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Home » Special Report » SUPPLY CHAIN MANAGEMENT AS A CATALYST IN FM OUTSOURCING

SUPPLY CHAIN MANAGEMENT AS A CATALYST IN FM OUTSOURCING

Selecting the Manpower issues right partner

The challenge for Navin Upadhyay stems from getting the right service provider across the locations right from a single ATM machine which needs to be maintained and guarded to large complex office spaces. Some important considerations while selecting a FM service provider:

  • Will outsourcing a function dilute the sense of ownership which is there as of now
  • Will it give me the result which has been projected by the service provider?

He said, “The scope of engagement needs to considered such as, to outsource the entire department/ function or only part of it. Other factors include the FM service provider value addition in terms of audit and technology platforms and whether to go with a regional partner or a national player. All these form the basis for the vendor pre-qualification process, followed by site visits of the facilities managed by them and interaction with the on-ground team. Once the FM agency is on board, you have certain expectations and challenges to face.

Expectations:
  • Value for money: Will it lead to optimization in terms of manpower, consumption of materials or streamlining of process?
  • Benchmarking: As the FM service provider is providing services to multiple clients, expectation of benchmarking to understand the company’s performance in comparison to my peers.
  • Knowledge sharing: Introducing new technology or best practices which does not exist in the company to scale up the performance.

To retain manpower deployed by third party it is essential to take initiatives like offering various facilities and cash incentives. Earlier the churn out was almost 30% manpower every month, now almost 95% of manpower is retained.

Challenges:
  • Handover from sales team to operations team in terms of what has been promised and what needs to be delivered is something which can improve.
  • Maintaining the quality of manpower by ensuring that the right people are at right places. In past 10-15 years, with the increase in magnitude of demand, the quality of manpower has suffered., In case of FM, we do not look at any minimum qualification and simply go by experience so may be as an industry some certification mechanism can be worked out.
  • Cash flow management, which is payment to the third party contractor, doesn’t happen at times and there are situations wherein the agency is not able to pay contractor and they go on strike or move out.”

Ruediger-SchroederIn the procurement process, Indian clients are habitual of making last minute decisions and expecting the vendor to deliver a bulk order in an unrealistic time frame. The customers would want the job to start in five or seven days but their own internal procedures consume most of the time. As an equipment supplier my understanding is that the logistics supply chain is not understood well..

– Ruediger Schroeder

Understanding the supply chain logistics

The advantage of purchasing power that a FM service provider does not get passed on to the client. It is observed that the FM agency becomes more of a manpower supplier rather than one which, managing the services pro-actively.”

Having spent the last five years in India, Ruediger Schroeder felt that the country was still at a basic level in terms of new techniques, information technologies and so on. Elaborating on the same, he said, “In the procurement process, Indian clients are habitual of making last minute decisions and expecting the vendor to deliver a bulk order in an unrealistic time frame. The customers would want the job to start in five or seven days but their own internal procedures consume most of the time. As an equipment supplier my understanding is that the logistics supply chain is not understood well. Also, the after sales service is not given due importance here. In case of maintenance service, firstly, the client’s internal clearance process takes unrealistically long time, then if a company like us offers readily available spare parts and immediate servicing though at a premium, the same is considered expensive, not realizing the faulty machinery is also incurring them a loss. Globally, the decision maker is an operations guy who gives a go ahead on the cost approvals. We tried this model in India but the customers are unwilling to change their processes or pay high servicing cost. We and some other companies also came up with the model of renting equipment because then it’s our responsibility to make sure that the machines are working but cost factor became an issue with the clients. What consumers here have to understand is the company’s financial risk to make spare parts available in short time for quick servicing to save the consumer time, money and inconvenience. This attitude needs to change.”

Narayan agreed that the decision making had gradually moved away from the people who actually manage the operations to administrative, procurement and the CFO offices. He questioned the panel if clients were actually willing to pay more for a quality service and if life cycle cost is really considered during FM contracting.

Sethi pointed out that the one-year contracting is now evolving into long term contracts like three or five years. “As a service provider, if cost is the determining factor, then we prefer long term contracts, so that if we have a guarantee, we can actually make investments into the contract.”

Rawat said, “For the similar reasons, all our contracts are five years so the service providers can focus on the delivery. Alternatively, if the SLAs are not met, the termination clause is also incorporated. Regarding the maintenance aspects, we have taken a comprehensive AMC so that the OEM need not bother about the part, its repair, cost or approval, etc. thereby bringing down turnaround time to barest minimum.”

Today, the function of integrated facility management, both from a service provider and a client perspective goes far beyond the workplace.The FM companies are expected to not only maintain office spaces but also offer property management, township management and even municipal services management,” S. Narayan, Founder & President Integron, said moderating a session on supply chain during the IFM summit organized in January 2016.The services sometimes extend beyond a single building or services to cover entire complexes, varied services or are spread across multiple functions and locations. In such a situation procuring or even planning for the services has become…

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