7 April 2014 | Michael Owen
There is growing recognition that outsourcing can deliver much more than just a lower-cost model, and it can create opportunities to harness added value through redefining the procurement approach.
In particular, there is an evident shift towards developing effective partnerships and transparency during the procurement process to achieve better outcomes for all.
Recent research conducted by Interserve, in partnership with Sheffield Hallam University and i-FM, has shown communication and working together are the most important factors in outsourcing. So how can we make the procurement process more successful?
1. Clearly defined reasons for change. The first challenge is to define clearly why a business is undertaking an outsourcing process. It may seem like a logical and pragmatic step but businesses need to be absolutely clear as to what they want to achieve from the procurement process and the specific challenges they face in their provision. If a key issue is to decrease spending then why not say it?
2. Keep it simple. Often documents can become overly complicated and discourage suppliers; they need to know and understand exactly what services they are expected to offer, on what grounds and for what reasons. Making it easier and clearer for suppliers to tender will not only make the process easier for you, the client, it will enable providers to use their time and resources to create a solution that adds value and enhances services.
3. Relationships matter. One vital question that needs to be asked is ‘what type of relationship do you want to foster with your supplier?’ This is a challenging thought, but one that requires attention.
Partnership structures are well developed in larger outsourcing models. But as the length of a contract reduces it can impact on the type of relationship that is developed between the client and supplier.
This does not need to be the case, and suppliers should be able to explain the practicalities of forming a partnership relationship and the benefits it will deliver, irrespective of the value of the contract.
A partnership model should not mean creating lots of reports or governance arrangements. It should be about defining a clear supporting framework within which the services operate, with alignment of the overarching objectives, goals and targets.
As a supplier it is critical to have an idea of the client-side operational structure, so an appropriate contract governance model can be designed. The market tends to be veering increasingly towards the creation of lean, internal management teams, required to pass on responsibility for tactical and operational delivery to the supplier.
This approach may be a reflection of the growing maturity of the contracting organisations in delivering facilities services, but it does need to be considered carefully by each organisation when assessing its appetite to relinquish day-to-day control of service delivery.
The challenge now for businesses and suppliers alike is to raise the bar to achieve better procurement outcomes in facilities management. Through a clear understanding of one another’s brand value, corporate culture, business targets and expectations, the right people can deliver the right solution facilitated by a flexible and engaging process.
☛ Michael Owen is business development projects director at Interserve. His full whitepaper on this topic, Putting the relationship first, is available here.