization became more common. As management of activities like procurement and new store
construction moved to the corporate level, centralization also found its way to facility management. Corporate facility maintenance departments began to grow, adding head count to manage the needs of multiple locations while off-loading tasks from on site managers. National maintenance organizations (NMOs) emerged in response to centralization. These were companies that managed groups of maintenance subcontractors
operating under a shared umbrella. Often referred to as brokers, these organizations managed their own select service provider base, promising retailers greater service consistency and the ability to manage one aggregated supplier rather than hundreds of facilities contractors. By the late 1990s, web-based management solutions, known as computerized maintenance
Fa
ci
lit
y M
an
ag
em
en
t L
an
ds
cap
e
management systems (CMMS), began to appear. The promise of a CMMS was the connection of all interested parties, including the store manager, facility manager and service providers. Unfortunately, service providers often did not have computers and many major retailers lacked Internet connections, leading to system inefficiencies. It was not until about 2002 that the proliferation of affordable broadband Internet connections led to widespread application of effective CMMS systems. The facility management industry—including both internal corporate teams and specialized firms providing outsourcedservices—embraced portals, email and other technology to improve communications and accountability. Centralization and outsourcing of facility maintenance also expanded in response to the Great Recession of 2007-9. As the economy slowed, retail was hit harder than most industries as consumers cut back on non-essential spending. A building boom earlier in the decade had left markets oversaturated with locations, so new store construction slowed or stopped. As maintenance budgets were cut, facility managers were left with fewer resources to manage an aging fleet of locations.
“The proliferation of
affordable broadband
Internet connections
led to widespread
application of effective
CMMS systems.”
Challenges Faced
By Large Retailers »
Today, large retailers face several challenges when it comes to maintaining well-functioning, on-brand store facilities. Budgets and staff are leaner than ever; brand visions evolve faster, even as
corporate pressure for consistency grows; and maintaining control over the whereabouts and performance standards of an ever-growing
number of service providers can get downright daunting.
Budgeting and Forecasting
As the retailer grows and locations become more geographically
dispersed, it becomes more difficult for facility managers to forecast and budget for episodic maintenance, preventative maintenance, utilities, and capital expenditures.
Ensuring Brand
Consistency
As the store fleet expands and ages, retailers must work harder to maintain consistency in brand standards across all locations. With each new store that is built, visual design and brand vision evolve, creating special challenges in maintaining consistency in brand vision and store function. Furthermore, variable factors like
overall store condition (e.g. paint, carpet, walls, windows, lighting), fixture quality and climate all play roles in dictating facility maintenance requirements for each unique location. Ensuring a consistent customer experience across a widely dispersed, constantly evolving fleet is a difficult task for large retailers.
Coordinating Service Providers
Efficiently identifying, evaluating and coordinating service providers across all locations becomes exponentially more difficult as the store fleet spreads. Without centralized data and information, retailers may struggle to control providers’ costs and performance.
Doing More with Less
When the economy slows, store operations are often scaled back. While the retailer may stop building additional stores, facility managers are expected to maintain the aging fleet at the same level of quality and brand consistency, but with fewer people and budgetary resources at hand.
Current Options in Facility Management Models »
The various approaches to facility management available today each present a variety of pros and cons, all of which should be considered when determining which solution will be the right one for a given retailer.
Software Only
This is an internal solution in which the retailer purchases computerized maintenance management system (CMMS) software and implements it with its own staff and resources, usually a corporate team with a centralized call center. This solution is generally used in conjunction with some form of a Broker/National Maintenance Organization model to manage service providers.
Pros – Low up-front costs. Allows for greater control over service provider selection and management.
Cons – Requires a relatively large facility team and a call center. Must screen and manage own service providers. Long-term savings can be difficult to achieve. Analytics often difficult to get to, and given internal staff is fighting daily fires, often not used strategically when available.
Brokers/National Maintenance Organizations
The traditional consolidator model: each broker maintains a network of service providers, often specialized by region or trade.
The broker manages its own service providers and charges a commission or mark-up for each service call. Larger brokers that operate across the country may also be referred to as national maintenance organizations. These brokers are often managed via a CMMS software solution via a CMMS software solution, or offer their own software solution.
Pros – Convenience - retailer only needs to manage a single or small number of brokers. Can cover most trades in most locations.
