How to test a consolidated program
By Kevin Smith
As the economy continues to reshape itself, all of us are finding the need to accomplish more with fewer resources. This is certainly the landscape for many of you on a day-to-day basis. The days of managing 300 vendors with a team of people simply donít exist for most of you. Those teams are gone, you often are the last person standing and consolidating your resources goes well beyond just the need for a single provided to help deliver resources.
But you are often faced with the same concern: What if that single-sourced solution you choose doesnít work? What will the impact be on a portfolio of hundreds or thousands of locations? Certainly, many of us have heard about similar award decisions that turned out to not deliver as expected, costing people jobs and sometimes companies their financial standing. So what are your options?
Consolidation is here to stay. So what we need to do is make better decisions on how we make our awards and one way to do that is by performing a qualified test to a supplier or suppliers.
So letís use an example of a mid-box retailer with 1,000 locations geographically dispersed across the country. They are looking to source out landscaping and have the ultimate goal of selecting two providers to split the territory. They are currently managed through a locally sourced solution. In year one, they have decided to test out five national suppliers with the hope of working that list down to two companies.
Unfortunately, we often see the test as a failure before it even starts based on the first decision the client makes. What is it? Often, it is based on the size of the test. Selecting 10 stores for each company to service for one year is not a test. It is just a roll of the dice. What do 10 stores represent? Does it test the companyís ability to perform services across a large geographic footprint? Absolutely not. Does it test the companyís ability to manage a large portfolio? Or measure its ability to build out an extensive communication tree? Definitely not.
A test should be reflective of what a vendor would face when delivering services but at just a somewhat smaller increment, but it should be proportional. Often, the true measure of a large scale program is the dedicated account structure of a vendor partner, something that canít be realized without a sizable piece of work.
Another mistake we often see when presented with a test? Geographical diversity. For example, using the same 1,000 sites as a test, a client gives us 100 locations in year one. A great start. But then they award us two states in New England. This is often done to limit the number of regions that have to participate in the test. But what will happen at the end of the test is you will find out if we are a successful provider in those two states. Not exactly an indicator of how we would perform in 30 states across the country. Maybe New England is our best market or where we have our best vendors. However, when trying to select a service partner to deliver a program across a national footprint, the only way to truly test them is to test them across your national footprint.
So letís quickly summarize some of these points. First, make sure the number of sites in your test is proportional to the size of your portfolio overall. Second, make sure the areas of the test are similar to your overall layout, giving you the chance to measure performance against how you would align your supplier in a consolidated award.
So now youíve worked out the number of sites and where those sites are located. Whatís next? I recommend starting with reporting. One of the values of a consolidated program is having a single point of contact, one resource to contact with questions or to request services. As a single point of contact, they should be providing you with significant visibility on what they are delivering. This is the time to customize your required reports, to see what data they collect and how they would present it to you. Specialized invoicing needs? This is the time to work through the requirements of a consolidated invoice. Make sure you lay the groundwork for what you will need when the other 80 percent of your portfolio is consolidated.
So how do you measure success at the end of a test? Certainly there are many ways to gauge it. Many people get caught up only in what it cost in those sites where you engaged a consolidated solution? However, there are numerous other items that will fall into your decision to move to a consolidated model, including the direct price points, the capabilities of the national provider and the buyoff from the field. Each of them has to be weighed against your existing process. The true cost of a program is not measured simply by the cost of that mowing service or the hourly rate to fix that leaky toilet, but the overall costs that will encompass every aspect of that program. The leading companies in every vertical market consolidate services for the same reasons they buy their products for resale in bulk Ö leverage. When laying out the pros and cons of moving to a consolidated solution, be sure to factor in every aspect of the program Ö as experience tells me that the scales will eventually tip in this direction.
Before wrapping up this article, I wanted to touch on one more topic related to performing a test and that is the level of engagement by your company through this process. It is often misunderstood that when a program is consolidated, there is nothing the client needs to do to make the program successful but to sit back and let their vendors do their job. However, in over 10 years of doing this, I can assure you that the most successful programs I have been engaged with our ones where the client fully engages the solution, participating at the highest levels as they work towards an overall solution that meets the needs of every stakeholder. This means significant communication from the stores all the way up to the senior most people on the program. Meetings, conference calls, business reviews and other program tools like these will not only pave the way for success, it will also allow you to better measure the performance of your suppliers during the program.
Consolidation isnít easy. Itís an advanced solution. You have to want it bad because your local solution is going to put up a fight. You want better risk management, consistency of service, spend management Ö then you have to stand up and say this is the best solution, and this is what we are going to do to make it successful. Make that your commitment, make that your goal, and I believe you will end up on the other side of a very successful consolidated program.
Kevin Smith is vice president of operations at Ferrandino & Son, Inc. He has 11 years of experience in facilities services and exterior maintenance, has written many articles and white papers, and has produced podcasts and webinars on ďbest practicesĒ within the industry.