Insight:

Six emerging trends in facilities management sourcing – part one

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For companies with distributed operations—retailers, manufacturers, transportation and logistics—facilities management can represent 10 to 25 percent of total indirect spending. Several recent developments, including fears of a recession, trade conflicts, tech disruption, and rising wages, have made cost cutting a higher priority in this area. But business leaders must strike a tricky balance to reduce non-core costs without affecting the performance of core operations.

Companies have no shortage of options at their disposal to optimise facilities management expenditures. Outsourcing is a well-established strategy that’s on the rise thanks to an influx of vendors, while integrated approaches to facilities management, workplace strategy, and technology all hold promise.

The global market for in-house and outsourced facilities management is estimated to reach $1.9 trillion by 2024. The outsourced segment accounts for more than half the total and has attracted a growing number of vendors with new service offerings. Still, charting a clear path forward—one that enables companies to extract the most value—is an increasingly complex task.

The evolution of facilities management strategy

When facing ongoing pressure to reduce operating costs, companies tends to look for savings without giving much thought to the long-term repercussions. This dynamic makes facilities management a particularly ripe target. During challenging economic times, companies trim facilities management budgets; once the outlook rebounds, spending levels often remain low. This pattern can lead to deteriorating conditions of buildings and equipment, potentially costing more in the long run.

Over the years, industries have accepted outsourcing as a viable option to non-core operations, including facilities management. Companies typically follow a progression that begins with outsourcing noncore activities at individual locations. The consolidation, standardisation, and bundling of these tasks across facilities over time results in the outsourcing of a comprehensive set of noncore services and management to third parties, like the services we offer at Igloo.

Several economic factors have made outsourcing more relevant for facilities management.
We have identified six trends that offer cost savings or productivity improvement opportunities now or could transform facilities management over the next decade.

1. Outsourcing facilities management
Organisations are evaluating their operating model to maximise value creation. Before they outsource facility management to third parties, however, they review the appropriate mix of insourcing and outsourcing based on capability, cost, and coverage. Several factors are altering the equation. This is something Igloo pride themselves on and work extremely closely with our clients to create the perfect in-sourcing and outsourcing team cohesively. 

2. Integrated value and related services
Companies are exploring the integration of facilities management and related services in an effort to streamline management and improve performance. This offering can include the following functions:

• Real estate. This category includes all services related to transaction management, project management, and other services.

• Facilities management. All of the tasks that are involved in maintaining a facility, such as equipment maintenance and building services.

• Energy management. Activities focus on the conservation of energy, including retrofits and procedural changes.

• Production maintenance. The maintenance of production equipment comprises areas such as assembly stations, process equipment, and testing stations.

• Employee services. Services for employees could include mailroom, fitness center, and cafeteria and food service.

3. Workplace strategy

Workplace strategy is becoming a key tool to enhance employee engagement and retention. It includes several different categories:

• Modular workspace. Workspaces can become more modular and activity-based to increase agility and flexibility with changing workforce while decreasing total square footage.

• Coworking. Coworking provides flexibility in selecting the type of space and period of occupancy, which can offer cost savings.

• Lifestyle amenities. Lifestyle amenities such as yoga, meditation, daycare, recreation rooms, and nap areas have become common features to enhance employee experience.

• Wellness designs. Companies can invest in workspaces with appealing acoustics, lighting, furniture, and flooring, among other features.

However, now we have COVID-19 on our hands, who know what the future workplace looks like. 

4. Internet of Things (IoT) evolution
A number of trends and developments are spurring the adoption of IoT-enabled equipment by facilities management across a range of applications.

5. Advent of robots
Robotic automation is well suited to take over repetitive and hazardous tasks. Thus far, Asian and European companies are leading in adoption of robotics for services such as cleaning and security; widespread adoption could occur within the next decade.

Leading companies are in the process of integrating robotics into their facilities management operations for tasks such as floor cleaning, window washing, and power washing. Innovations in early stages of development include robots for security patrol, lawn mowing, and snow removal, among other tasks. The promise of such robots is threefold: beyond the opportunity to reduce operating expenses, these machines could free up existing staff to focus on higher-value activities while mitigating some of the risk associated with these tasks.

6. Augmented reality
Technology players are developing end-to-end AR solutions that have the potential to transform facilities management.

Look our for the second part of this insight

Facilities management leaders can’t simply flip a switch to harness these trends – the second part of this insight will help you understand why. Get in touch to find out more, or if you have any questions: enquiries@igloopropertygroup.co.uk

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