supplier management & procurement strategies for facility...
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Supplier Management & Procurement Strategies for
Facility Managers
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Vision StatementThe FMCC is the resource and voice for Facility
Management Consultants worldwide to leverage
our collective expertise to benefit IFMA members,
and the Facility Management profession.
Mission Statement
To serve as a global Facility Management
consultants' resource and representative for
Knowledge Sharing, Networking and Business
Opportunities in support of our impact upon the built
environment and value to their clients..
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How We Can Help
Ask the Expert
Find a Consultant by Location & Expertise
Locate a Speaker
Online Educational Resources
fmcc.ifma.org
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Todays Presentation
Moderator:
Josh Amos, IFMA Components Liaison
Presentation Title:
Supplier Management & Procurement Strategies for
Facility Managers
Presenter(s): Tim Schmidt eBid Systems
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Presentation Logistics
Polls will be used throughout the webinar
Q&A at the end of the presentation
Quick survey at the conclusion of the Webinar
PowerPoint & Recorded Webinar will be
available online via FMCCs Website
(fmcc.ifma.org)
Your Participation is Greatly Appreciated!
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Gold Sponsors
Silver SponsorsInterested in Sponsoring
FMCC? Contact Joshua.amos@ifma.org
mailto:Mary.ressler@ifma.orghttp://www.feapc.com/http://www.feapc.com/http://www.nextfms.com/http://www.nextfms.com/http://www.issworld.com/http://www.issworld.com/http://exceldryer.com/http://exceldryer.com/http://www.isar1.de/http://www.isar1.de/
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Learning Objectives
1. What is Strategic Sourcing
2. How to apply Strategic Sourcing to facilities
management
3. Tactics for addressing common Strategic
Sourcing goals
4. Improve the bottom line with Strategic Sourcing
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Presenter Bio Background in procurement and technology
Sourcing technology expert
Participated in hundreds of sourcing events
over 20 years
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Participant Poll #1
To what extent is procurement part of your job?
Procurement is my main job responsibility.
I perform procurement functions as part of my job.
I oversee procurement activities of others.
I am involved with procurement but have no procurement
responsibilities.
Procurement is not part of my job.
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Participant Poll #2
What best describes your approach to facility
management?
Manage facilities for company-owned rental properties.
Manage facilities for company-used commercial
properties.
Outsourced facility management provider.
Other type of service provider.
None of the above.
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What is Strategic Sourcing?
Strategic sourcing is an institutional procurement process
that continuously improves and re-evaluates the
purchasing activities of a company.
Strategic sourcing techniques are also applied to
nontraditional areas such as services or capital.
The goal of the strategic sourcing process is to lower costs,
improve quality, and reduce risks.
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Steps to Strategic Sourcing
Analyze current spend and supply sources
Categorize suppliers
Implement appropriate sourcing strategies
Execute sourcing strategy
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Step 1: Analyzing Spend
Get spend detail from accounting
Group spending into broad categories
Look for:
What are the largest categories of spend?
How many different suppliers per category?
What are the pricing variations for the same product or service?
Create list of target areas for improvement
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Step 2: Categorize Suppliers
Categorize suppliers by risk impact on facility
Downtime
Occupational hazards/safety
Liability
Loss of business opportunities
Categorize suppliers by cost impact on facility
Cost does not equal expensive
Cost does not equal price
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Kraljics Portfolio Purchasing Model
Risk Impact
Co
st Im
pac
t
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Kraljics Portfolio Purchasing Model
Risk Impact
Co
st Im
pac
t
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
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Kraljics Portfolio Purchasing Model
Risk Impact
Co
st Im
pac
t
Strategic Suppliers
Critical for product s cost priceDependent upon supplier
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
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Kraljics Portfolio Purchasing Model
Risk Impact
Co
st Im
pac
t
Leverage Suppliers
Many competitorsCommodity products/servicesLow switching costs
Strategic Suppliers
Critical for product s cost priceDependent upon supplier
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
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Kraljics Portfolio Purchasing Model
Risk Impact
Co
st Im
pac
t
Leverage Suppliers
Many competitorsCommodity products/servicesLow switching costs
Strategic Suppliers
Critical for product s cost priceDependent upon supplier
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
Bottleneck Suppliers
Relatively low valueFew alternativesMonopolistic markets
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Step 3: Identify Procurement Strategies
Use the Kraljic Portfolio Procurement Model
Blanket PO
Competitive Bidding
Partnerships
Secure Supply
Contrast with current processes
