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Rightsourcing approach for the running of facilities

Author : Marcus Hill, head of consulting, Retearn FM

16 February 2021

The global outsourced Facilities Management (FM) market is set to exceed £1trillion by 2025, according to research by Frost and Sullivan. It’s big business and the COVID-19 pandemic will continue to act as a further catalyst for change.

The outsourced FM market is now more than 30 years old, and some strategies which might have worked in the 1990’s are no longer fit for purpose in the world in which we live today.

Delving further, agile working is here to stay, and we have witnessed a sea change to the way services are now delivered away from the usual workplace, ranging from the virtualisation of switchboards through to digital mailrooms and document management.

Inhouse vs Outsource… a thing of the past?

What is becoming very clear is it is no longer a question of “in-house” and “outsourced” with outsourcing simply set to grow, nor is it singularly about hard services, soft services or Integrated (IFM) or Total Facilities Management (TFM), the dynamics are far more complex.

Outsourced services are being taken back in house on a significant scale in sectors such as blue light, (Lincolnshire Police, multi back office services), academia (Kings College London, cleaning) and health (Imperial Hospital NHS Trust for hotel services).

Previously, outsourcing focused on cost cutting at worst or at best driving value by allowing companies to focus on their core business activities. Today’s emphasis is on wider impacts such as environment and social value.

The UK Head of Barclays Bank recently cited that the environmental agenda is still very much in its infancy, just like Amazon and eBay was 25 years ago.

In fact, he stated we would witness a similar revolution in relation to the environment as we have done in the way we now buy things. So, what is “rightsourcing”, if it is not about types of delivery models in FM, then what is it?

Understanding Rightsourcing

One central strand is to challenge the status quo.

At Retearn, we have come across several examples where a suite of services has been outsourced and for whatever reason, the supplier has not performed.

Often the focus is on supplier non-performance, when in reality the service mix they have been asked to provide is wrong. It could be for a multitude of reasons such as it is outside of their core business or they may be sub-contracting for convenience rather than for good reason such as bringing in ‘best-in-class’ services which complement the overall delivery model.

Rightsourcing therefore opens the door to change, asking why it is being delivered in a particular way, is it right for the client, or is it right for the supplier.

Universities and hospitals taking cleaning services back in house is a prime example of this. This is in part around control and service response but also is centred on social value, where organisations do not want to see staff merely outsourced and subject to wage levels that parts of the core organisation simply do not support.

For example, the London Living Wage versus a commercial wage driven by market forces. Bringing services back in house may be seen as an expensive option but it’s important to assess wider impact and social value, enhanced productivity, and staff retention.

Such benefits are indicative as to why some organisations have insourced. Services may be outsourced due to the economic climate. The use of outsourced models can be particularly effective in achieving flexibility, driving change and creating a model that can be upscaled and downscaled according to need.

A good example of this is catering where, at one stage, reducing costs was seen to be key but times change so does culture. Instead, it is increasingly seen as a valued service which can enhance and influence wellbeing, support the health of employees and support local communities in areas ranging from employing apprentices through to local sourcing of food.

Social value is now playing a huge impact on this. In terms of rightsourcing, never before has the provenance of food been so greatly and directly challenged with customers insisting that the food and drink they consume is sourced in a sustainable manner.

We have seen this via initiatives such as “Fairtrade” in terms of responsible sourcing through to the product itself being organic and, beyond that, to wider social responsibility such as the desire to cut CO2 levels by eating more plant-based foods.

The word canteen is now pretty much obsolete, most staff restaurants have a name and brand which reflects the vision and values of the organisation in which it is based.

Once the world returns to what will be a “new normal”, services such as catering will change once again.

It is very likely that queues will be a thing of the past and catering purchases will be via an app to manage the transactional elements of buying food and beverages. It is likely the human interface will remain but it is clear the process will change.

The focus will be on experience not just taste but the responsibility in sourcing, preparing and minimising waste alongside ongoing environmental impacts.

So, looking ahead how does an organisation ensure that it is rightsourcing correctly? Put simply, it is about making sure the supply chain is constantly reviewed at all levels ensuring it is aligned to the business plan which increasingly is not about the bottom line but the ‘triple bottom line’, People, Planet and Profit.

Rightsourcing needs to always deliver on all three.

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