The question of outsourcing or insourcing facilities management (FM) has been long-debated. In truth, of course, there is no ‘one-size fits all’ FM solution. What works for one manufacturer may be entirely inconceivable to another. However, the fundamental contrast between outsourcing and insourcing non-core activities means that picking the right course can prove vital to bottom-line profitability.
One company that has recently switched from FM outsourcing to insourcing is Witney-based Siemens Magnet Technology, a manufacturer of superconducting magnets for MRI body scanners and the Factory of the Year winner at the 2015 Best Factory Awards. All site services, including scheduled maintenance, breakdowns, cleaning, gardening, security, catering and waste management now fall under the remit of Steve Quick, the company’s head of site services and projects.
“Until recently we had been using a single FM contractor to oversee and manage all of these services,” explains Quick. “We always tried to get the best value and changed FM supplier two or three times over the course of the past eight years. However, we reached a point where we didn’t feel that the business was getting value, quality or fast enough response times. The level of support was dropping despite having several KPIs in place, and there always seemed to be an excuse for poor performance.”
Determined to make a difference, Quick put together a business case in support of bringing FM in-house and, as a result of having his proposal accepted, considerable financial savings have been accrued.
The shift to in-house FM was based, among other things, on recruiting a multi-skilled team comprising individuals with specialist disciplines in areas such as electrical engineering, pipe-fitting and air conditioning, with the team monitored using KPIs that include response times, time to repair, quality, and cost. In addition, Quick has established a database of direct vendors with further specialist expertise, when required, in hydraulics, electronics and programming, for example. Suitable service level agreements (SLAs) and KPIs are in place to help assure performance.
‘Bringing FM in house is about good value’
Siemens Magnet Technology began its in-house FM operations in October 2015, since when it has introduced comprehensive asset management analysis, a scheduled maintenance programme and a full set of RAMS (risk assessment method statements), not to mention many news ways of working.
“One of our new initiatives is the creation of an electronic help-desk system which has seen response times fall to minutes, as opposed to the previous hours, days or even weeks,” says Quick. “Of course, it is early days and we’re still fine-tuning. For instance, we have already identified further savings for next year by making a few internal changes.
“Although we will be targeting a year-on-year cost reduction moving forwards, bringing FM in-house is about giving good value,” he continues. “For instance, we have decided to spend more money on the canteen service, offering higher quality food and healthier choices.”
Despite the seemingly clear advantages being enjoyed at Siemens Magnet Technology, every plant is different, and FM providers will argue that outsourcing can deliver a number of important benefits, assuming the right supplier is appointed, of course.
“When an organisation goes out to tender it will always aim to get the best price in the market,” says Phil Holland, managing director at outsourcing specialist Mitie. “However, in manufacturing plants, specifications vary greatly, which makes benchmarking very difficult. With this in mind, FM providers should be measured against key metrics that are linked to the company’s overall strategy and business objectives. This is essential to manufacturing as it’s a very collaborative process and FM providers can impact on so many core parts of production.”
A major dilemma facing plants looking to outsource FM is whether to use a single FM partner across all business areas, or multiple partners with expertise in specialist areas?
“As is often the case, a local supply chain will provide the best for specific niche functions,” says Holland. “However, for integrated services it is best to rely on one strong provider as it allows a degree of control for manufacturers and a single point of contact, which has particular importance when taking into consideration the long list of regulations and audits with which production plants have to comply.”
Outsourcing: don’t do it just for the money
For contracts involving manufacturers, Mitie has worked on creating a brand to be adopted by all of the team before even being appointed, a move that it says has successfully helped side-step the potential for a ‘them and us’ culture among employees.
“We integrate our teams horizontally, but it’s good to have an approach of vertical integration as well,” says Holland. “It’s a powerful way of giving the message that we are working towards the same goals and helps to build a unified culture.”
In all instances, health and safety is a top priority, and Mitie suggests it would be disruptive to have contractors operating on site who are not familiar with health and safety processes and may not have what is required to follow the manufacturer’s procedures.
“At one of our accounts operating in a high risk environment, we have recorded in excess of 3 million hours with no serious or reportable health and safety incidents,” says Holland.
As for contract length, at least five years or a five years plus two year extension option is ideal, according to Mitie.
“The time it takes to absorb the culture and to get truly ingrained is a long journey, and is difficult to achieve within a three year contract,” states Holland. “Clients need to be aware of this from tender stage, because it will take time for change to work through.”
The gains, however, should far outweigh any initial pain of instigating change.
“It would be easy to say that cost savings are the major benefit, but outsourcing should not just be about money,” says Holland. “The key benefit to outsourcing FM is the flexibility it brings around the management of resources. An FM provider can provide support that is more responsive and sensitive to changing workloads or patterns of work. Outsourcing also brings economies of scale, experience from other sectors, staff development and innovation.
“Ultimately, an FM provider can help to ensure that the focus for the manufacturer is on product at exactly the right time, reducing stock and helping with space,” he concludes. “If we can’t add value to a business in ways like this and have some impact on the bottom line, then we shouldn’t be engaged in the first place.”