Cons – Limited value add outside of convenience. Service providers are selected and paid by the broker, and these brokers often build their networks ‘on the fly,’ and do not have pre-negotiated rates nor clearly defined service level expectations. Brokers, paid per service call, have an incentive to overspend, and a lack of transparency can make it difficult to reign in costs.
Full Outsource Model
Essentially larger, more comprehensive brokers that can cover all regions and trades. Often operate on a “buy the budget” pricing model, in which they are paid based on their ability to lower costs.
Pros – A fixed-budget solution that can ease cost pressures. Allows the retailer to maintain a minimal internal facility maintenance staff.
Cons – Service providers are selected strictly based on the least expensive option, without a balanced approach inclusive of quality, service history, and proper documentation. Pricing structure often gives the outsourcer an incentive to under spend in order to cut costs, which can result in diminished
Real Estate Providers
Large real estate services companies, usually with significant corporate holdings, that offer some facility management services.
Pros – Depending on locations and services required, may align with broader real estate outsourcing initiatives. Cons – Not specialists in facility management or retail, so may lack the competency of more focused providers.
Integrated Facility
Management (IFM)
A hybrid model that integrates existing internal facility
management systems with an outsourced facility support center, service provider network, and data management and analytics. Pricing model varies based on client requirements.
Pros – A flexible solution with a track record of delivering savings through economies of scale and technology-driven efficiencies. Retaining an internal team allows for greater control of brand vision, and analytic metrics enable strategic planning. High level of transparency keeps retailers and service providers on the same page. Pricing models include fixed fee for a set trade scope of work, pre-negotiated hourly rates by trade and state.
Vendor strategies include: Client supplies vendors, IFM provider supplies vendors, hybrid.
Facilities management is sometimes bundled with small capital project management for cost efficiencies. The same supplier base providing facilities services can provide services for small capital projects, such as store refresh, brand programs, etc. Cons – Retailer must relinquish some control in vendor selection and management. May require significant changes to current maintenance processes and service provider procurement strategies.
Account Manager Business Analyst Customer Service Service Coordinators Trade Specialists Representatives Invoice Coordinators
responsible for day-to-day executive management data analytics, SLA, trend reporting & scorecards
24/7 live support of stores & service providers review, dispatch and follow up on work orders
work order, quote, invoice technical review process costs, perform invoice validation checklist
IFM MODEL
An IFM provider deploys a team to act as an extension of a retailer’s internal facilities management team. A sample of such a support team is illustrated below.
Facility Management: Available Business
Model Summary & High Level Market Analysis
CMMS Software
Providers Brokers CompleteOutsourcers End-to-End Real Estate
Service Provider
Integrated Facility Management Services
Provided
CMMS Software Trade services Call Center Invoice Payment CMMS (sometimes) CMMS Trade Services Service provider Management Invoice Payment Reporting Asset Services Brokerage Project Management Transaction Management Valuation Services CMMS Support Center Service provider Management Invoice Payment Reporting Trade Service Provider Approach No service provider base No responsibility for work order management/service provider management
Has a well developed service provider base May self-perform in some areas
May or may not have a service provider base of their own, typically subs out most of the work Service provider selection is dictated
Some have techs in trucks
Subs out where they don’t have coverage
Has a service provider network Pre-negotiated hourly rates based on volume pricing. Service calls bundled across multiple clients.
Pricing Model
Pricing model is flat fee per location or priced as traditional software license
Pricing model is a % of invoice & discount sub contractor invoice
Pricing model varies “Buy the budget” model
Earn fees from service provider invoices
Varies by service Transaction based Management fees Tech services billed per hour
Fixed rates for scheduled services as well as reactive hourly rates. Flexible commercial model based on client requirements.
Strengths Great solution for
companies with limited budgets and large facility teams
Well developed service provider base Can cover most trades in most locations
Eases cost pressures /fixed budget Allows companies to operate with minimal staff
Good for companies looking to outsource entire real estate department
Track record delivering savings Provides transparency between management and service providers Strong experience with integration to existing systems Service providers like this approach
Coordinated Crisis Response
Large-scale crises that impact many store locations simultaneously, such as hurricanes or blizzards, present a major challenge for any facility maintenance department. If a cold snap bursts pipes at a dozen locations at once, for example, fixing up each store in piecemeal fashion could be a slow and expensive process. IFM providers with large service provider networks are well-positioned to respond to widespread store damage, coordinating service provider movement to efficiently serve multiple clients and get more stores operational in less time.
