High-Tech Manufacturer Achieves 1st Generation FM Sourcing Success in North America
A leading global high-tech manufacturer needed to generate more value from its $100+ million facilities management spend in North America. The company was managing 600+ suppliers in supporting more than 30 million square feet of office space, R&D, technical facilities and manufacturing plants. Company leadership recognized the need to consolidate the supplier base and implement standards—a common objective for first-generation outsourcing programs. Further, it saw an opportunity to embrace best practices and proven tactics so that it could improve returns on its facilities management investment (FM) and evolve its FM operation along with current industry standards.
Outsourcing at this scale was unprecedented in company history, so the stakes were high for this very visible project. The company faced major cost pressures due to a downturn in its core markets and had launched an enterprise-wide transformation program focused on cost reduction. In seeking more leverage in facilities management, the company needed direction and guidance in devising an optimal go-to-market approach for the full outsourcing and supplier consolidation initiative.
The Trascent team was engaged to validate the go-to-market strategy and guide the full process, covering all steps from Request for Information (RFI) and Request for Proposal (RFP) development, to vendor evaluation and selection, to contract negotiation and transition support. The plan called for a single supplier to assume responsibility for all facilities management soft services and maintenance and engineering services for all non-manufacturing space in North America, including Costa Rica.
The key to success was an outcome-based statement of work (SOW), developed by Trascent. Critically, the SOW included key performance indicators (KPIs) aligned to the company’s overall business objectives, as well as specific requirements for facilities management. The SOW defined precisely how and where the supplier could add value above and beyond cost reductions and provided appropriate incentives for delivering that value across the five-year contract life. Along with detailed communication scripts developed by Trascent, the SOW provided the foundation for a collaborative negotiation process—a superior alternative to typically adversarial negotiations that are narrowly focused on cost.
In executing the agreement, company advisors worked as part of a diverse project team, including high-level stakeholders from the business and the company’s facilities management unit, as well as external consultants. During transition, Trascent used its proprietary tool for collecting and cataloguing key project data to validate site baseline data and financial projections. Ensuring the accuracy and completeness of this core data proved critical in ensuring a smooth transition, with no disruption to existing operations.
In moving from 600+ suppliers down to one integrated provider, the company not only recognized ongoing savings of greater than 15% on its overall spend; it also made major advances along the FM maturity curve, embracing best practices and standardized templates and tools that drive both efficiency and effectiveness in key facilities management processes and activities. Most importantly, it has established a productive, win-win relationship with its supplier—a partnership that remains in place today.
Due to the outstanding results, the company’s indirect sourcing team received an internal award recognizing their success in delivering such a critical initiative.
After the successful completion of the North American outsourcing effort, Trascent was commissioned to conduct a comprehensive, five-month supplier assessment and to lead the development of the go-to-market FM outsourcing strategy in Asia Pacific, Europe and the Middle East. The study focused on FM market maturity and supplier capabilities and identified operational efficiencies and project savings as the basis for the outsourcing business case in those regions.
Sourcing recognition, value-add supplier partnership & FM maturity gains. Due to the outstanding results, the company’s indirect sourcing team received an internal award recognizing their success in delivering such a critical initiative.