Facilities management (FM) has always been somewhat of an afterthought for manufacturers. And yet, while FM activities – which range from cleaning, catering and pest control to maintenance and IT management – are effectively non-core, they are no less essential to the successful business model.
Some manufacturers manage FM tasks internally with varying degrees of success. But what of outsourcing? Is this a viable alternative that can both ease the burden of FM and, at the same time, save money? It appears so, at least according to Phillip Spencer, sales and business development director at Voith Industrial Service, a specialist in FM provision to the automotive sector.
"Of course, manufacturers can save money by outsourcing FM, although they need to be honest with themselves on how much they are spending by managing FM in-house," he says. "It's not as straightforward as simply comparing labour costs as there's a great deal of management time and resource devoted to an in-house operation, which is not always considered or costed."
Voith, which typically offers frame-type contracts over a fixed term varying between three and eight years, says manufacturers looking to outsource FM should look at the length of relationships suppliers hold with their customers.
"There are many service providers who are only interested in the 'quick win' scenario," says Spencer, "whereas the Voith customer portfolio shows relationships with key customers spanning up to 50 years. We achieve longevity by benchmarking best practices that will provide efficiency gains, and by meeting continuous improvement targets."
He adds: "Our facility managers are encouraged to build strong relationships with client stakeholders through regular meetings, where performance is discussed and reviewed. We tailor a set of individual KPIs to suit each customer's specific requirements and these form the cornerstone of our meetings."
Voith, which says it has achieved world class standards in lost time accidents measured in number of incidents per million hours worked, is enjoying noted success in its core automotive market. As well as recent contract wins for Vauxhall Motors at Luton and various Jaguar Land Rover (JLR) vehicle production facilities, the company has also secured a major FM contract for JLR's new engine manufacturing centre in Wolverhampton.
The work, which will involve about 50 jobs, comprises cleaning, waste management, grounds maintenance, landscaping and winter services. It also includes the maintenance of all facility equipment such as boilers, heating and ventilation systems, and water treatment, as well as the disposal of items such as metal scrap and swarf to the factory gate.
Mitie is another FM supplier with a good track record in the automotive sector. At Vauxhall's Ellesmere Port plant, for example, the company reports savings of around £300,000 per annum. Other notable Mitie FM customers include Novartis Pharmaceuticals, BAE Systems, Kellogg's and Procter and Gamble.
In terms of FM, the company will address any factory requirement up to the point of connection with the machine, and says it can reduce costs by around 20% against in-house efforts.
Non-core activities get neglected
"For manufacturers looking to outsource for the first time, we often find that FM activities such as cleaning and maintenance, which are non-core activities, get neglected and become fixed, repeat costs," explains Phil Holland, the managing director of Mitie's Integrated Facilities Management business.
"We review the specifications and typically discover that we can reduce costs significantly. Furthermore, we supply our customers with regular cost information. For instance, if production expands, will FM costs also increase? Mitie is able to provide cost per unit of output, so the customer can make better informed decisions."
FM contracts from Mitie, which can be fixed or variable price, are typically either input- or output-based. The former might specify how many people are required, for example, while the latter will be linked to an agreed output specification. Here, six or seven KPIs are likely to include uptime (the availability of the manufacturing area – is it clean and safe?), PPM (delivered in the agreed timelines) and standards of cleaning.
"It's all about trust between the FM supplier and the manufacturer – both working together in the right way," says Holland. "Is there sufficient trust to allow the FM supplier to do their job in the most efficient way to meet the agreed outcomes, or will the manufacturer be dictating the tasks, with FM staff waiting around to be told what to do? If the latter, the customer won't get the benefit of the FM supplier's knowledge and experience.
"For any manufacturers concerned about losing control – don't be," he continues. "Outsourcing FM is not an unknown world – take confidence in the fact that it's a proven solution."
Holland states that, for first time outsourcers, the advice is not simply to approach the 20 biggest FM suppliers in the country for a quote.