Integrated Facility Management Solutions
Brought To Life »
Recently, a major US grocery store chain made the switch to IFM, and their experience provides a good example of the power of truly integrated
the northeastern United States, and its supermarket business model comes with complicated and demanding facility maintenance
challenges.
A large grocery store can have over 1,000 facilities assets that need regular service—from scales, to sliding doors, to cash registers—and depends on extremely reliable performance from
sophisticated refrigeration systems to keep much of its inventory fresh and salable. All this makes for a maintenance-intensive environment, with the chain averaging 80-90,000 service calls each year.
At first the company dealt with this demand internally, using CMMS and its own centralized call center. This system was generally
successful in maintaining day-to-day store operations, but was relatively expensive, as it required a large
internal staff. It was also ill-equipped to manage complex crisis situations, and management spent too much time putting out fires
instead of looking ahead and driving efficiencies. As the chain expanded, the need for a more specialized facility maintenance
provider became clear. Thus, the company hired
a large NMO (national maintenance organization) that promised to meet all their facilities needs, handling service calls and managing the service providers.
Unfortunately, the NMO proved to be an inflexible partner, and its one-size-fits-all approach was not up to the specialized maintenance demands of a major supermarket chain. Finally the grocery chain decided to try IFM, and found a system that worked. The IFM provider managed service calls and service providers, but proved to be a much more accessible, flexible partner than the NMO.
IFM specialists coordinated closely with the grocery company’s existing maintenance staff to learn the ins and outs
of supermarket facility management. With the benefit of this expertise, the IFM provider was able to deliver more consistent store conditions while giving the grocery company greater control over its maintenance spend. As the IFM provider managed the heavy lifting of day-to-day operations and gathered and analyzed data, the internal maintenance staff had the time and resources to act on the data in a timely manner; for example, the grocery company is developing a unique algorithm to optimize management of its large-scale refrigerator systems. A few months into their collaboration, the grocery company has already realized a 5% reduction in its total maintenance spend, while a new initiative in preventative maintenance has raised the aesthetic and operational
level of the entire fleet of stores.
Spotlight on IFM:
The Future of Facility Management »
Facility management providers aiming to reduce costs and improve outcomes for their clients have increasingly turned to new technologies and business techniques. The IFM model has been on the forefront of these changes, embracing new ideas in an effort to deliver efficient, smart, high-quality results.
Service Provider Optimization and GPS Tracking
Firms providing IFM leverage technology and data to minimize downtime and ensure the right service provider is in the right place at the right time and doing the right work. IFM companies can supply service providers with smartphones or tablets to make their work more efficient; these devices not only facilitate more direct contact, they can be used to transmit video training and instructions to fill skill gaps and ensure consistency of service. They are also experimenting with advanced GPS technology, which makes it possible for every stakeholder to know exactly where a service provider is at any given moment. This both simplifies the
check-About the Author
Bill Hayden has guided a wide array of organizations through rapid growth cycles, including both technology-rich start-ups and established companies venturing into technology-based solutions as an additional service line. Beginning with the dot-com community of New York City in the late nineties, Bill leveraged his strong background in technology-based digital asset
management to assist facility maintenance organizations in enhancing service
delivery through technology. [Optional: He is currently CEO of FacilitySource]
About FacilitySource
FacilitySource is a leading life cycle facility management provider that specializes in helping multi-unit retailers control their financial investment in facility management while improving overall operations.
Its Integrated Facility Management (IFM) solution provides a holistic approach to facility management by outsourcing all critical functions, including service calls, service provider management and invoicing, while empowering facility managers with powerful analytical tools to help improve overall operations. IFM offers large retailers a reliable, high-quality alternative to in-house solutions and traditional broker models for facility maintenance.
FacilitySource’s holistic approach was created by former facility and operations executives. IFM has helped retailers reduce their annual facilities
costs by up to 20 percent, reduce corporate risk, and streamline the entire maintenance process.
Conclusion
Today, large retailers have a wide variety of solutions available to maintain consistent high-quality customer experiences and well-executed brand visions, all while keeping costs within budget. Choosing the right solution for a particular large retailer comes down to weighing the pros and cons of each solution and deciding which will be most likely to satisfy all parties involved while accomplishing the company’s overall goals. The Integrated Facility
Management (IFM) model offers many advantages for the large retailer, and should receive serious consideration.