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Kriljics Procurement Strategies
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
Risk Impact
Co
st Im
pac
t
Blanket PO / eProcurement
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Kriljics Procurement Strategies
Strategic Suppliers
Critical for product s cost priceDependent upon supplier
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
Risk Impact
Co
st Im
pac
t
Partnership
Blanket PO / eProcurement
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Kriljics Procurement Strategies
Leverage Suppliers
Many competitorsCommodity products/servicesLow switching costs
Strategic Suppliers
Critical for product s cost priceDependent upon supplier
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
Risk Impact
Co
st Im
pac
t
Competitive Bidding / eSourcing Partnership
Blanket PO / eProcurement
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Kriljics Procurement Strategies
Leverage Suppliers
Many competitorsCommodity products/servicesLow switching costs
Strategic Suppliers
Critical for product s cost priceDependent upon supplier
Routine Suppliers
Large product varietyLow value per productHigh labor transaction costs
Bottleneck Suppliers
Relatively low valueFew alternativesMonopolistic markets
Risk Impact
Co
st Im
pac
t
Competitive Bidding / eSourcing Partnership
Blanket PO / eProcurement Secure Supply + Find Alternatives
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Step 4: Execute Sourcing Strategy
Develop goals for each supplier segment/spend
category
Develop tactics for each goal
Continuously assess suppliers and strategy
Use technology where appropriate
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Common Sourcing Goals
Routine Suppliers
Reduce number of suppliersAutomate transactions
Risk Impact
Co
st Im
pac
t
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Common Sourcing Goals
Strategic Suppliers
Marry the suppliers daughter
Routine Suppliers
Reduce number of suppliersAutomate transactions
Risk Impact
Co
st Im
pac
t
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Common Sourcing Goals
Leverage Suppliers
Compete projects over $10,000Eliminate non-performing suppliersImplement central vendor database
Strategic Suppliers
Marry the suppliers daughter
Routine Suppliers
Reduce number of suppliersAutomate transactions
Risk Impact
Co
st Im
pac
t
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Common Sourcing Goals
Leverage Suppliers
Compete projects over $10,000Eliminate non-performing suppliersImplement central vendor database
Strategic Suppliers
Marry the suppliers daughter
Routine Suppliers
Reduce number of suppliersAutomate transactions
Bottleneck Suppliers
Identify new part supplierReplace proprietary equipment
Risk Impact
Co
st Im
pac
t
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Tactic 1: Supplier ID and Prequalification
Centralize supplier (and potential supplier) information
Implement multi-dimensional supplier prequalification
Financial
References
Verification of licenses and insurance
Implement public supplier registration
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Tactic 2: Competitive Sourcing
Requests for Proposal (RFP)
Multi-dimension decision process
Performance based criteria
Focus more on what rather than how
Scored responses
Request for Quote (RFQ)
Most common for commodity items
Focus on what
Include all cost dimensions
Use prequalification process
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Guidelines For Competition
Develop specifications not based upon single suppliers
capabilities
Define objective supplier criteria before sourcing event
Share the selection criteria
Set a reasonable deadline for all suppliers
Share Q&A with all suppliers
Do not share bid information with suppliers until after the
award
Do not negotiate with lower scoring supplier without
giving favorably scored supplier the same opportunity
Stick to your own rules
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Tactic 3: Supplier Assessment
Periodically evaluate the quality of suppliers
Define Key Performance Indicators (KPI)
Invite different stakeholders to score suppliers on KPI
Create a place for people to log relevant supplier
information
Make results available to decision makers
Periodically evaluate performance for each supplier
segment
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Supplier Assessment Example
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Tactic 4: Use Appropriate Software Supplier Management
Central vendor information
Supplier approval
Tracking Key Performance Indicators (KPI)
eSourcing Automate sourcing processes
Ensure competition
Reporting and feedback
eProcurement Catalog purchasing
Verified pricing agreements
Automated transaction processing
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eBid eXchange Supplier Management
Central Vendor DB Self-maintained
Custom fields
Vendor approval
Central supplier notes
Track performance
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eBid eXchange eSourcing
RFx Management RFx Templates
Notifications
Q&A Mgmt
Document Mgmt
Online Bid Submission
Automated Tabulation
Bid Scoring
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Vinimaya eCatalog
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Review Learning Objectives
1. What is Strategic Sourcing
2. How to apply Strategic Sourcing to facilities
management
3. Tactics for addressing common Strategic
Sourcing goals
4. Improve the bottom line with Strategic Sourcing
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Q&A
Tim Schmidt
+1 (206) 855-8430
tschmidt@ebidsystems.com
www.ebidsystems.com
mailto:tschmidt@ebidsystems.comhttp://www.ebidsystems.com/
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http://ifma.org/community/industry-councils
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