"You'll disappear under a mountain of analysis," he says. "Instead, perhaps look at who your competitors use to identify four or five close-fit FM suppliers. Also, stick to your guns about what's required, and pick the right KPIs that will help achieve the desired results, i.e. measure what's important to you."
This sentiment is shared by Steven Moore, FM operations director at Servest, who says that reputable suppliers should continually develop and improve service delivery by reviewing it against measurable service level agreements.
"We offer accountability by tracking service delivery performance," he says. "Furthermore, we have total cost transparency. Ultimately, when outsourcing FM, spend is combined and service delivery is optimised, which can generate substantial savings for the customer. Management is also consolidated and there are efficiencies and synergies between the various service lines, which again saves time and money. In addition, with a dedicated team on site you have lots of flexibility, so the need to parachute in additional labour is reduced."
To secure the best deal, Moore says that manufacturers should start by having a clear idea of what they want from a contractor and where their current concerns lie.
Find a contractor you can trust
"Then find a contractor who you trust to do what they promise. It's not only about price, it's about how factory managers can work with the supplier and their senior management teams. Being clear and transparent is key, and if the client particularly wants budgets to form part of the KPIs, then that can be incorporated in the periodic review without a problem."
Many manufacturers combat FM in a progressive manner, perhaps beginning with cleaning, and slowly adding more tasks to the job list. However, according to Jane Sheard, CEO facilities services UK at OCS, an in-house FM service risks becoming isolated.
"A proven FM supplier can challenge the way things are done, delivering a quality service with a focus on measurement, reporting and driving efficiencies," she says. "FM contractors are able to maximise price leverage for procuring equipment and services, and increase operational flexibility, through rationalising staffing, to match business needs."
Providing an efficient and effective FM service within budget can be a complex business. However, it appears that the more services which can be brought together under a streamlined management structure through TFM (total facilities management), the greater the cost benefits.
"This is true, but the trend is for clients who require a range of services to look for added value through innovation and technical expertise rather than cost efficiencies," says Sheard. "Clients who have taken a step towards TFM are also seeing a number of non-cost benefits, including the flexibility to adapt to unforeseen circumstances, robust disaster recovery planning and improved accountability through the tracking of service delivery performance."
OCS recommends that manufacturers seek out an FM provider with the ability to self-deliver as many services as possible as this will allow them to be flexible and scalable, adapting the shape of the supplier to match organisational changes and demands.
"When looking to outsource FM, it's vital to get under the skin of the contractor and establish a transparent, realistic and interactive dialogue as early as possible," Sheard says. "Exploring and shaping ideas can form a solid foundation for the contract and generate sustainable outcomes, rather than simply providing a quick fix."
Energy myths and tips
There is no shortage of facts and figures to illustrate the huge savings businesses can generate by becoming energy efficient. But can works managers tasked with outsourcing FM services reasonably expect sustainability goals to be achieved, or significantly advanced, via this route?
To help shed some light on matters, Jason Plent, managing director at energy and sustainability specialist, Minimise Solutions, offers up some energy efficiency myths that manufacturers think will work, but don't.
"First, don't leave lighting or electrical equipment on when not in use, thinking it's more efficient – it's not," he says. "Secondly, do not set the thermostat at a higher or lower temperature than required, in the expectancy it will heat or cool the building faster, thus saving time and energy – it won't."
Instead, Plent says there are plenty of efficiencies that manufacturers do not commonly consider, but should. These include insulating the roofs, ceilings, walls and floors of buildings, replacing overloaded filters on AHUs, and reducing fan speed on AHUs down to 60% capacity.
"The idea here is to use the control provided by VSDs or inverters to only allow the fan motors in an AHU to operate at a maximum of 60% of their full operational load," he says. "In doing this, you effectively set a ceiling in operational load that the motor will not exceed. So if it was a 10kW motor, for example, it would never use more than 6kW at any time."