RICS FM conference: the FM supply chain web

8 February 2012

An FM supply chain is less a chain and more an intricate network of supplier-client relationships that should deliver added value for the client.

According to Professor Michael Pitt in his presentation to the Strategic FM Conference at the Royal Institute of Chartered Surveyors' London headquarters, facilities managers are never buying products but services that are defined as good or bad according to their delivery, an often intangible attribute, at least at first.

“But service is the market differentiator of FM suppliers," said Pitt, professor of facility management innovation at University College of London.

“All hotels will provide you with a room key, but it’s how the hotel staff greets you and shows you to your room that counts. What happens is the client has an expectation of a level of service,” he told delegates.

Engaging a catering firm to supply meals is the solution, he said. How it is delivered will add value to your business.

For example, a caterer opening an on-site restaurant or coffee bar could make it so attractive to employees that they eat there and spend less time at lunch because they are not going outside to hunt for a place to eat.

While the service might add to the contract price, the value returned is through more hours at work and a possible productivity gain for the employer.

Pitt acknowledged that this value aspect of the FM supply chain is often overlooked by academics when they analyse supply chains, costs and relationships. “Academics tend to look at hard FM deliveries and measurable data, when FMs know value is more complex.”

This is why choosing FM suppliers on cost alone, as is sometimes does through e-auctions, can be dangerous, said Pitt.

“It’s not about cost but what s supplier can do for you which is above and beyond the basic service that adds the real value.”

From the supplier’s point of view, seeing a client buying on cost as the main factor sends the signal that is where the client deems value to be. Buying on cost can also indicate the client is in the relationship for the short term and not willing to invest in that relationship.

This will undermine a partnership and make it a simple, short-term convenience relationship from which little innovation results for either party, he warned.

“A real partnership means a long-term relationship,” he said. “If you don’t leave them some financial wriggle-room then you’ll stifle their innovation and a good supply chain is also about the generation of new ideas.”