A New Competitive Advantage?

24th October 2015

Andy Erskine

As the facilities management industry continues to mature, competition to grow and win new business has become increasingly fierce with contracts often won or lost on marginal differences in costing rather than through variation in service offering.

 

As core costs continue to spiral upwards and industry best practice models level the playing field further, service providers in an effort to remain competitive seek to standardise delivery models, driving improvement in internal efficiency together with insourcing the supply chain to remove gaps in service capability and competence.  To do otherwise creates a situation where organisations risk losing the competitive advantage they have worked to develop over each other and become themselves targets for acquisition and absorption within the market.

 

Is the market therefore at risk of reaching a point where only cost and intangible variations between service providers becomes the determining factor when selecting a supply partner?

 

The facilities management market has changed over recent years and where cost reduction was for so long the prime imperative, quality and value added service is becoming a much greater imperative and simply being the cheapest is no longer enough.

 

As the FM industry matures, it brings with it clients that are much more commercially aware, challenging service providers who historically sought to gain an advantage through value engineering the delivery model whilst also bringing a much deeper level of understanding about what they need from their service providers.  The client is much better able to actively drive efficiency in the service model, placing pressure on the service provider to maintain margins.  The client has become much more than a person that simply receives a service and pays the bill, they are an intrinsic part of the service solution. This is a good thing for credibility of the industry.

 

The innovations, techniques, niche products and services that individual companies used to be able to rely upon to provide them with a unique selling point have vanished as the supply chain seeks to push products directly into the market as quickly and widely as they can, seeking to maximise the return from the investment that they have made bringing new products to market through wide distribution which now often includes direct supply to the client. These suppliers are facing exactly the same challenges that the service provider is experiencing further up the chain except that they now have an opportunity to reap a greater share of the margin.

 

If direct delivery costs have become levelled in a market where everyone has access to the same information, services and products and companies are now simply trading variances on margin alone, then how do service providers differentiate themselves in the marketplace and to their clients?

 

Service providers must now begin to think differently, looking internally at how they can differentiate themselves from their peers to deliver something that nobody else is doing, leveraging the strengths, skills and talents that already exist within the business to do something different. Key to this then is the recruitment, retention and development of the strongest and most competent resource available in the market, using these individuals to build and develop authentic relationships with clients that go beyond simply delivering a solution.

 

Simply having the best resource is only part of the puzzle though and needs to be strongly linked to training and development of the wider team, working with everyone in the service delivery model to share and develop new skills, giving access to a level of knowledge that allows them to see things differently, ultimately allowing everyone within the organisation to engage with their clients in a different way to the competition. It is no longer enough to simply deliver a service in the current marketplace.

 

This investment in training and development needs to extend all the way through the service model, engaging with the most junior member of the team as well as those that members of the team who ultimately run the contract or organisation.

 

Training costs are often looked upon simply as a cost to a business, an expense that could be otherwise be parked on the bottom line or used to support dividend payments. The reality though is that training and development, if delivered and structured in the right way, significantly improves efficiency, performance and engagement for businesses.

 

Experience has shown that by far the most exciting and innovative ideas come from those that are closest to the task. Engaging with the team at the point of work often provides an insight that is hidden from managers and small changes that improve efficiency and performance are missed from our high level, helicopter perspective.

 

A study conducted by the CMI stated that “Chartered Managers are worth over £362,000 in financial returns to their employers”. By anyone’s reckoning this is a significant return on a relatively small level of investment. The math’s suggests that the more people you engage, train and develop the greater the level of return will be. Sadly, not always the case but one that you are unlikely to go far wrong with if the training is structured correctly.

 

The development of people doesn’t always have to be formal though (although feedback from staff suggests that they get more fulfilment from certification and formal recognition), development can be achieved through internal workshops, toolbox talks, awareness campaigns, webinars, knowledge sharing with key suppliers and experts from within the business itself, all of which contribute to the engagement and development of individuals at all levels. Development and training opportunities need to be made available to everyone not just the rising stars or top tier.

 

Internal investment in training and development is recognised quickly by clients as the engaged and now enthused recipient starts to use these new skills in the workplace to the benefit of their clients.

 

Indeed, a key part of the success of developing teams internally is in sharing those learning experiences with the client, showing them a new way of working or thinking that adds value to the overall solution or to other areas of the business. An often internally unrecognised benefit of investing in training and in clients recognising the resultant change is that they start to talk about this investment within their networks and circles of influence, becoming unconscious brand ambassadors for the service provider. Organisations that are seen to invest and develop people attract good people who actively seek to become a part of the organisation. A positive position to be in.

 

To stand out from the pack and achieve a true competitive advantage, the service provider has to become an invaluable member of the client’s team, delivering value that exceeds the savings that could be achieved by simpl

 

y tendering the service line. This can only be achieved through the delivery of effective, quality services provided by an engaged team.

 

In a world where the difference between competent suppliers is marginal, the investment you make in your team might just very well be the differentiator you needed.

 

 

 

AEFM Ltd

Sentinel House

Ancells Business Park

Harvest Crescent

Fleet, Hampshire

GU51 2UZ

Company No: 06950191

Copyright 2015 - AEFM Ltd - All Rights Reserved

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