It could take as many as 25 different suppliers to keep an office building running smoothly. With the recent meltdown in stock prices, corporations have more important matters to worry about than thermostats, trash baskets or trimmed turf.
FBG Service Corporation provides one-stop shopping for facility management. Serving as an outsourcer’s outsourcer, the Omaha, Nebraska company screens, then selects suppliers for its corporate clients. The goal is to provide better services at a lower cost with as little hassle as possible.
One FBG client owned many office buildings and had a different cleaning service in each one. FBG consolidated the activity, saving the company both time and money.
Clients receive one monthly statement that clearly delineates the management fee and the sums going to each contractor. Customers like this system because they only have to produce one check for everything from snow removal to air conditioning repairs. But FBG studies those numbers carefully, too. If it has two buildings with the same square footage but discovers pest services for one costs three times the amount of the other, “we’d have to find out why,” says Mike Lusey, vice president of marketing for FBG.
Answers to those questions allow FBG to control costs and earn the moniker “the value leader in facility management.” A gas and electric utility company came to FBG for help in managing its 2,000 locations in four states. After studying the local markets, the supplier agreed to a contract fee that was a 20 percent reduction from the utility’s current costs with a three year phase-in.
Generating Savings Through Careful Screening
Lusey says the outsourcer was able to achieve these savings through better screening of the subcontractors who would be doing the work in the utility’s buildings. The company can achieve lower prices for its customers by ferreting out high quality contractors who may be mowing eight corporate campuses and offer to add another 20 if the contractor will give FBG a price break.
FBG is able to maintain its quality level because it has published detailed metrics for the performance of each category of contractor. Lusey says customers today will not tolerate shoddy service. “The quality movement has made us a nation of grumpies,” he says. It is a registered ISO 9002 contractor, a designation that assures quality delivery.
If a client is unhappy with an FBG contractor, the client calls the outsourcer’s toll free number. As soon as the client calls in, the computer system populates the screen so the operator knows exactly what services are part of the contract and which require additional payment. The operator then contacts the subcontractor to solve the problem.
Metrics Monitor Complaints
The outsourcer then monitors the turnaround time. During the course of a month it collects:
- The number of complaint calls.
- The type of complaint in the call.
- The response time to the call.
- The time needed to fix the problem to the customer’s satisfaction and close out the complaint.
Each subcontractor receives a monthly report that includes a chart with this data so the contractor can visually see his or her performance statistics. Both parties can see at a glance if they need to address a problem.
Whenever FBG is on the lookout for new subcontractors, it determines the appropriate price it is willing to pay for the quality it demands. Then it interviews any supplier who can work within that price point.
FBG trains each new subcontractor in the ways it expects business to be conducted. Then its subcontractors recruit and train their own staffs. FBG’s system often helps the subcontractors improve their operations.
A Stable Stable of Contractors
Currently, FBG has 750 suppliers on its roster. The company’s turnover averages less than one percent. Whenever the outsourcer takes over a building, it tries to work with the original suppliers. If they don’t measure up, they’re out. “As soon as we establish our supplier base, it becomes very stable,” says Lusey.
The company searches for contractors nationwide. It lays the groundwork in advance, so it will be ready to go whenever it gets a contract in a new area. Forming these kinds of alliances also has a strategic value. Lusey says potential suppliers are good sources of marketing leads.
The company began its existence as a janitorial company in 1955. It became a full service contractor in 1978. The next step into outsourcing came in 1989, when a major transportation company asked the firm to provide all facility services at a major communications and dispatching center. Currently the company services 3,000 facilities in 12 states.
Lusey says consolidating facilities management outsourcing is becoming more commonplace as companies downsize. Facilities management people are typically included in the job cutting, so there’s no one left on staff to manage the building.
Once a company outsources, it rarely takes these activities back in house. “If we do our job right, our outsourcing relationship can last forever,” says Lusey.
Lessons from the Outsourcing Primer:
- Outsourcing all facilities management to one contractor saves customers both time and money since they only have to deal with one corporate entity.
- Carefully defined metrics help subcontractors remain focused on their job descriptions.
- Metric statistics help suppliers determine their costs.
- Potential contractors are a good source of marketing leads in new territories.