Materials and Services: Indirect

Facilities and Real Estate

By Duncan Blatch, Craig McLaughlin
and Endre Støgård

Actions Procurement Professionals Should Take Now
Market Buzz and Trends to Watch

Actions Procurement Professionals Should Take Now

  • EMEA cleaning/janitorial supplies: Penetration of international service providers into European markets continues to face the obstacle of national supply preference by corporations based in EU member states. Market trends over the past eight years show the Cleaning Price Index lagging Consumer Price Index by nearly 10 points. Nevertheless in labor-oriented service lines like cleaning, strategic principles still apply to the “home” markets. Cost of janitorial supplies remains relatively static at the €3/m2 per annum. Introduction of functional or output specifications and becoming standardized across locations allows service levels to be compared, and opens up the possibility of consolidation. Increasingly buyers are seeking services from larger suppliers who offer quality assurance as well as labor and tax law compliance. Detailed examination of labor utilization based on a benchmark of 250/m2 per man-hour has allowed some suppliers to continuously improve the value of their offering in order to retain existing contracts. Bundling of cleaning and catering is the most popular first step in transitioning to a consolidated supply model, but fully Integrated FM is less developed both as a principle methodology and is less well serviced by the EMEA market than in the U.S. and United Kingdom. Savings can be constrained by the relative non-compressibility of labor cost transferring to supplier employment under the EU Business Transfer Directive. Nevertheless, up to 10 percent cost reduction is possible through competitive tender and a further 5 to 10 percent can be obtained through management synergy, including consolidation with other Facilities Services.

  • Evaluate frequency of armored car pick-ups: Even with the increased availability of cashless payment options, demand for armored car services is still holding fairly stable. In industries such as banking, financial services, restaurant and retail, armored car services is often a major expenditure. However, companies in the retail and restaurant industries rarely apply strategic sourcing measures to effectively manage the category. Prudent buyers should optimize their armored car program through key levers such as frequency of pick-ups and breadth of services utilized. An assessment of the weekly frequency of store pick-ups should be conducted by evaluating key factors such as average funds held and store locations. Moving from five to three weekly pickups can significantly reduce costs, while only exposing the company to a very slight risk increase. Additionally, utilizing the preferred armored car provider for an expanded range of services beyond pure cash-in-transit services can prove to be beneficial. The leading providers offer evolving cash logistics solutions to respond to new ways of transacting, and buyers can take advantage of new technology, smart safes being a common example, to help manage their program. It should be noted that even though the armored car market in the U.S. is highly concentrated, with the four market leaders accounting for approximately 80 percent of the market, it still remains competitive, yielding savings in the 6 to 12 percent range from sourcing initiatives.

Back to Top

Quality of Workplace Environments Gaining Importance

“Today, we regard the quality of work environments and work experiences as important forms of corporate social responsibility (CSR), benefiting employers and employees alike,” CoreNet Global’s Issues Advocacy Focus Group outlines in a wide-ranging statement based on extensive input from subject matter experts and the extensive, long-term documentation of best-in-class workplace management practices from more than 7,500 CoreNet Global members worldwide. Further, the position statement points out that the nature of work is “changing dramatically, transcending the traditional definitions of productivity to include the concepts of enabling work, employee engagement, employee satisfaction and employee wellness framed around an emerging ‘work-life support’ business model.” More than nine out of ten (93 percent) of senior-level CRE executives rate the quality of work environments and work experiences as the most urgent issue facing their companies, according to results of a CoreNet Global Industry Leaders Opinion Poll.

Accenture’s Take:
  • Evidence-based data and metrics will be developed around work environment efficiency and employee satisfaction and utilized in KPI and SLA performance measures for service providers to meet under performance-based fee agreements.
  • Quality of life characteristics will be included in occupied square foot metrics.
Benchmarking Facilities Management (FM) Services to Manage Cost

Prime office space occupancy costs across 126 global markets are profiled in DTZ’s 16th edition of the Global Occupancy Costs-Offices report released January 2013. Prime office global occupancy costs increased by an average 1 percent during 2012. The greatest cost savings from a change in total occupancy costs per workstation were in the United States (-6 percent), and growth was also weak in Central & South America (<1 percent). North Asia posted the highest increase in costs at 6 percent. Looking ahead to 2013 and 2014, DTZ is forecasting the five most affordable markets to be in India and China (Hyderabad; Qingdao; Pune; Chennai and Nanjing) and the five least affordable markets to be lead by London’s West End (Zurich; Tokyo; Geneva and Hong Kong round out the bottom five markets).

Accenture’s Take:
  • The sluggish labor market and weak corporate confidence has resulted in weak demand for space in the U.S. and has driven lower occupancy costs mainly due to the considerable reduction in space utilization, which fell by 11.8 percent during 2012. Service providers with fees based on square foot serviced will see continued pressure to lower costs.
  • Occupiers in least affordable markets will continue to seek secondary space over prime to reduce costs.

Article Tools


Print Download article
[PDF, 0.2MB]
Download the issue
[PDF, 850KB]

Bookmark and Share


Also in Supply Watch

MRO

E-commerce Increasing as a Differentiator
As investing in e-commerce becomes more recognized as a critical business strategy for MRO distributors to grow sales and earnings, those with the most user-friendly web-based and mobile applications will develop a competitive advantage in the long term. Despite this, many MRO players have a long way to go to effectively leverage this trend, according to a recent Modern Distribution Management survey.
Read more

Untitled Document

Subscribe

to the Supply Watch
Newsletter today

Keep up to date with all the
latest news and information
about Accenture’s
Procurement Services.

Join our mailing list

Newsflash

Outsourcing processes can add real business value..
Learn more

Latest Accenture Research

Subscribe to Supply Watch and get access to all Accenture’s latest research in the Sourcing and Procurement world. Read about: A new Paradigm in Supply Chain Outsourcing.

Why Accenture?

Find out how Accenture helps clients to increase control, reduce risk and achieve high performance by outsourcing procurement.
Learn more

Facilities and Real Estate - Accenture Supply Watch 
Facilities and Real Estate
Facilities and Real Estate, Accenture Supply Watch
Yes  Yes 
  No 
By using this site you agree that we can place cookies on your device. See our privacy policy for details.